A Refreshing Challenge for DirectBuy
DirectBuy, a leading international members-only consumer buying club, with over 50 franchise locations in North America, representing over 700 manufacturers with more than one million product SKUs, was in desperate need of business modernization. Their legacy systems were costly, out of date, and out of compliance. The anticipated cost to refresh the company’s systems in two physical data centers was projected to exceed $4 million dollars and incur annual operating costs of $1.2M. The 44-year old company with more than 250,000 members could ill afford a misstep at this critical juncture. They were out of time and out of budget while undertaking a project that required virtualizing DirectBuy’s entire IT portfolio.
Armin Roeseler, CIO at DirectBuy, explained, “Our main goal is always to ultimately support our customers. We knew we needed a robust, flexible and secure infrastructure and we were convinced that the cloud was the vehicle to bring us into the future.”
Because of DirectBuy’s long and successful history, the company was pushed beyond what its IT infrastructure was designed to handle. In this outdated environment, 65% of DirectBuy’s IT systems were either out of warranty or support contracts, and 45% of those were older than five years. End of life, end of support and end of extended support.
DirectBuy’s core business relies heavily on its ecommerce website through which members have access to products, all without hidden retail markups. DirectBuy’s website also serves as a resource for franchise owners to build their businesses by leveraging DirectBuy’s training, support and incentives.
Roeseler responded to the challenge aggressively with a plan to explore the full potential of the cloud. Before proceeding, however, Roeseler went through a carefully considered process. The concerns he needed to address were multi-fold: technical feasibility, data security and governance, storage and disaster recovery, the ability within existing IT resources to manage the process, and the importance of business continuity while managing any anticipated migration.
“We had a handle on what our systems could do as well as what their limitations were, but needed an expert team to guide us in utilizing technology more aptly and efficiently,” Roeseler said. “17% of our infrastructure was end of life—beyond the timeframe that our vendors could support. We were not positioned to support the new initiatives and modern direction in which DirectBuy’s executives wanted to take the company. In addition, our overall IT spend was very high, since there were quite a few service provider contracts, preventing the company from capitalizing on volume discounts.”
Roeseler started with a state-of-the-industry overview via Gartner reports. He consulted his network of colleagues who faced similar challenges. He spoke to vendors and former partners. Then he spent time with DirectBuy’s CFO working through an extensive cost-benefit analysis. After some back and forth with prospective cloud providers, it became clear that a comprehensive migration of the IT infrastructure to a cloud environment made for a compelling value proposition across the board.
With the cloud, DirectBuy was looking at a 40+% reduction in annual operating costs from $1.2M to $700K, and avoiding the anticipated $4M refresh of legacy systems. The cloud-based solution also addressed all of Roeseler’s issues and concerns, provided they could find the right partner to help make the cloud’s potential a reality.
When Komodo Cloud entered the picture as a potential partner, Roeseler gained some initial comfort from his familiarity with the Komodo teams’ history, reputation and track record. Although a relatively new player in the cloud provider landscape, the team’s technical prowess was evident from the outset. Further, Komodo was able to provide Roeseler with confidence in the long-run sustainability of the partnership. The combination of “new school” technology from cloud provider Faction and professional services customization from Komodo, coupled with “old school” financial strength from Fortune 100 distributor Arrow ECS, made for a powerful combination and solution that rivaled bigger competitors.
Ultimately, it was the responsiveness and agility of the Komodo team that the big boys could not match that sealed the deal in Roeseler’s mind. From a purely financial perspective, the Komodo/Arrow/Faction team’s value proposition was compelling. Roeseler states, “When the Komodo team was able to readily understand and effectively address every one of our issues and concerns, including our stringent financial and compliance constraints, I had the confidence that we were on the right track with the right partner.”
As a result, Komodo’s Management team presented a solution that demonstrated a deep understanding of both the technical and business implications of cloud migration.
Komodo delivered an initial assessment, and delineated project targets, roadmap and milestones. “Komodo worked closely with our team every step of the way to overcome every hurdle we encountered.” Roeseler says. “They responsively collaborated with me and the DirectBuy team to address both the anticipated and unanticipated project challenges along the way to our destination, a completely virtualized, cloud-based, IT solution. The entire process was accomplished in 90 days, on time, on budget and fully operational and with minimal disruption to business continuity.”
Benefits achieved and unanticipated transformation opportunities realized by DirectBuy include:
- Enhanced website speed and function
- Reduced time to market
- Enhanced user experience
- Reduced IT headcount
- Improved internal IT delivery and business agility
- Shift from capital-intensive to opex model
- Simplified/standardized IT infrastructure/app platforms
- Reduced IT budget
- Redeployed IT personnel
- Improved IT staff productivity
Friendly advice to CIOs – there’s a trade-off to be faced between the size and strength of the BIG nameplate vendors and the agility and responsiveness of providers like Komodo Cloud. Roeseler explained “For our situation, we opted for the latter and are completely satisfied with the results. During the entire process, we felt as though we were Komodo’s most important customer – and in light of the collaboration we enjoyed with Komodo, and the results achieved, it was a productive and satisfying experience.” Komodo CTO, Nigel Lambert, adds, ”There were technical challenges in the DirectBuy migration, but Armin’s decisive and collaborative approach helped us work through each of them to a productive outcome. For the Komodo team, working on the DirectBuy engagement was an enjoyable challenge.”
About DirectBuy, Inc.
DirectBuy provides its members with outstanding service, selection and value. DirectBuy members pay confidential dealer prices, with no hidden retail markup, combined with an amazing selection. DirectBuy’s commitment to service excellence ensures that members have access to unparalleled quality and choice while being guided by experts in purchasing and design. Our members select from over 1 million products from 700 popular brands in the US and 500 in Canada. DirectBuy also provides lifestyle-enhancing benefits including travel packages, home improvement services, and much more.
For more information, visit www.directbuy.com.
About Komodo Cloud
Komodo Cloud, LLC is a provider of IT transition and transformation services for businesses and solution providers. Born in the cloud, Komodo enables its enterprise clients to set up cloud assets, provides subscription-based compute and storage services, and provides IT business processing and subscription-based software solutions. The company is headquartered in Rolling Hills Estates, CA with engineering and sales offices in Chicago and San Jose. For more information, visit www.komodocloud.com call 424.488.7755, or email firstname.lastname@example.org.
Editor’s Note: This post was originally published in June 2015 and has been updated for accuracy and comprehensiveness.