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Case Study

 

How Lumber Liquidators Optimized Its IT Investments by Going Virtual

by Dave Hannon | insiderPROFILES

April 1, 2011

With more and more stores opening across the US, hardwood floor retailer Lumber Liquidators needed more room to grow in its IT infrastructure. This article highlights the business drivers — including scalability and physical space — that prompted the SAP customer to move to a virtual environment, as well as the biggest benefits that Lumber Liquidators is seeing today.
 

Rapid business growth is a double-edged sword. On one hand, all emerging enterprises surely aspire to grow and thrive. But keeping up with this expansion, especially from an infrastructure point of view, can be complex and expensive. In less than two decades, hardwood flooring retailer Lumber Liquidators grew from a single warehouse with no running water to a $600 million retailer with stores in 46 US states and more than 1,000 employees.

In 2009, Lumber Liquidators planned to open 30–40 new locations — and expected similar results for 2010. To accommodate this growth, the business required some major IT infrastructure changes. To this end, the business opted to implement a new ERP system, selecting SAP ERP for its functionality extending across finance, sales and operations, warehouse management, merchandising, and purchasing. 

Because the company was interested in a cost-efficient ERP system, the implementation team began an evaluation process to find a flexible server architecture that could handle its current requirements and also scale as the business continued to expand — especially in the areas of order capacity, transaction speed, reporting, and process automation.

“Our goal was to deploy a solid and manageable foundation with the ability to scale,” says Jack Kinsey, Director of Network Operations at Lumber Liquidators. “The message from the top of our company was to continue to deliver the way we’re delivering, but to keep an eye toward the future.”

 

Jack Kinsey

 

     
“We were able to give the project team what it needed faster than would have been possible with physical hardware.”
Jack Kinsey, Director of Network Operations, Lumber Liquidators
                                                    

Moving to a Virtual Environment

A conservative estimate from an internal cross-functional search committee showed that, to run a new ERP system, the company would need to triple its number of physical servers — and would then have to add more servers in the future as the landscape expanded.

“We didn’t have a data center available in which we could put that much additional equipment while maintaining a reasonable reserve capacity,” Kinsey says, noting that the additional costs of either moving servers off site or making upgrades to its existing computer room weren’t particularly appealing to a company planning for long-term growth. And beyond the installation and housing of the physical servers, ongoing maintenance was a concern.

Lumber truck

For these reasons, the search committee recommended that Lumber Liquidators move to a virtual environment. According to Kinsey, the following were identified as the key business drivers of going virtual:

  • Scalability. The business wanted a system that would not only meet its current needs, but scale with its long-term growth.
  • Physical space. Installing physical servers today, and in the future, would require that the company maintain enough physical space to accommodate a growing ERP system.
  • Maintenance and operations costs. Running and maintaining physical servers would require more investment — augmenting the company’s lean IT staff — than virtual servers would.
  • Expertise. The company hoped to capitalize on the in-house experience it had, but also planned to seek virtualization help from an outside partner that would mesh well with the existing implementation team.

After considering all of these factors — and implementation time — Lumber Liquidators decided to purchase all of the necessary equipment and software to begin a virtual ERP implementation, including VMware solutions, Dell servers and storage, and Microsoft operating systems. The environment was used throughout the project for all SAP systems — sandbox, training, development, and quality assurance — and that continues today, but with the addition of the production environment, which went live in August 2010.

Because Kinsey had come to Lumber Liquidators in 2009 from a company that had virtualized extensively, he understood the benefits and advantages of virtual implementations. To help with the project, the business partnered with DataXstream, a proponent of virtualization that, according to Kinsey, provided extensive expertise in virtualization for SAP environments. (For more information on the integral role DataXstream played in Lumber Liquidators’ virtual implementation, refer to the sidebar to the right.)

“During evaluation, implementation, and ongoing operations, having DataXstream on our side relieved a lot of pressure — because not only had they done it themselves, they were willing to put their stamp of approval on our virtualization project and provide examples of other companies that had been successful with virtualized SAP implementations,” Kinsey says. “A lot of our internal staff didn’t come from SAP shops, so it was a lot of change. Having DataXstream as such a proponent of virtualization relieved a lot of angst.”

Lumber Liquidators

Reaping the Benefits of Virtualization

While still in the early stages of its implementation, Lumber Liquidators is seeing big benefits from its decision to go virtual. For starters, according to Kinsey, the ongoing maintenance and operation of a virtualized environment significantly lightens the demands on the internal IT organization. The reduction in physical servers and their related cooling systems reduces the maintenance requirements and costs.

And the process of adding new servers is significantly streamlined in a virtualized environment. “We can provision additional servers for SAP installations in less than 30 minutes,” says Greg Hubof, Senior Basis Administrator at Lumber Liquidators. “With a physical server, that process could take anywhere from two weeks to two months.” That benefit is particularly useful when it comes to ramping up additional servers for specific time-sensitive projects.

Prior to this project, Hubof had been involved in several SAP implementations — but none in virtual environments. “When you get into data conversions with non-virtualized implementations, you always wish you had a little more horsepower,” he says. “With our new environment, we could — and did — spin up additional virtual machines temporarily while those data conversions were running, and then tore it down when the conversions were done.”

Another example of the flexibility that comes with virtualization was the ability to create isolated research and testing environments using exact replicas of the servers running the SAP systems. This allowed multiple teams to work concurrently on different tasks on the “same” servers, while removing the complexity of coordination between groups. In a physical environment, such accommodations are both costly and complicated, but in the virtual landscape, the IT team simply cloned the necessary servers and placed them in the isolated sandbox.

“We were able to give the project team what it needed faster than would have been possible with physical hardware,” says Kinsey. “It’s a great example of the flexibility you have to flip machines around and make adjustments that are completely unrealistic in a physical environment.”

Down the Virtual Road

The most important benefits of the virtualized environment, according to Kinsey, are yet to come. Going forward, Lumber Liquidators can quickly and efficiently expand its IT landscape with greatly reduced concerns about where to put the servers and who will maintain them.

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