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Managing the technology that runs Virgin Entertainment Group's 10 Virgin Megastores in the U.S. is like staging a rock concert, says Robert Fort, CIO of the media company.

When each store opens its doors, the curtain effectively rises, and the systems-the cash registers, listening station kiosks, digital signage, data warehouse, converged voice and data network-need to perform smoothly and in sync, much like the lighting, pyrotechnics, band and dancers all need to be following the beat of the same drum.

To ensure that store systems don't skip a beat, Fort says he began looking for tools he could use to proactively police them a few years ago. Fort joined Virgin Entertainment Group five years ago and became vice president of IT and CIO in 2004. Last year, he piloted Microsoft's Operations Manager 2007, which monitors the performance of all devices on his network, including servers, cash registers, and kiosks.

Fort says Operations Manager has provided him with a tremendous amount of useful information at the device level, but it doesn't provide him with visibility into individual, customer-facing business transactions. That becomes a problem when he gets an angry phone call from a store manager demanding why credit card transactions are taking so long to process.

So Virgin has supplemented its implementation of Operations Manager 2007 with transaction monitoring software from Inetco. This way, he can track the performance of hardware and software (using Operations Manager) as well as credit card transactions (using Inetco's Insight software.)

Sound Check

Operations Manager 2007 tells Fort when hardware doesn't have enough disk space, when communication lines are backed up and when there's a problem with a particular router, switch or piece of software. He says Operations Manager has provided him with a tremendous amount of useful information at the device level. And as a result, he's rolling out Operations Manager across the company.

But it doesn't provide him with any visibility into individual business transactions. For example, he can't tell how long it takes the cash registers to scan prices and ring up sales. Nor can he tell how long it takes to process credit and debit card transactions, which account for between 60 and 70 percent of in-store sales at Virgin Megastores in the U.S.

Yet he needs those metrics to understand what customers are experiencing in the stores. For instance, if point of sale systems are running slowly, lines could be forming. Customers waiting in line and at the register could be growing impatient. They could decide not to bother to wait-and thus not to bother purchasing those CDs and DVDs they had in their hands.

"Our product is available in other locations," says Fort. "It's important to us that customers come into our stores and have a pleasant experience the entire time, even through checkout."

If they don't, he adds, revenue and the reputation of the Virgin Megastore brand is at stake.

In a fiercely competitive retail environment where customers can buy music and DVDs from such leading retailers as Amazon.com, Best Buy and iTunes, Fort needs any technology he can get that will improve customers' experience in the store. Though roughly 10,000 customers walk into the flagship Virgin Megastore in NYC's Time Square every day, Virgin Megastores have been hammered by the rise of digital media and the subsequent decline of CD and DVD sales.

Since 2004, Virgin Entertainment Group has closed 14 Virgin Megastores in the U.S. Fort says this "rationalization" of the privately-held company's portfolio of retail stores along with a shift in strategy to become a lifestyle brand has increased the company's profitability and improved the performance of remaining stores.

At the same time that Virgin Entertainment Group was closing stores, Fort was forced to make cuts to his IT staff in 2005 to keep the company's IT costs in line with business operations. The size of the IT group went from 16 people when he started in 2003 to its current level of 11 people today.

He doesn't have the luxury of a team of network and store operations managers to monitor logs and systems. He needs software to do that job automatically and to only report on exceptions when the systems go out of whack.

"Retailers have a big incentive to improve the in-store experience because it costs them a lot more per transaction to enable than the online experience [costs]," says Nikki Baird, an analyst with Retail Systems Research Group. "The American Customer Satisfaction Index for the first time showed that consumers are happier with the online shopping experience than they are with the in-store shopping experience. Store comps have been flat year over year, yet online is growing like gangbusters, even in tough economic times."

The Show Must Go On

In January 2008, Fort met representatives from Inetco, a provider of transaction monitoring software based in British Columbia, Canada, at the National Retail Federation tradeshow. He learned that Inetco's technology diagnoses credit card processing problems, which he says the company occasionally experiences.
"When we have a problem [processing a credit card], I get a prompt and loud call from the store," he says.
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