Cheaper not to do VoIP: JB Hi-Fi

Although JB Hi-Fi has rolled out an IP telephony-capable Nortel phone system across 120 of its 135 stores, it said it was cheaper to continue to use the legacy Telstra voice service than power up the VoIP feature.

(JB Hi-Fi in the Macquarie Centre image by maebmij, CC2.0)

JB Hi-Fi chief information officer Geoff Craig said that although Nortel's CS-1000 had been easy to implement and worked well in the capacity it was being used, VoIP wasn't a feature the retail chain had gone live with.

"VoIP was never a big success because we've already got such a great spending relationship with Telstra that it was actually cheaper to not use VoIP than what it was to roll out an entire solution and support an entire VoIP solution," he told ZDNet.com.au recently. The New Zealand office does use a VoIP system, but he said it required more support than the phone service the stores ran on in Australia.

"[Telstra] actually changed our contract around so that our data was at a highly supported rate and obviously an affordable rate, gave us a fantastic discount structure and made it worth our while to stay with the voice lines as they were, and not use VoIP," he said.

Despite not making use of the feature, Craig said he would still implement Nortel's system if he could turn back time. "I've got a VoIP-capable phone system that I could turn on whenever I want," he said.

The only thing I find offensive about Telstra is their Next G pricing.

Geoff Craig, JB Hi-Fi CIO

Currently, Craig is in the middle of negotiations with Telstra for a new contract. Although in general the IT department runs as cheap as it possibly can, Craig admits it has paid a premium to hook up its stores via the telco's frame relay.

"Telstra has the best network around Australia," he said. "Most other successful telco companies sit on top of Telstra's network. The only thing I find offensive about Telstra is their Next G pricing."

The Telstra contract is the firm's largest IT spend, Craig said, although he wouldn't say how much the contract had been because of the negotiations. The next largest spend was on a three-year Microsoft enterprise agreement that cost the retailer around $2 million.

"If you'd ask me the pros and cons of the industry at the moment I'd have to say that definitely under cons I'd have to say Microsoft licensing," he said.

Although there were alternatives, the reality was that the Microsoft products were often the standard, which JB Hi-Fi had to use to be able to relate to its suppliers, according to Craig. "Our major database or third-party application vendor for our point of sale and back-end use Microsoft products," he said.

Craig has an almost non-existent IT budget to cover these costs. He only fields an IT team of 18. "Everything we spend, we literally get asked by the guys: how many CDs do you need to sell to pay for this?" he said. "The mandate from the company especially around the monetary scenario is: if it ain't broke, don't fix it," he said.

Everything we spend, we literally get asked by the guys: how many CDs do you need to sell to pay for this?

Geoff Craig, JB Hi-Fi CIO

A desktop refresh for the company's over 3000 machines is one example of what JB Hi-Fi doesn't do, despite the fact that many of its desktops are over five years old, he said. If one breaks, Craig said he replaces it.

This is made possible, according to the executive, because the applications the company runs don't require new hardware. "Because we use terminal services predominately for a lot of our applications delivered in store there's no speed difference," he said. The Markinson inventory control system, which the company has been running "since day dot", will operate even on an ancient machine running Windows 98, he said.

Yet if he truly wanted something, he'd get the funding, he said. "It's really easy with JB," he said. "If you need it, obviously the company will support you and you can buy it."

One of the largest projects he is doing now is to do with data de-duplication — the elimination of redundant data can reduce the amount of back-up storage required by a factor of 10. It meant quicker backups, according to Craig, and files could be synced to a live office site for disaster recovery.

He's chosen a Data Domain system that will be rolled out with consultants Thomas Duryea. The $100,000 implementation would be finished in four weeks.

The company has also implemented a new mail archiving system and has changed spam filtering vendor from MailGuard to FirstWave (which it purchased through Telstra), because it had grown out of the former small business focused system.