AT&T Connect Case Study
Helzberg Diamonds Polishes its Disaster Recovery Plans (Cont'd)
We needed the experience and creativity that the AT&T team brought to the table, to assist with a ‘worst case’ scenario that would address the cyclical nature of our business.”
- Orlando “Butch” Jagoda, V.P. Information Technology, CIO, Helzberg Diamonds
About Helzberg Diamonds
Helzberg Diamonds Facts
Gain executive commitment to enhance Business Continuity and Disaster Recovery plans; create a framework that will facilitate next steps
Business Continuity and Disaster Recovery evaluation and recommendations provided by AT&T Consulting
Drove senior executive commitment and funding for BC/DR planning and maintenance; helped avoid some $235,000 per month in potential data recovery costs
Retail sales of fine jewelry
More than 240 retail locations
Helzberg Diamonds®, a retail and online jewelry store, was founded in 1915 and today has more than 240 stores nationwide. The company offers a wide selection of fine jewelry, including diamond engagement and wedding rings, precious gems and watches. Helzberg Diamonds takes pride in its history of offering exceptional value, exclusive designs and timeless jewelry. Based in North Kansas City, Mo., Helzberg is part of the Berkshire Hathaway, Inc. family of companies.
In addition to provisioning, help desk and other support services, the small information technology (IT) group at Helzberg Diamonds manages the availability of mission-critical supply chain and ERP applications. The challenge: the existing Business Continuity and Disaster Recovery (BC/DR) plan was focused on technical requirements, but not linked to the business processes to be protected. The IT group decided to have a professional consulting team conduct an in-depth review of the company’s disaster recovery needs and recommend changes.
Helzberg chose AT&T Consulting to conduct an exhaustive review that included weeks of discovery sessions with its IT organization and business units. Based on that review, AT&T Consulting created a Business Continuity Assessment that clearly identified risks, analyzed potential business impact and made recommendations to better align the data recovery solution with critical business operations. The new framework effectively highlights the importance of BC/DR and provides the tools to help speed recovery in an emergency.
Like a Diamond, Small . . . but Very Important
We found AT&T Consulting to be a truly independent consultancy who was focused on achieving our objectives and demonstrating their competency as a trusted advisor.”
- Orlando “Butch” Jagoda, V.P. Information Technology, CIO, Helzberg Diamonds
The fine jewelry that customers find at Helzberg Diamond stores often symbolizes the most important occasions in life: an engagement, a marriage, an anniversary, a big step up the corporate ladder or a kind thought. The gift boxes may be small, but there is extensive technology at work behind the display counters to make sure shoppers can find exactly the right ring, watch or necklace, when they need it.
The company’s IT organization is also small, but important. Among its responsibilities, the team oversees an AT&T virtual private network that connects its stores and supports credit applications, key point-of-sale services (such as credit card authorizations), provisioning, and handling help desk and other support services.
“Networking is so critical to our success,” said Orlando “Butch” Jagoda, V.P. Information Technology, and CIO for Helzberg Diamonds. “240 stores depend on us, and the network keeps this all tied together.”
The team also manages the mission-critical networked supply chain and ERP applications that facilitate key business processes: merchandise ordering, distribution and shipment to the stores. The application stack supports the processing of customer transactions and helps ensure that company revenues are accurately tracked. In addition, these critical business systems support facility management, security and human resources tasks.
“How dependent is the organization on IT and IT services?” Jagoda asked. “You quickly conclude that the business doesn’t run without it.”
Risk Factors and Impacts
These systems are essential, but far from simple. “Our environment has become very complex,” Jagoda added. “We are patching together a fabric of applications in our data center, on our premises and in the cloud. There are network security issues and regulations with which we need to deal. At the foundation is the enterprise data warehouse—it is the hub of the wheel. Corporate reporting, dashboards, scorecards, performance reports—all of these emanate from the warehouse.
“Should the system fail, losses are not just in dollars. The impact is also on the brand, on the potential for lost customers, and on our workforce,” Jagoda said. And timing could be key. In the cyclical retail jewelry market, an outage during the holidays or the week before Valentine’s Day could cause far greater revenue losses than an outage at other times.
”For most IT organizations, business continuity and disaster recovery are not recognized as a critical business process, but seen as just one more IT program,” said Jagoda ”This is due to a host of factors including budget priorities, not understanding how to get started and an ‘IT will fix it’ mindset.”
“It is a journey for the organization to develop a framework to build a BC/DR program,” Jagoda, explained. “There is a starting point, but it has no ending as you are constantly responding as the business changes. At Helzberg Diamonds, we needed to more tightly align our DR services to our critical business processes. This would provide us with the necessary data to calculate potential losses to all of our business units and articulate that to our senior executives.”
The Disaster Nearby
Helzberg’s journey was about to begin. The motivation arrived in the form of three dramatic disasters: a major flood, a tornado that devastated the town of Joplin, Missouri some 160 miles from Helzberg headquarters, and an electric transformer explosion just a half mile away. Though none impacted the company’s operations, they made clear the need to be prepared. Jagoda had his company’s attention.
“You need to correlate the cost/impact if there is a disaster,” Jagoda said. “Regardless if you are looking at minutes, hours, days or weeks, the shape of the curve is the same—over time it goes straight up; the impact of the outage over time is exponential.”
Understanding risk factors and their potential business impacts would determine the best approach. The recovery plan had to restore operations within 96 hours. Most important, it had to be simple for Jagoda and his busy team to manage.
Finding an Expert
“We needed a BC/DR expert to teach us how to fish,” said Jagoda. “While we were capable of doing the heavy lifting, we needed help to clearly calculate the potential direct and indirect revenue losses from an outage as well as the potential impact to our customers and our business partners.”
Jagoda looked for a consultancy that would work with Helzberg to provide a framework, then continue mentoring the company in managing and executing its recovery plan. “By far, the most important things were finding a company who understood the importance of driving a linkage to the business and who had a methodology that would allow us to achieve that objective,” said Jagoda. “This would help us determine our true Recovery Time Objectives.”
It was decided that AT&T Consulting fit the bill. “Networking is important to AT&T. They need to care for their customer base,” Jagoda said. “We needed the experience and creativity that the AT&T team brought to the table, to assist with a ‘worst case’ scenario that would address the cyclical nature of our business,” Jagoda said. “We found AT&T Consulting to be a truly independent consultancy who was focused on achieving our objectives and demonstrating their competency as a trusted advisor.”
Discovery, Analysis and Recommendations
The AT&T Consulting team conducted an exhaustive review of information collected during weeks of discovery sessions with the Helzberg IT organization and business units. Next the team executed a risk assessment and a business impact analysis which helped to create a recovery matrix of critical business processes. A BC/DR framework was provided for Helzberg to use to create its plan.
During the journey, company managers gained new insights. “Each line of business was dependent on each other—marketing and finance, the stores and real estate,” Jagoda said. “They recognized that it’s not just their business or area, but other parts of the organization that they depend on. Business owners became accountable and became a group of partners—this helped everyone heighten their awareness.”
The engagement produced a number of recommendations: a recovery plan for an alternative site to support a new or temporary distribution center; an infrastructure solution which provides appropriate Internet bandwidth and VPN recovery options; and a data recovery plan updated to reflect the current production environment.
Security and Savings
“We successfully identified the necessary linkages with our business operations and now had a framework to help us find gaps that existed in our current DR solution,” Jagoda said. “We were able to brief our executives on the impact of unplanned outages and immediately obtained executive support to implement our framework. This work also identified over $235,000 per month in potential DR costs that could be avoided.”
In the event of a disaster, Jagoda noted that Helzberg will save millions by minimizing downtime and preventing adverse impact to its brand and customer relationships. “More importantly, we will keep vital business processes available to our retail locations and Distribution Center and ensure the continuity of our operations,” he said.
What’s next? “Now we are using the infrastructure recommendations,” said Jagoda. “We have gone into the marketplace and are engaging with partners to house our DR plan.
“In the meantime, AT&T Consulting will continue to be our advisor who can articulate a sensible path for future growth, help us remain cost effective and provide the expertise for our IT department to utilize.”
And perhaps most important of all, Jagoda said, “now we are in great shape, and I can sleep at night.”