Magazine Article | July 1, 2000

Rebuilding Your IT Infrastructure

Source: Innovative Retail Technologies

Jo-Ann Fabrics had built its IT infrastructure on a hodgepodge of legacy technologies — a foundation that couldn't support the growth of the $1.5 billion company. That's why the company recently revamped almost every facet of its technology.

Integrated Solutions For Retailers, July 2000
An ERP (enterprise resource planning) implementation is intimidating for any IT employee. It can, at times, consume years of a business and an individual's life. Imagine then, Les Duncan's job. As the CIO of Jo-Ann Fabrics, he recently completed what could be deemed the mother of all IT projects. On March 21st, the company went live with an SAP ERP system that took nearly two years to install. You'd think that undertaking would have prevented the company from focusing on other installations. Think again. In that time frame, the company also implemented a new WMS (warehouse management system), servers, bar coding scanners, and RF (radio frequency) devices.

Industry Growth Drives Solution
Jo-Ann Fabrics is a $1.3 billion specialty retailer. The company has 1,035 stores in 49 states. The company's headquarters and its main distribution center are located in Hudson, OH. Currently, the store carries roughly 200,000 SKUs (stock keeping units).

Recently, the company has expanded the scope of its stores. Its original stores were typically 15,000 square feet and strictly offered sewing and craft-related items. Jo-Ann's new stores are 45,000-square-foot, big-box concepts. These stores extend the company's product offerings to decorating items, floral arrangements, and framing – anything you would associate with home decoration. Duncan describes them as "Home Depots for women."

Legacy Systems Don't Support Growth
The story of Jo-Ann's new IT infrastructure begins about two years ago. Duncan describes the company's infrastructure at that point as a "hodgepodge of legacy systems that were not integrated. We weren't happy with the functionality we had, and we couldn't grow our business. We were using the wrong stuff." With the problem blatantly defined, Jo-Ann had to find a solution; it had a couple of options. The first option was to attempt an upgrade of existing technology. The second option was to rebuild the company's IT infrastructure from the foundation up.

Duncan opted for the latter choice. He explains his reasoning. "We couldn't grow our business – we couldn't even support more than one distribution center with the legacy technology. We could have continued to modify and string together the legacy systems, but that was only prolonging the inevitable – throwing good money after bad. It was pretty easy to decide to replace everything. The implementation behind that decision, well…that was a bit more difficult."

Moving Forward With An ERP Solution
Jo-Ann decided to undertake the implementation in a big way. The company partnered with SAP to install one of its ERP systems. Jo-Ann also partnered with IBM and Siemens for the installation. Duncan says that Jo-Ann went into the installation knowing it would be a "risky venture."

The company, however, felt it was a necessary risk. "Over time, I've learned that with ventures like this, the first step is to figure out what causes things to go wrong," comments Duncan. "Then you need to determine how you can prevent those things from happening. That was our mind-set going into the installation. Having SAP, IBM, and Siemens as partners certainly helped us in that respect."

Jo-Ann used IBM not only as a hardware provider, but also for consulting and database support. The company is using IBM's S/390 database server and RS/6000 application servers.

Duncan describes IBM's role as an integration partner, providing both a knowledge of SAP systems and experience in implementing them worldwide. Jo-Ann, he notes, took on the role of overall project management and project integration.

Although the company selected SAP in March 1998, it didn't begin the actual implementation until June. Rather than running the old and new systems parallel, Jo-Ann put the SAP system through a series of tests before going live. "We did full volume testing," describes Duncan. "We went through several rounds of tests with our actual business volumes. That involved taking data out of our legacy systems and then processing it through SAP. It allowed us to see not only if the new system was functioning properly, but also whether it could handle our business volumes. We were throwing volumes at it that SAP had never seen before. It took a lot of effort to get those things to work properly." In all, the installation took 21 months – that was three months ahead of Jo-Ann's projected schedule.

Integrating Technologies With ERP
Most of the business processes at Jo-Ann's are running on the new SAP system. Its distribution center, however, is one such system that is not. "One of the things that makes ERP installations so difficult is that they present multiple challenges," explains Duncan. "Your first objective is to implement the ERP system. But, you are also changing other systems that must ultimately interface with the ERP system. And, you're trying to do both of these tasks at the same time."

The company was careful not to make that mistake. It implemented a WMS solution from EXE Technologies, Inc. about a year before the ERP system.

"The WMS was up and running by the time we finished the SAP system," says Duncan. "There is an interface between the WMS and the ERP, but that's another area of contention we tried to avoid. We minimized the number of interfaces with the SAP system. Beyond the WMS, there is an interface only with our stores, and another for EDI – but that's it."

In addition to the new WMS, Jo-Ann also has new bar coding and sortation systems. Currently, the company is working with EXE to develop an RF system, as well.

Define Your IT Philosophy
Although Duncan is pleased with the success of the installation, he still cautions: "It's still early. We need to allow ourselves a couple of months to make sure everything is stable and that we fully understand what we are doing."

The Jo-Ann installation hints at the company's new attitude toward technology. Duncan describes that new philosophy. "We view technology as an enabler. Our ERP installation was a strategic investment. In the future, we'll look at any technologies that will help us with our plans for growth – and be aggressive about implementing them."

The company's next project is a full-scale satellite distribution center on the West Coast. That project is a testament to the success of the ERP installation. Jo-Ann couldn't have even considered such a move with its previous legacy technology.

Until Jo-Ann Fabrics has run its ERP for an extended time under the demands of everyday business, it won't truly be finished with its installation. Still, the company's transition from a near-complete legacy IT infrastructure to one of almost total integration is impressive. The initiative underscores two important business/IT lessons: the necessity of a strong IT infrastructure in business today, and the never-ending nature of IT projects. Les Duncan realized the importance of anticipating problems – both before and after an installation. Complacency on the part of the end user always ensures a disastrous installation – no matter how good the technology. Keep that caveat in mind for all your future IT projects; it will serve you well.

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