We often talk about digital transformation as though it’s something that can be done in the span of a quarterly or annual IT refresh cycle – and sometimes that’s the case. In other cases the transformation journey takes years.
Such has been the case for Singapore consumer electronics chain Challenger Technologies, whose transformation journey arguably started nine years ago as an IT restructuring project with a “build everything” software ethos and an aversion to cloud. Now, with the help of Rackspace, Challenger is in the cloud and loving it.
Challenger’s Chief Technology Officer Joshua Woon explains that when he was appointed to the post in 2011, every store had its own server running packaged software and using a third-party solution provider to support its system requirements.
“Most of the transactions were taking place locally and in batch mode, sent back to HQ for consolidation and processing and so on and so forth,” Woon recalls. “The systems were also fragmented, whereby the partner sales and the accounting systems were two separate systems, etc. So my first task class in Challenger was to integrate all the core systems.”
However, that task came with a mandate from the CEO who hired him: rather than using commercial off-the-shelf (COTS) software, every core system had to be developed in-house.
“We intended our core business systems – ERP, POS, HR, online appliances – to be built in-house because we really wanted to have full control of the strategic direction of our technology platform to support our business strategy,” Woon says. “When adopting any package or third party software, we don’t really have control, and we’re at the mercy of the technology roadmap of those systems.”
The other downside of third-party ERP software is that Woon didn’t feel the economics were justified.
“When you look at these systems, yes, they’re very comprehensive, well-built, well-tested and so on, but when you go down to the details, you probably use about 10% to 15% of the functionality that’s available – but the traditional licensing model is that whether you use 10% or 90%, you pay the same price,” he says. “So why would I want to pay 100% when I’m only using 15%? Why not build fully in-house where it’s possible and have full control?”
In addition to building an in-house ERP system to integrate Challenger’s finances, Woon’s team also set about consolidating the infrastructure so there was one central server serving all locations.
With that groundwork laid, the project entered what might be considered proper digital transformation phase around the 2013 – 2014 period when Challenger began digitizing its business processes, a major outcome of which was digitizing its entire order-to-payment cycle, from POS to invoices. “What used to be done with faxes and hard copies or PDFs was now fully digitized,” Woon explains.
The only trouble was that going fully digital placed extra stress on Challenger’s IT infrastructure – particularly network connectivity between its on-prem data centers.
While Challenger was entertaining cloud as a possible solution, the fact that network connectivity was the chief pain point meant Challenger initially sought solutions from telcos offering managed services rather than cloud providers.
“The idea was to have all the data center connectivity handled by one service provider, so that if there’s any problems, they can’t point to someone else and say it’s their problem, not ours,” Woon says.
However, Woon adds that Gartner advised them to broaden their scope beyond telcos to get a better understanding of available cloud options.
Woon admits he was initially wary of cloud providers like AWS, Google and Azure. “The experience I was hearing from my other colleagues or friends is that it was very hard to use [public clouds], because they’re just so technical.” Eventually, in September 2015 Challenger settled on cloud managed services provider Datapipe, which was acquired by Rackspace two years later.
What a difference a cloud makes
Challenger finally decided to migrate to Amazon Web Services (AWS) with the help of Rackspace, and the results have been dramatic, says Woon.
To illustrate the point, he says, “Prior to the cloud, because we had built everything in-house, I had six IT staff taking care of the on-prem infrastructure as well as the operational environment, and I had about five or six software development team members. As we begin migration to the cloud, my IT team now is down to two people: an IT director and an assistant. So they are now more focused on the operational support than on the IT software.”
Woon adds that in November 2019, Challenger removed half of the racks in its on-prem data center.
Meanwhile, he continues, moving to AWS has enabled Challenger to migrate from a single monolithic core system and core database to a more diversified approach that makes greater use of the full spectrum of offerings on AWS, from the database and security to container services and AI functionalities such as facial recognition.
“What used to be a single client/server point of sales or ERP now is web based systems, app systems and client/server systems, as well as the myriads of operating systems,” Woon says. “We used to be mainly on Windows – now we are running on Linux, Windows, MySQL. And we have container services, which we would not have been able to do based on my internal software development team’s expertise. So Rackspace’s contribution to my team’s expansion has been tremendous in terms of the offerings and the new services that have been turned on.”
Multicloud? Maybe one day …
For now, Challenger is sticking with AWS for its cloud needs, but Woon says he is looking at a possible multi-cloud option in future.
That may seem out of step with the multi-cloud being the hot new cloud trend, but Sandeep Bhargava, Managing Director of Asia Pacific & Japan at Rackspace, notes that multi-cloud isn’t for everyone, nor should it be.
“For midsize companies, my advice is, are you really big enough that if you go multi cloud, it’s really worth the hassle?” he says. “Basically, if you get somebody else to do it for you, you still have different things to think about, thinking about which use case goes where.”
That said, he adds, the decision to go multi-cloud isn’t so much about the size of the company so much as the use cases.
“For customers who go with multi-cloud, it’s usually workload-specific,” Bhargava says. “Typically, if you’re not very data-intensive, you could be on Amazon or Google, and you can run most of your stuff on either of those platforms, but maybe if certain use cases work better with one platform than another, you have the option of using both, and some customers prefer having two clouds so they can switch back and forth rather than being locked in to one cloud.”
Another factor is how easy it is to shift the company’s apps to the cloud in the first place – which, for companies like Challenger with legacy in-house systems, is … well, challenging.
“Lift and shift has been the predominant strategy over the last two to three years, but more and more, what we see is lift, shift and refactor the applications, and that’s where most of the work will be – how you can refactor the applications to better suit the cloud, rather than rewriting the applications or replacing them with COTS products.”
The good news, he adds, is that once those apps have been refactored and migrated to the cloud, the hard work has been done and it becomes easier to start using SaaS offerings is suited to your market.
“There are quite a number of SaaS offerings in various fields of operations, with all these smaller vendors coming up – so once people migrate to cloud and get away from that [on-prem] data center, then it’s just a matter of matching up with the right application provider,” Bhargava says. “That’s the place where we see people going. But the first step is to get off that data center.”