Bob Evans: Profiting From Its Satellite Advantage
How does a company streamline its administrative duties, increase its efficiency for financial transactions and keep the workforce trained throughout its remote locations with a minimal investment in an infrastructure upgrade? That was exactly the business challenge facing the executive management team at Bob Evans Farms Inc. four years ago.
Getting the edge in business is paramount in today’s corporate jungle and any CEO, CTO, CFO or equivalent will tell you that recognizing an issue and then executing an appropriate plan to solve that problem is easier said than done. In most cases, it comes down to capital expenditures and whether spending money today for proposed profits tomorrow is worth the risk.
For Bob Evans, the risk was definitely worth taking. In fact, many companies within various enterprise markets are rapidly moving toward adopting a variety of next-generation technologies that can improve both operating efficiency and customer service. Nothing allows a corporate executive to sleep better at night than the knowledge that those two things are humming like a well-oiled machine. Across the United States, Bob Evans is a restaurant where speed is essential; from seating customers to quickly cashing them out. The corporation currently owns and operates 550 full-service, family restaurants throughout 21 states in the Eastern, North Central, Mid-Atlantic and Southern United States as well as six food processing facilities. Likewise, Bob Evans also employees more than 35,000 people throughout the United States, so keeping all of them linked is vital to this corporation’s success.
“We wanted a persistent IP connection to all our restaurants for a number of reasons,” says Larry Beckwith, senior vice president of information systems for Bob Evans Farms Inc. “We wanted faster credit authorizations, e-mail and Lotus Notes replications of selected databases, manuals and forms. We also wanted to improve our polling statistics.” Not only did Bob Evans want seamless connectivity to serve multiple applications, but it also needed that solution to be cost-effective and help lay the groundwork for future business growth.
Not surprising, Beckwith’s task of providing corporate management with a turnkey solution to not only the near-term challenges but also to long-term company growth plans was a daunting task. On his priority list of which issues needed to be solved first was faster credit card authorization. In fact, it was the primary reason for the network upgrade. Beckwith wanted to find a better, faster way to complete these transactions. That, however, was not all that he was after. “We also wanted to do e-mail efficiently.”
But make no mistake: that satellite network now in place that seamlessly connects the restaurants to the headquarters in Columbus, OH, not only came as a surprise, but also with some opposition. “I was against satellite from the beginning,” says Beckwith. “DSL came along and I thought this was going to be my champion, but I came to find out that I would only be able to reach less than half of my stores.” In addition, Beckwith also says that he would have preferred not to mix technologies when it came to this upgrade.
For executives who are not familiar with how a satellite network can be incorporated within an existing communication system, they also may have reservations similar to Beckwith. Once educated, however, the satellite myths are dispelled. Though bandwidth-intensive, a satellite system will not monopolize the entire system; it will not crash the network.
The management team at Bob Evans, however, was wise to methodically approach this project. Bob Evans corporate executives researched and tested the technology in intervals prior to rolling it out across the entire company. After examining the alternatives, including direct-subscriber linked and frame relay systems, Bob Evans ultimately turned its sights toward space. As it turned out, terrestrial solutions were indeed out of the question for the network expansion. ISDN and DSL were not available for all restaurant locations, while frame relay was just too expensive. That was the catalyst for Bob Evans deciding to build its own private satellite network, using Spacenet’s Skystar Advantage Very Small Aperture Terminal (VSAT) solution.
Among other things, the space-based network provides Bob Evans’ restaurant locations access to financial operations data and software housed on hard drives located at corporate headquarters. The satellite network established by Bob Evans creates a virtual circuit between the headquarters building and all of the remote sites. In other words, it connects all the restaurants in the same fashion, with the same access, to the same software whether they are in a metropolitan area or in a rural location.
After finally making the decision to install a satellite network, Bob Evans ran tests for two months, first in the lab, and then linking one restaurant with corporate headquarters. After obtaining successful results, the company launched a month-long pilot program linking 10 stores—that sold the Bob Evans management team on the technology and diminished any remaining hesitation about bringing a satellite system into its established network.
During the next five weeks, Bob Evans rolled out the systems to more than 400 sites and the system went live in October 2000. Today, each site has access to e-mail and other back office applications at speeds up to 512 kbs, while inbound traffic to Bob Evans headquarters travels on one of seventeen 38.4 kbs channels. This replaced the system of dedicated lines and modems as the primary form of business transaction communication. The company’s contract for this VSAT network runs through 2008, at which time Bob Evans can extend.
The Nuts And Bolts
Such a VSAT system speeds communications by cutting latency and pooling bandwidth. What is most important for a corporate executive to realize is that the satellite system seamlessly communicates with the established terrestrial network already in place, should there be one. Therefore, the remote sites are linked with corporate headquarters via TCP/IP. The host computer acknowledges the request for information coming from the remote sites and then breaks the file into smaller pieces, sending each segment to the termination point all the while requesting confirmation of its receipt. This back-and-forth communication continues until the entire piece of data is received and reassembled at the user’s terminal at the remote sites.
Even though conventional satellite connectivity, unlike terrestrial, adds roughly an eighth of a second or a quarter of a second latency to each exchange, new equipment technology in the satellite arena has drastically reduced this issue. Now, satellite TCP and IP accelerators allow the hub to intercede in this back-and-forth process, reducing the latency time.
Thus, one can see that adding a satellite component to a network provides more pluses than minuses and can be a seamless turnkey solution for connecting a few hundred or up to thousands of locations.
And the actual hardware installation is very unobtrusive as well. At each of the Bob Evans restaurants, Spacenet installed a 1.2-meter satellite dish and an indoor unit, which serves to provide broadband IP connectivity. Most importantly, business continued as usual for the restaurant chain during this period, with no need to close down the office and lose profits.
The satellite network’s speed enhancements, coupled with the fact that it offers a managed service that is adaptable and always on justifies the upfront cost of the system.
Price will vary depending on which service provider a customer chooses, as well as the number of sites needing connectivity. Generally, a VSAT system can cost roughly $1,000 per site. In certain cases, such VSAT networks’ break-even point is at 250 to 300 remote sites on a three-to-five-year contract.
Today, there are enterprise clients, however, that have a VSAT network serving fewer than 100 sites. This may be incrementally more expensive at that low quantity, but it will still be a viable economic proposition.
Likewise, depending on the size of the system, the substantial savings from dial-up to a satellite-based IP network can greatly offset the initial cost. There is the initial cost for bandwidth—varying in amount according to the contract signed—and the hardware per site. For some establishments with systems comparable in size to that of Bob Evans, cost to incorporate satellite is around $1,000 a year more per site than what it already pays for its terrestrial network communications, according to some satellite industry analysts.
“We don’t disclose such savings, but I can tell you that it was never a question with corporate management whether this would be worth the investment or not,” Beckwith says. “It is a blessing to have this satellite system to enable us to do what we need to do.”
By far, one of the most significant items Beckwith was searching for with this investment was not only an upgraded network, but also a partner for the process. “I found working with individuals in the satellite industry to be a very good experience. They were easy to work with and remained flexible with us as we learned how to incorporate this new technology within our system. You can tell they cared about us and did not disappear once the contract was signed.”
To say the least, satellite connectivity has solved some major problems for Bob Evans. First and foremost, the catalyst issue of credit/debit authorization is no more. “With dial-up, every time a credit card is swiped, a modem dials out for authorization, makes the connection, verifies the card and responds to the store, taking as much as 15 seconds. If the connection fails, as it can from time to time, usually during weekend morning breakfast rushes, the total time could be 30 seconds,” says Beckwith. This can be a long time to wait when you have a growing line of people at a register.
What used to take 13-18 seconds now takes three seconds at most. “They promised us five seconds and at times we are averaging three seconds per transaction and I am happy with that. People don’t even get a chance to put their cards back in their wallets before it’s gone through,” says Beckwith. “It’s that fast.”
Second, Bob Evans’ private network helps the chain transmit large files economically and quickly to all its outlets, and get confirmation of receipt to boot. “With satellite, our polling takes less than an hour every night and many of our old manual reports that we used to have to file we now do electronically,” says Beckwith.
Running over the satellite system are nightly automatic polling of financial data from the point-of-sale system, Lotus Notes e-mail to managers and online manuals on restaurant procedures and facility maintenances. “These were all things that we never had live access to before. Recently, the company finished developing and implementing a browser-based electronic ordering/inventory interface that is carried via satellite network. Online ordering saves managers approximately two hours each week with ordering and receiving, and gives Bob Evans the ability for chainwide inventory monitoring and restocking. The restaurant managers truly appreciate saving that time.”
Third, this network is both reliable and robust, says Beckwith. The occasional times when there have been problems, “Spacenet has been very good at resolving them. But we have not given up anything either. The occasional ‘rain fade’ issue that might cause us to lose connectivity to a store for a few minutes is nothing significant. We put software on the servers that would use the phone lines as back-up, but we’ve only used them a couple of times,” Beckwith adds. In fact, this was a serious concern of Beckwith’s from the beginning. Bob Evans actually experienced such a weather problem with rain in the past affecting the phone lines and was not interested in having that happen with a satellite dish. But time and experience with the VSAT system has shown corporate executives at Bob Evans that there are minimal hiccups with satellite and the benefits outweigh the negatives.
In the future, Bob Evans expects to further expand its use of the satellite platform to include interactive training and corporate communications. Today, Bob Evans trains its employees the old-fashioned way—by gathering the restaurant managers to corporate headquarters to train in-house in front of a live instructor. “We believe that training by satellite will be more interactive with our employees and may lead to better retention of our staff,” says Beckwith.
This year, Bob Evans will have the e-learning platform fully deployed—transitioning from old school to new school. Essentially, Beckwith says that training content would be delivered to each of the stores at the same time, interactive testing could be done in real-time, cleaning up the paper-trail clutter translating into saved expenses and wasted time. “Immediately upon hiring, a new employee can begin their training, taking the course work specific to their position, take a test and get a quicker result,” says Beckwith. “The quicker we can incorporate a new hire, the more comfortable the employee feels and the quicker we can get them to work.”
For Bob Evans, now four years later, using satellite technology seems like second nature to its management. The speed of the connection, its reliability and its smooth integration have enabled the executive management of Bob Evans Farms to concentrate more on building its business as opposed to building its infrastructure.
Can a network incorporating satellite save managers and executives time and money while running their business? With satellite broadband connectivity, the answer is yes.
Nick Mitsis is Editor of Satellite Business Solutions.