The next BriefingsDirect Voice of the Customer digital business transformation case study examines how loyalty management innovator Aimia is modernizing, consolidating, and standardizing its global IT infrastructure.
As a result of rapid growth and myriad acquisitions, Montreal-based Aimia is in a leapfrog mode — modernizing applications, consolidating data centers, and adopting industry standard platforms. We’ll now learn how improving end-user experiences and leveraging big data analytics helps IT organizations head off digital disruption and improve core operations and processes.
To describe how Aimia is entering a new era of strategic IT innovation, we’re joined by André Hébert, Senior Vice President of Technology at Aimia in Montreal. The discussion is moderated by BriefingsDirect’s Dana Gardner, Principal Analyst at Interarbor Solutions.
Here are some excerpts:
Gardner: What are some of the major drivers that have made you seek a common IT strategy?
Hébert: If you go back in time, Aimia grew through a bunch of acquisitions. We started as Aeroplan, Air Canada’s frequent flyer program and decided to go in the loyalty space. That was the corporate strategy all along. We acquired two major companies, one in the UK and one that was US-based, which gave us a global footprint. As a result of these acquisitions, we ended up with quite a large IT footprint worldwide and wanted to look at ways of globalizing and also consolidating our IT footprint.
Gardner: For many people, when they think of a loyalty program, it’s frequent flyer miles, perhaps points at a specific retail outlet, but this varies quite a bit market to market around the globe. How do you take something that’s rather fractured as a business and make it a global enterprise?
Hébert: We’ve split the business into two different business units. The first one is around coalition loyalty. This is where Aimia actually runs the program. Good examples are Aeroplan in Canada or Nectar in the UK, where we own the currency, we operate the program, and basically manage all of the coalition partners. That’s one side.
The other side is what we call our global loyalty solutions. This is where we run loyalty programs for other companies. Through our standard technology, we set up a technology footprint within the customer site or preferably in one of our data centers and we run the technology, but the program is often white-labeled, so Aimia’s name doesn’t appear anywhere. We run it for banks, retailers and many industry verticals.
Almost like money
Gardner: You mentioned the word currency, and as I think about it, loyalty points are almost like money — it is currency — it can be traded, and it can be put into other programs. Tell us about this idea. Are you operating almost like a bank or a virtual currency trader of some sort?
Hébert: You could say that the currency is like money. It is accumulated. If you look at our systems, they’re very similar to bank-account systems. So our systems are like banks’. If you look at debit and credit transactions, they mimic the accumulation and redemption transactions that our members do.
Gardner: What’s been your challenge from an IT perspective to allow your company to thrive in this digital economy?
Hébert: Our biggest challenge was how large the technology footprint was. We still operate many dozens of data centers across the globe. The project with HPE is to consolidate all of our technology footprint into four Tier 3 data centers that are scattered across the globe to better serve our customers. Those will benefit from the best security standards and extremely robust data-center infrastructure.
On the infrastructure side, it’s all about simplifying, consolidating, virtualizing, using the cloud, leveraging the cloud, but in a virtual private way, so that we also keep our data very secured. That’s on the infra side.
On the application side, we probably have more applications than we have customers. One of the big drivers there is that we have a global product strategy. Several loyalty products have now been developed. We’re slowly migrating all of our customers over to our new loyalty systems that we’ve created to simplify our application portfolios. We have a large number of applications today, and the plan is to try to consolidate all these applications into key products that we’ve been developing over the last few years.
Gardner: That’s quite a challenge. You’re modernizing and consolidating applications. At the same time, you’re consolidating and modernizing your infrastructure. It reminds me of what HPE did just a few years ago when it decided to split and to consolidate many data centers. Was that something that attracted you to HPE, that they have themselves gone through a similar activity?
Hébert: Yes, that is one of the reasons. We’ve shopped around for a partner that can help us in that space and we thought that HPE had the best credentials, the best offer for us to go forward.
Virtual Private Cloud (VPC), a solution that they have offered, is both innovative, yet it is virtual and private. So, we feel that our customer’s data will be significantly more secure than just going to any public cloud.
Gardner: How is consolidating applications and modernizing infrastructure at the same time helping you to manage these compliance and data-protection issues?
Raising the bar
Hébert: The modernization and infrastructure consolidation is, in fact, helping greatly in continuing to secure data and meet ever more difficult security standards, such as PCI and DSS 3.0. Through this process, we’re going to raise the bar significantly over data privacy.
Gardner: André, a lot of organizations don’t necessarily know how to start. There’s so much to do when it comes to apps, data, infrastructure modernization and, in your case, moving to VPC. Do you have any thoughts about how to chunk that out, how to prioritize, or are you making this sort of a big bang approach, where you are going to do it all at once and try to do it as rapidly as possible? Do you have a philosophy about how to go about something so complex?
Hébert: We’ve actually scheduled the whole project. It’s a three-year journey into the new HPE world. We decided to attack it by region, starting with Canada and the US, North America. Then, we moved on to zooming into Asia-Pacific, and the last phase of the project is to do Europe. We decided to go geographically.
The program is run centrally from Canada, but we have boots on the ground in all of those regions. HPE has taken the lead into the actual technical work. Aimia does the support work, providing documentation, helping with all of the intricacies of our systems and the infrastructure, but it’s a co-led project, with HPE doing the heavy lifting.
Gardner: Something about costs comes to mind when you go standard. Sometimes, there are some upfront cost, you have to leapfrog that hurdle, but your long-term operating costs can be significantly lower. What is it about the cost structure? Is it the standardized infrastructure platforms, are you using cheaper hardware, is it open source software, all the above? How do you factor this as a return on investment (ROI) type of an equation?
Hébert: It’s all of the above. Because we’re right in the middle of this project, it will allow us to standardize, to evergreen, a lot of our technology that was getting older. A lot of our servers were getting old. So, we’re giving the infrastructure a shot in the arm as far as modernization.
From a VPC point of view, we’re going to leverage this internal cloud much more significantly. From a CPU point of view, and from an infrastructure point of view, we’re going to have significantly fewer physical servers than what we have today. It’s all operated and run by HPE. So, all of the management, all of the ITO work is done by HPE, which means that we can focus on apps, because our secret sauce is in apps, not in infrastructure. Infrastructure is a necessary evil.
Gardner: That brings up another topic, DevOps. When you’re developing, modernizing, or having a continuous-development process for your applications, if you have that cloud and infrastructure in place and it’s modern, that can allow you to do more with the development phase. Is that something you’ve been able to measure at all in terms of the ability to generate or update apps more rapidly?
Hébert: We’re just dipping our toe into advanced DevOps, but definitely there are some benefits around that. We’re currently focused on trying to get more value from that.
Gardner: When you think about ROI, there are, of course, those direct costs on infrastructure, but there are ancillary benefits in terms of agility, business innovation, and being able to come to market faster with new products and services. Is that something that is a big motivator for you and do you have anything to demonstrate yet in terms of how that could factor?
Hébert: We’re very much focused right now on what I would say is Relationship 1.0, but HPE was selected as a partner for their ability to innovate. They also are in a transition phase, as we all know, so while we’re focused on getting the heavy lifting done, we’re focusing on innovation and focusing on new projects with HPE. We actually call that Relationship 2.0.
Gardner: For others who are looking at similar issues — consolidation, modernization, reducing costs over time, leveraging cloud models — any words of advice now that you are into this journey as to how to best go about it or maybe things to avoid?
Hébert: When we first looked at this, we thought that we could do a lot of that consolidation work ourselves. Consolidating 42 data centers into 4 is a big job, and where HPE helps in that regard is that they bring the experience, they bring the teams, and they bring the focus to this.
We probably could have done it ourselves. It probably would have cost more and it probably would have taken longer. One of the benefits that I also see is that HPE manages thousands and thousands of servers. With their ability to automate all of the server management, they’ve taken it to a level. As a small company, we couldn’t afford to do all of the automation that they can afford doing on these thousands of servers.
Gardner: Before we close out, André, looking to the future — two, three, four years out — when you’ve gone through this process, when you’ve gotten those modern apps and they are running on virtual private clouds and you can take advantage of cloud models, where do you see this going next?
Do you have some ideas about mobile applications, about different types of transactional capabilities, maybe getting more into the retail sector? How does this enable you to have even greater growth strategically as a company in a few years?
Hébert: If you start with the cloud, the world is about to see a very different cloud model. If you fast forward five years, there will be mega clouds, and everybody will be leveraging these clouds. Companies that actually purchase servers will be a thing of the past.
When it comes to mobile, clearly Aimia’s strategy around mobile is very focused. The world is going mobile. Most apps will require mobile support. If you look at analytics, we have a whole other business that focuses on analytics. Clearly, loyalty is all about making all this data make sense, and there’s a ton of data out there. We have got a business unit that specializes in big data, in advanced analytics, as it pertains to the consumers, and clearly for us it is a very strategic area that we’re investing in significantly.
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