Andreas Kranabitl began working at retailer SPAR immediately after his military service in 1982, and has remained there to this day. Since 2009, he has been the CEO of SPAR’s IT subsidiary ICS. For the ambitious Managing Director of SPAR Business Services GmbH, IT jobs in the retail industry are among the most fascinating IT jobs of all. SPAR ICS employs 350 employees in six countries, around 200 of which work at the headquarters in Salzburg.
Kranabitl’s career at SPAR began as a staff member at the data centre. The Upper Austrian obtained his IT know-how on the job, with the company supporting him with various training and education programmes. Three years after being hired, Kranabitl transferred to application development to design inventory management applications. Two years later he transferred again, this time to systems development. In 1993, Kranabitl became head of the systems group in the corporate IT organization, making him responsible for the system landscape. In 1998, IT responsibility for Hervis was added; in 2000, for Interspar. The SPAR group became more and more international over the years, and so did its IT department, where Kranabitl eventually became head of IT for Austria. In 2009, the group’s various international IT organizations where finally combined into SPAR Austria Information and Communication Services (ICS), with Andreas Kranabitl at the helm. Last year, the ICS Academy was established to provide optimal training opportunities at the highest level for SPAR’s IT employees.
SPAR Österreich is in 100 percent Austrian private ownership and employs a staff or more than 77,000. The group is a Central European retailer active in the food, sports equipment and shopping centre sectors. In 2013, SPAR generated total revenues of around EUR 12.94 billion at 2,900 locations in Austria, Italy, Hungary, Slovenia and Croatia. The group’s activities are focused on three business areas: food retail (Spar), sports equipment retail (Hervis) and shopping centres (SES). The IT capacities for all countries are consolidated in the subsidiary SPAR Information & Communication Services (ICS) with Andreas Kranabitl as CEO. Its headquarters, from where group-wide IT projects are implemented across country borders, are located in Salzburg. SPAR ICS currently services a total of around 10,000 users (4,400 of them in Austria) and 11,000 cash registers in 2,500 stores. More than 1,595 terabyte of storage are available for the 514 physical and 848 virtual servers.
Movie with Andreas Kranabitl
The SPAR Cloud Strategy
How the Retail Sector Benefits from the Cloud
Cloud technology is a game changer in today’s business world. Only companies who understand how to use the benefits associated with the cloud will survive on the market. At internationally active retailers like SPAR, the areas of big data and digital marketing in particular are facing new challenges. The Information and Communication Services (ICS) division headed by Andreas Kranabitl is responsible for all IT services in the SPAR group as well as for strategic management of the IT organization. Kranabitl confirms: “In the retail sector, cloud computing is becoming an increasingly important element of the overall IT strategy.”
The digital revolution and the associated new possibilities in almost all areas of business are also dramatically changing the demands on information technology. While only a few years ago, topics like controlling and modernizing technology as well as harmonization and consolidation considerations were at the forefront, the more complex markets of today require quick and often global action. The departments within a company or corporation are constantly under pressure to bring new innovations to market at ever-decreasing intervals, and are thus becoming decisive drivers for the IT business.
It is obviously no longer “only” essential to provide the infrastructure supporting business processes, but also to develop projects and new solutions quickly across department boundaries. In this transformation, new internal and external challenges have to be mastered: mindset changes, extended skills, new best practices, adapted IT organizations and new collaboration models with external service suppliers and cloud service providers. In addition, IT decision makers need to provide basic infrastructure at lower and lower costs and increasingly assume the role of business innovator.
Against this background, Austrian retail giant SPAR is working innovatively and with a view to the future in terms of its IT strategy, well aware of the ongoing digital revolution that is already changing the global market permanently. SPAR, which celebrated its 60th year as a successful retailer in 2014, has been proactively tackling current and upcoming challenges in IT – especially regarding big data – for some time now. For the retail sector is more strongly affected by exponentially increasing data volumes than ever before, and simultaneously reliant on real-time analysis of these data for strategic business decisions. The faster data can be analysed, the better for business. In the retail world, this means being able to evaluate product turnover in stores in real time based on receipt data and trigger appropriate processes.
Exceptional Significance of New Cloud Technologies
SPAR Austria has been running a separate IT subsidiary for its own IT and that of its associated foreign branches since 2009: Spar Austria Information and Communication Services (ICS), headed by CEO Andres Kranabitl, provides IT and communication services for Austria, Italy, Slovenia, Hungary, the Czech Republic and Croatia. Kranabitl explains the reason for this consolidation: “Nothing is more expensive than an infrastructure that does not meet business requirements. Anyone who shies away from investing into a forward-looking system will run into operative problems in the long run.”
CIO Kranabitl and his team at ICS have been exploiting the benefits of cloud computing for years – not just as an enhancement to the provision of IT-based solutions, but also to reduce costs, increase the group’s agility and competitiveness, and better meet requirements in terms of innovation, security, flexibility, speed and scalability. The ICS staff consists of a formidable 350 employees who service around 10,000 users in nine countries and implement more than 200 IT projects every year. To Kranabitl, cloud computing is simply another possibility of providing and using IT services. “We use an enterprise collaboration solution from the cloud, a mobile device. We also operate various ERP and business solutions for our international branches and partners from our central data centres in Salzburg via a private cloud architecture. This guarantees quick reaction times to business requirements, a host of synergy effects and, ultimately, remarkable efficiency. Besides that, we also use public cloud services for business solutions like validating and charging coupon cards, or for EDI services. The cloud is nothing new or strange to us, but simply an element of our IT portfolio. With our cloud competency and existing infrastructure, we can develop and deploy new services quickly.”
Digital Marketing as a “Customer Journey”
Cloud computing likewise plays a key role at SPAR in the areas of digital marketing and e-commerce: “The consumer is increasingly connected to us digitally,” the CIO explains, “and we want to offer our customers systems that truly help them to live better and allow them to shop more comfortably and easily, as well as providing new functions like time management.” Kranabitl defines digital marketing as a “customer journey”, which implies the question “How do the customers come to us, how do they interact with our products, and what appeals to them?” Viewing this customer journey from the perspective of IT, he says, businesses can only be successful if they “sensibly mesh together and employ the four areas of mobile close to the consumer, big data in the analysis of shopping behaviour, social media, and finally the cloud.
In this context, Kranabitl and his IT team are currently implementing a ground-breaking project to equip various departments of the group with a powerful database and analysis platform. The benefits of the employed technology are speed and flexibility in reacting proactively to customer demands, trends and developments in sales, and customer behaviour in general – obvious competitive advantages for SPAR: “In today’s business world, companies who can recognize changes quickly and act flexibly are a step ahead of the rest. We would have had to invest heavily into our business warehouse in late 2014 anyway, and so it seemed sensible to go ahead and invest into a future-oriented solution.” Kranabitl searched for – and found – a reliable partner with comprehensive experience. “We decided not to operate the IT systems ourselves,” he says, “but at the same time, we didn’t want to outsource completely.” Hence ICS entered into a partnership with an external specialist for the operation of their own data centre. A Unified Compute Platform will guarantee optimal processing of the massive quantities of data, while a converged scale-out solution will ensure that SPAR’s IT architecture is future-proof. Besides fulfilling the functions of a classic data centre (like backups), the high-end external enterprise storage system also provides advantages like performance, availability and scalability – including high availability and uninterrupted service. This enables the group to realize its vision of “real-time retail”: Instant communication with stores and employees, e.g. to quickly recognize when certain products are sold out. A typical scenario are cash registers that transmit information to a central system, which in turn generates analyses every ten minutes. If strong deviations should suddenly occur in the sale frequency of certain products, supply can react immediately. For example, if a large store sells no milk for a period of half an hour, it is likely that the refrigerated display needs to be refilled, and the store staff can be messaged correspondingly. This type of data analysis will also provide insights into customer purchasing behaviour for sales and marketing in future. Kranabitl: “The staff in the respective departments like the solution. For me, it is equally important that we always have the support of the executive board as well.”
New Employee Competencies
Widespread support by the board is also important for the aspect of training IT staff. After all, the specialists need to be constantly up to speed, especially in regard to dynamic technologies like cloud computing. “Unfortunately, in Austria we tend to be critical of new things and focus on their problems. This tendency is very obvious in regard to the cloud and big data,” Kranabitl says. He sees his job as CIO in analysing these new topics holistically and assessing the possibilities and benefits as well. “It is also important to evaluate, with a view to the competition, what can happen if you don’t follow trends. One thing is certain: 90 percent of the cloud solutions available today are offered by professional, serious and stable companies. But like in every industry, there is also a certain risk potential.”
Especially in Austria, it is therefore important to emphasize and ensure the manifold benefits of cloud computing for small and medium business in particular. “Otherwise we will find ourselves in the stone age in ten years,” Kranabitl says. “My current standpoint is that there are many use cases that can be implemented perfectly with cloud computing while keeping risks manageable. In any case, the risks not substantially greater than with other architectures.”
Many things will simply not be achievable without using cloud solutions in future, the CIO is convinced. Competencies enabling staff to make the right decisions and present the topic professionally within their company are therefore already required now. Kranabitl: “Because cloud computing strongly affects the areas of infrastructure and operations, we need architects who have knowledge of the entire cloud environment and can evaluate benefits and risks. Cloud competencies will replace storage, server and operating system know-how for us over the medium term.” Besides his own employees, however, he also needs his business partners to be ready for cloud computing. “We have some need for development in Austria in this regard, since many traditional IT providers and suppliers do not properly understand the new situation or haven’t put it at the top of their priority list yet.”
“Innovative retail business without cloud services is impossible.”
In 2014, Austrian retailer SPAR celebrated 60 years of success in the retail business. At the same time, the group takes a forward-looking approach to the upcoming challenges expected at the IT level, especially in regard to big data. For the retail industry currently sees itself confronted with fast-increasing amounts of data, and simultaneously depends on quick real-time analysis of these data for various strategic business decisions. In areas like this, cloud computing is becoming an increasingly important element of the general IT strategy. KURIER spoke with Andreas Kranabitl, CEO of ICS (the IT subsidiary of SPAR Österreichische Warenhandels AG) and responsible for all IT services in the SPAR group as well as strategic management of the IT organization. With ICS and its around 350 employees, Kranabitl works for more than 10,000 users in nine countries, implementing more than 200 IT projects per year.
KURIER: In what way are you involved with cloud computing?
We have been engaging with the topic for years now, ever since it entered the IT horizon. Cloud computing needs to be a part of every IT strategy today, and at our company it is taken into consideration for every decision and every strategic alignment. We have been using cloud services for a long time: We started in the area of EDI (data exchange), then went on to payment services and coupon cards, where the entire validation is processed via cloud services. Recently, we have added vehicle fleet management and planning. In all associated decision processes, we make sure to involve our legal department in regard to data privacy and data security, and of course our executive board as well. The cloud is a fundamental element of our IT architecture in my eyes, and we will have to continue moving in this direction even more in future if we want to employ contemporary and forward-looking solutions.
Why is cloud computing playing an increasingly important role in retail in particular?
Innovative retail business without cloud services is impossible. We are currently in the process of a digital business transformation, and if we don’t want to find ourselves in the stone age in six years, we have to face this competition and get involved with new technologies and models like cloud computing. For me the cloud is a must-have, simply because there are many things I will not be able to achieve without it. This applies to the area of social media and digital marketing, for example, in which I see a focal area for the next five years. And 80 percent of available solutions are offered in a cloud environment. The requirements on the marketing side are also completely new compared to the traditional IT area, and one of the key topics here is time-to-market. Especially in marketing and e-commerce, the life cycle of a solution is different than in the ERP area, for example.
Why is digital marketing so essential for an otherwise traditional retailer?
Digital marketing is decisive in two regards: The consumer is increasingly connected to us digitally. In this context, we have established the motto “the system is my friend”, meaning that we want to provide systems to our customers that truly help them to live better, allow them to shop more comfortably and easily, and provide new functions. The keyword here is time management. And the second perspective are new corporate forms that are competing with us. Competition has changed completely; we are now increasingly talking about e-commerce. We will be confronted with business designs that we cannot even imagine today, and we need to have answers to them.
Lastly, we also define digital marketing as a “customer journey” – i.e. how do the customers come to us, how do they interact with our products, what appeals to them? If you look at this customer journey from the perspective of IT, then you can only succeed if you sensibly mesh together and employ the four areas of mobile close to the consumer, big data in the analysis of shopping behaviour, social media, and finally the cloud.
Have you already developed a cloud strategy for your company for the next three years?
Our company’s cloud strategy is to consistently expand cloud services internally and use innovative cloud services for our retail business. Existing systems and data remain in the existing architectures, however, because we do not yet see any essential advantage here or are focusing on new solutions.
What cloud services are already in use at your company?
We use an enterprise collaboration solution from the cloud, a mobile device. Within a private cloud architecture, we operate various ERP and business solutions for our international branches and partners from our central data centres in Salzburg. This guarantees quick reaction times to business requirements, a host of synergy effects and, ultimately, remarkable efficiency. We use services from different providers that we bring to our customers at the POS through our systems. With our cloud competence and the existing infrastructure, we can also quickly deploy new services.
How do you react to the frequently voiced concerns about cloud computing?
In Austria, we have a strong tendency to be critical of new things and focus on their problems, and this trend can be observed clearly in regard to cloud computing and big data. The job of a CIO is to analyse these topics holistically and assess the possibilities and benefits as well. It is also important in terms of competition to evaluate what can happen if you don’t follow trends. One thing is certain: 90 percent of the cloud solutions available today are offered by professional, serious and stable companies. But like in every industry, there is also a certain risk potential. One dilemma of cloud computing is that everybody immediately associates it with placing company data in unsafe hands. In reality, many outsourcers are simply offering their traditional services as cloud services now.
How do you ensure that the individual departments know in which forms cloud computing is allowed or forbidden?
Our internal policy is that cloud solutions must be cleared not only by IT, but also by the legal department. This ensures that cloud services are specifically checked and cannot simply be employed wantonly. But it also means that the business can rely on the respective cloud solution being a good fit in every way once it has passed clearance.
How do you ensure that individual employees have the required know-how to deal with cloud computing effectively?
To us, cloud computing is nothing alien or strange. Professional selection processes, contract management, supplier management, compliance, General Terms and Conditions, SLAs and risk management are topics that need to be addressed for all IT solutions. Cloud solutions are simply one of several variants that we need to cover in our standard processes and with our experts. And of course we have to take new developments into consideration for our training programmes and development goals.
What is the requirement profile for new IT employees enabling them to properly handle future requirements?
Cloud computing heavily affects the areas of infrastructure and operations. We need architects who have a knowledge of the entire cloud environment and can evaluate benefits and risks. Cloud competencies will replace storage, server and operating system know-how for us over the medium term. And for that, our partners need to be ready for cloud computing as well as our own employees. That is where we still have a need for development in Austria, since many traditional IT providers and suppliers do not properly understand the new situation or haven’t put it at the top of their priority list yet.
How do you verify the sufficient quality of a potential cloud service prior to employing it?
We have established a standard process for choosing solutions and services that also covers cloud solutions. And they are being offered increasingly often – there is hardly a project anymore where there isn’t at least one cloud alternative to choose from.