Warnaco Asia, the retail distributor for Calvin Klein, took a bold move five years ago—it virtualized the POS system.
Like the heart of a human body, the POS (point-of-sale) system is vital for any retailer. It handles sales transactions, collects customer data, supports different customer loyalty programs and discount campaigns. If the POS system goes down, the store becomes paralyzed.
Five years ago, when desktop virtualization remained a new technology, Patrick Lamp, information technology director of Warnaco Asia, decided to convert the company’s POS system to a desktop virtualization architecture. For Asia, this was a pioneering deployment.
“But if I hadn’t made that decision,” said Lamp, “we wouldn’t be where we are today.”
A web of problems
Lamp said that when he first joined the company: “the POS implementation was a mess.”
There were multiple issues, including lack of support for users across the region, confusion with data integrity and complexity of upgrades.
Under the previous POS architecture, each retail store hosted its own POS software, database and hardware. Lamp said maintaining this de-centralized architecture was costly and challenging.
Warnaco had retail stores across Hong Kong, Korea, Australia and China. “We needed external consultants to maintain the system and support the users, but that support was limited,” he said. “If the POS system had problems on a Sunday, on a peak shopping day, no one was able to help—we had lots of complaints.”
Another major problem was data integrity. On every sale, data needed to travel both ways between the store’s local POS system and the central database in Hong Kong to verify customer profiles and promotional data. By month-end, the sales data between the stores’ POS systems and the centralized database often did not match. Lamp’s team had to spend weeks or months investigating.
“Lost data could happen anytime within the month-long period, and the cause could be the network, the POS system or a database issue,” he said. To ensure a secure and high performance network, the company was also spending heavily on network infrastructure.
“There was so much finger-pointing,” said Lamp. “We spent a lot of money, but users were still frustrated.”
On top of the maintenance issues, another headache was supporting new store openings. Each POS installation required hardware and network experts to set up the machines, POS experts for software configuration, and database administrators for data integration.
Business innovation
Although the hardware and software could be set up centrally in Hong Kong, Lamp still needed to ship the equipment and send his team or outsource an IT pro to install them at the location. This became a nightmare for Lamp when Warnaco Asia decided to transform its business model from distributorship to direct retail.
“I had less than 10 people managing the POS systems,” he said. “It was impossible for my team to keep up with the expansion.”
Warnaco was traditionally a distributor. But five years ago the company’s Asia operation decided to tap the rising retail industry and move to a direct retail model. The company planned to take over retail operations across the region and expand the number of retail stores.
For Lamp, this means his team had to manage the POS installation at each individual store. When the company took over a country’s retail operation, Lamp’s team also had to support the POS migration—very often within a window of eight to ten hours.
“The Taiwan takeover was a good example,” he added. “There were 50 stores in the country. We were required to install 50 new POS systems and migrate all historical data to the new system, all in one night.”
“With the original architecture, I would have needed a huge IT team,” he said. “It’d be out of control to manage because in the world of IT, managing technology is relatively easy, but managing people is a huge issue.”
To support the company’s business transformation and solve the POS system problems, Lamp deployed a centralized POS architecture using desktop virtualization.
The architecture uses Citrix’s XenApp and allows each retail store to access its dedicated POS system hosted centrally at Warnaco’s Asia headquarters in Hong Kong. In each sale, customer loyalty information and database processing are all executed centrally. The network transmits only the keyboard entries, mouse movements and results of data processing.
“With this architecture, POS installation is simple—all we need to do is make sure the PCs get on the Internet,” said Lamp. “We can also maintain, upgrade and ensure SOX and PCI compliance centrally—it’s easy to manage and expand hundreds of stores and POS systems.”
This architecture has been the foundation for Warnaco Asia’s expansion in the past five years. Within the period, the company took over the retail operations in India, Malaysia, Macau, Singapore and Taiwan, bringing the total number of stores across Asia-Pacific to 650.
A pioneer and careful risk-taker
It was a bumpy road to success.
“I looked for prior successes, but all I found was one case in Bangkok,” said Lamp. “They were running a system at only two locations! I had more than two hundred installations.”
Lamp also requested help from a local POS developer. “They told me” ‘you’re on your own’.”
Without any successful cases or external support, Lamp pressed ahead. “In order to meet the management’s requirements, I had no choice but to centralize the system,” he said.
Lamp built a lab at the office to simulate the architecture. After two months of testing, it was deployed to run the architecture in Hong Kong and later expanded to China and the region.
“I believed this architecture would support the entire region after we successfully rolled out the system in Shanghai and Beijing,” he said. “But a major flaw of this architecture is its dependency on the public Internet infrastructure.”
At the store level, 3G USB modems serve as backup mobile Internet access. At the datacenter, Warnaco uses three different ISPs—Citic CPCNet, PCCW and Singtel—to ensure connectivity.
Lamp also set up a DR center with an external co-location service provider to support an active-active backup of the company’s real-time transactions. To enhance security, a two-factor authentication log-in is also required to access the POS systems.
“This is a critical centralized system, so the DR plan is extremely important,” he said. “We are making an effort to ensure the DR plan is perfect with zero downtime.”
Dealing with scalability
Lamp said each physical server supports a maximum of 25 stores. With hundreds of POS systems hosting at one location, Warnaco Asia’s datacenter started to run out of space about two years ago.
“We don’t have the space, not to mention air-conditioning and UPSs, to support hundreds of servers,” he said. Server virtualization was the answer—using Citrix’s XenServer, each physical server can support up to 150 stores.
Through leveraging both server and desktop virtualization technologies, Lamp solved his POS issues. He is also able to prepare for Warnaco Asia’s upcoming plan: to expand the number of retail stores from 650 to 1,000 stores within 2013. His success was a result of combining risk-taking attitude with well-planned implementation.
“If I didn’t take that risk, the company would look very different now,” Lamp concluded.
CEO Talking Shop is the Retail in Asia section devoted to interviews with brand CEOs and retail industry leaders.