For a retail chain that sells the latest technology to avid consumers, Noel Leeming Group's point-of-sale (POS) and back office computer systems were far from state of the art.

It had POS systems that were so old that, as new Noel Leeming and Bond & Bond stores were opened, POS terminals to equip them could only be found on the second-hand market. The group's ageing IBM® AS/400 back office machine had also "pretty much come to the end of its life", says chief financial officer Mark Conelly.

"The business had been under-invested at the time of acquisition," says Conelly, who joined when Gresham Private Equity bought the company from Pacific Retail Group in 2004. But the previous owner's "if it ain't broke, don't fix it" attitude had ended up as false economy, he says.

"You start getting into a position where your performance suffers and you can't really see the cost of that until the system falls over. The second thing, which you do see the cost of, is that it becomes increasingly hard and costly to maintain."

The first step in doing something about matters, was to replace the AS/400 in October 2007 with an IBM System i5 525 Express. "That's just taken the whole business a step forward in performance terms."

IBM supplied POS units, as well, Conelly settling on SurePOS 300 devices after consideration of a number of options. "We got an independent review just to ensure the SurePOS 300 range was appropriate for us," he says.

The new POS unit does not have an integrated printer, which the company has taken as an opportunity to streamline its processes, eliminating some form printing. "That's absolutely delivered functionality improvements at point-of-sale."

Their built-in processing capability lets them run the group's POS software locally, so if the link with the back office system fails, there's no interruption to customer service.

"Staff can undertake a sale at the point-of-sale without the main computer being online," Conelly says. The transition to the new SurePOS 300 devices took place without a hitch over about eight weeks, despite Conelly opting to continue tweaking the group's custom-written POS software during that period.

"We were worried about the transition. One option is to freeze the system but when you're in a dynamic business, you really need to maintain maximum flexibility.

"In the eight-week deployment phase the business could have come along and said, 'We want to do this', and the last thing you want to have to say is, 'Sorry, you can't action that till the end of the freeze', so we kept that flexibility right through."

The risk was rewarded with a smooth transition. "It was a very, very successful rollout - we really never faltered," Conelly says.

Solutions partner Gen-i helped with identifying and specifying the required equipment, then worked with Noel Leeming to negotiate pricing and install equipment in some of its premises.

"Noel Leeming did most of the integration itself," says Dougal MacDiarmid, client manager at Gen-i. "But certainly the bits that we were involved in - procurement and delivery of the equipment - were excellent and the rollout that we did do in certain parts of New Zealand went really well.

"Noel Leeming was looking for cost reduction and speed improvements and got both of those. The ROI was pretty short, given the maintenance it was paying on old equipment."

The new hardware platform for the POS units cost about $750,000, which Conelly considers a modest sum, and the back office system, and a second back-up machine, a further $550,000. It's been money well spent.

"We've mitigated risk in that we no longer have out-of-date machines, we've eliminated quite a lot of cost in that we've got a warranty period and therefore are not paying any maintenance at the moment, and when we do start paying it again it will be considerably cheaper than previously. We've also refreshed to a more contemporary piece of kit and extended the life out to 2012-13."

Greater processing speed means reports which used to tie up POS terminals for minutes at a time, initially confusing operators who thought their request hadn't been actioned - now happen within seconds. "We had stores ringing a number of times saying, 'We pressed the button and it comes back to the menu - it hasn't done the update'. We'd tell them the job was done and that they were just experiencing the improved performance of the new POS system- that's been quite dramatic in a number of areas.

"When you put something in that's the best part of 10 years younger, you're inevitably going to get more out of it."

Further resources: 
• You can read more about IBM System i 525 Express here: http://www-03.ibm.com/systems/i/hardware/525/index.html
http://www-07.ibm.com/businesscenter/nz/express/surepos.html

• You can read more about IBM's thought leadership on retail from its Institute of Business Value: http://www-935.ibm.com/services/us/index.wss/industry_
library/imc/a1000063

• Noel Leeming Group's Mark Conelly is chief financial officer, but he also manages the retail chain's IT. That means he has a keen interest in both the business and technical sides of retailing.

To keep up with the business of retailing, he reads articles from the UK and Australia, while his IT interest is catered for by a combination of local print publications and websites, and vendor presentations.

Local IT information sources Conelly relies on include:
www.istart.co.nz/index.htm
www.nzherald.co.nz/technology/news/headlines.cfm?c_id=5
www.nzbusiness.co.nz/

• Visit the Noel Leeming website.

• For more information on IBM POS systems and more please visit: ibm.com/products/retail

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