“Commissioning extra capacity is just like ordering something online – it takes just five minutes, and new servers are up and running fifteen to forty-five minutes later.”
Kaine Escott, Director, BiG BUYS, Harvey Norman
10000 employees
Founded in 1962, Harvey Norman is one of Australia’s largest retailers, selling electrical and computer goods, furniture and bedding from 230 stores. Generating revenue in excess of A$7.7 billion, the company employs over 10,000 staff.
Harvey Norman wanted to launch a new online daily-deals business within eight weeks. Executives knew that web site traffic volumes would be volatile and hard to predict, so needed to avoid under- or over-investing in server infrastructure.
Executives launched the custom-built site, named BiG BUYS, using the cloud computing platform, Windows Azure. With an easy-to-use service-management portal, executives can monitor site traffic and server utilisation, quickly expanding server capacity to meet peaks in demand.
Retail Consumer Products & Services
Australia
Cloud & Server Platform
English
In early 2011, Australian retailer Harvey Norman wanted to launch an online daily-deals business as rapidly as possible. However, executives faced a dilemma: if they over-estimated web site traffic, they could waste millions of dollars buying web site-hosting servers they did not need; if they underestimated traffic, the site would crash as soon as the business launched.
To minimise operational risk, as well as capital expenditure, executives deployed their custom-built BiG BUYS retail site on the Microsoft cloud computing platform, Windows Azure. After just eight weeks of development, the launch proved straightforward, with executives managing web site infrastructure through an easy-to-use portal, increasing and decreasing capacity to meet customer demand.
The firm’s cloud strategy has been swiftly vindicated, with executives able to accommodate site traffic peaking at 23 times normal levels at less than one hour’s notice. Having avoided risky hardware investments, the company only pays for servers used, ensuring the business’s costs of sale are directly related to purchases.
Based in Homebush West, New South Wales, Harvey Norman is a large retail chain with 230 stores in Australia, New Zealand, Europe and Southeast Asia. The company specialises in electrical and computer goods, as well as furniture and bedding, employing 10,000 staff in Australia and generating annual revenues of approximately A$7.7 billion.
Like many retailers, Harvey Norman needs to compete aggressively online, and in 2011 the company decided to create a web site offering bargain purchases that changed each day.
With Azure, we could quickly increase or decrease the cloud-based server infrastructure in direct response to customer demand, which gave us the flexibility we needed.
– Kaine Escott,
Director,
BiG BUYS,
Harvey Norman.
“We needed an online presence in the daily-deals market, and we decided to create the BiG BUYS site in March 2011,” says Kaine Escott, Director, BiG BUYS, Harvey Norman. “Speed was absolutely critical, and we gave ourselves just eight weeks to get a site up and running – as well as all the logistics and buying operations to support it. Unfortunately for us, Harvey Norman group had none of the systems or technologies we needed to achieve this.”
With previous experience of Microsoft enterprise resource planning applications, Escott chose Microsoft Dynamics NAV to manage the site’s finance and supply chain operations. For the shopping interface, Escott chose an e-commerce retail storefront, custom-built by Microsoft Gold Certified Partner Hands-on Systems, which is capable of processing up to 100,000 transactions per hour.
Deciding how to deploy the new e-commerce site, however, presented a dilemma for Escott.
“Retail is a volatile industry at the best of times, and we had no idea what demand would be like,” says Escott. “We could easily have spent millions of dollars on servers, and then experienced two percent utilisation. Conversely, we could easily under-spend, and launch a web site that immediately slowed to a crawl or crashed.”
“Of course, we could have spent a lot of money, internal resources and brain power trying to work out demand for our site, but we didn’t have the time. We decided to launch our web site in the cloud and only pay for the server capacity we used.”
Escott’s cloud options were influenced by a Microsoft strategy to expand the scope of the firm’s hosted services. Originally designed purely as a hosting service for .NET developers, the Microsoft cloud computing platform, Windows Azure, was becoming available to a wider range of technologies and operating systems. This flexibility, together with a solid commercial relationship, encouraged Escott to launch the site with Windows Azure.
“Harvey Norman has a good, long-term relationship with Microsoft, and the ability to host BiG BUYS with Azure was a logical step in that relationship,” says Escott. “With Azure, we could quickly increase or decrease the cloud-based server infrastructure in direct response to customer demand, which gave us the flexibility we needed.”
Escott would retain direct control over site infrastructure, through a simple web portal that allows Harvey Norman to match server capacity with demand.
“The portal makes it easy to monitor server utilisation,” says Escott. “Commissioning extra capacity is just like ordering something online – it takes just five minutes, and new servers are up and running fifteen to forty-five minutes later.”
With the help of Hands-on Systems, the new BiG BUYS site was built within eight weeks. According to Escott, launching it on the Windows Azure platform proved straightforward, with the majority of deployment issues related to business interfaces rather than technical compatibility.
“Deploying BiG BUYS in the cloud wasn’t rocket science and there were no dramas,” says Escott. “The site launched exactly on time.”
The BiG BUYS site has proved easy to manage, with Escott simply scaling capacity to meet demand. As a result, the business can easily monitor and manage its costs of sale, accommodating increased sales without having to make new capital investments. Impressed with the cloud service, Harvey Norman executives launched three more internet retail sites in the following 12 months, all hosted by Windows Azure.
Ensuring server flexibility
Cloud hosting quickly proved its value. Soon after the launch, Harvey Norman received extensive media coverage related to the BiG BUYS site, and Escott anticipated a spike in site traffic.
“We already had three servers in the cloud, which were running at ten to fifteen percent, accommodating 15–20,000 page views,” says Escott. “That night we switched on three more and demand soared. We managed 375,000 page views, peaking at 80 percent server utilisation.”
“Without the flexibility the cloud platform gives us, the servers would have been trying to run at 160 percent. Our new customers would have experienced very slow response times or the site would have crashed – which would have been hugely damaging for a new business.”
Besides freeing us from risky capital investments, Azure helps us run our retail business more efficiently. We only pay for servers when they are being used, which is when customers are shopping.
– Kaine Escott,
Director,
BiG BUYS,
Harvey Norman .
Making cost of sales transparent
By making server infrastructure an operational expense rather than a capital investment, executives removed much of the cost and risk of establishing a new online business, and avoided a lengthy procurement process. But cloud hosting has also proved valuable
to the online retail business, because costs of sale are directly related to purchases.
“Besides freeing us from risky capital investments, Azure helps us run our retail businesses more efficiently,” says Escott. “We only pay for servers when they are being used, which is when customers are shopping.”
“This makes our costs of sale very easy to work out and ensures they are directly related to the revenue the site generates. As a result, our retail operations are highly efficient, as well as easy to analyse, which also helps us to budget.”
Widening scope for developers
Responding to demand, Windows Azure has continued to widen its hosted services offering, helping companies like Harvey Norman launch new services quickly with the technologies they prefer. Microsoft already supported Java, PHP and other non-Microsoft technologies on Azure to varying degrees, but in June 2012, executives announced an expanded Infrastructure-as-a-Service (IaaS) offering.
Four of the major Linux distributions – CentOS, openSUSE, SUSE Linux, and Ubuntu – are now available, and with the new update support for a wide range of operating systems and languages is embedded into the platform, to attract developers and customers of all stripes.
Rob Evans, Platform Strategy Manager, Microsoft Australia, talks about the benefits: “Developers can now deploy direct from Linux, and use Microsoft Hyper-V as the virtualisation layer. Customers can also set up virtual private networks that connect to their data centres, and other secure non-public networks.
“The ability to distribute video content using the cloud has also increased. Azure Media Services now provide simple web site deployments and an app store containing pre-configured applications.
“Moving forward, Microsoft will continue to broaden its support for non-Microsoft technologies on Azure. Openness and interoperability have become a part of Microsoft’s DNA and this is being increasingly appreciated – not only by our customers, but developers that have not historically targeted Microsoft platforms.”
Windows Azure
Windows Azure is a Microsoft cloud-computing platform used to build, host and scale web applications through Microsoft data centres. With Azure, you can build applications using any operating system, language or tool. You only pay for the servers you use,
and you can quickly commission new capacity through our customer portal.
Service Update: 2012 Spring Release
Opportunities to host with Windows Azure are constantly expanding, and from June 2012, the service will include new features and capabilities. These include: Windows Azure Web Sites for scale-as-you-go instances that give you ten, free shared-instance web sites for one year; Windows Azure Virtual Machine Infrastructure-as-a-Service, enabling you to easily move your applications between the cloud and your own on-premises infrastructure; and Windows Azure Media Services, which enables you to host high-quality media experiences with up to 1 terabyte of data processing per month.
Microsoft Case Study: Harvey Norman