Centralized IT Structure Helps Propel Aaron's Digital Transformation

Aaron’s, an Atlanta-based retailer of furniture, consumer electronics and appliances that are available for sale or lease to own, is a rapidly growing company with more than 1,600 stores across 47 states and in Canada. However, Aaron's needed to take the necessary steps to improve upon its digital operations in order to be a truly omnichannel retailer and reach the next stage of growth. To support its digital transformation, Aaron’s has shifted from a decentralized IT infrastructure to a centralized model that increases its agility and nimbleness.

To help with this initiative, Aaron's has partnered with CloudGenix for its SD-WAN product. Now Aaron's has real-time visibility into inventory, supply chain and customer data, enabling it to create omnichannel experiences across stores and its e-commerce site. Additionally with CloudGenix, Aaron's is able to rapidly support all of its stores by troubleshooting performance problems and the rollout of new software. For example, Aaron's new point-of-sale system was installed in just 27 minutes. Furthermore, with cloud becoming an increasingly integral part of its business, Aaron’s is able to transition to the cloud quickly, as it did when migrating from Microsoft On-Premises to Office 365. Most importantly, with a centralized view of operations the company has the opportunity to leverage data science to extract business value to improve customer engagement and support future growth.

In an exclusive interview with Total Retail, John Trainor, CIO and senior vice president of digital product at Aaron's, discusses the company's digital transformation, and what it means for the retailer's future. (Editor's Note: John Trainor will be a keynote speaker at the upcoming Total Retail Tech event, happening Sept. 23-25 in Philadelphia. He will be discussing how culture and technology are driving Aaron's digital transformation. You can get more information on the Total Retail Tech website, and register for the event as well. Total Retail Tech is complimentary, including travel, hotel, meals, etc., for retailer attendees.)

John Trainor, CIO and Senior Vice President of Digital Product, Aaron's

Total Retail: Why has Aaron's moved from a decentralized IT infrastructure to a centralized model?
John Trainor: I've been at Aaron's almost 20 years now, and been the CIO for almost nine years, and the benefit of that is I've seen our business model change a good bit. When I first arrived at Aaron's, our No. 1 goal was how many stores can we open each year. We were opening 100-plus stores [per year], and that was our way of growing the company. We had so much white space out there, that the philosophy was just how many stores could we grow. When you do that, you want to minimize your constraints to build out those stores. It was back in a day when we didn't have very robust connectivity — nobody did, really.

We had a very decentralized model of how we ran our store operationally, and then that translated into the technology — both for the purposes of matching the way we operate, but also so that we could rapidly scale our growth. Over time as we've introduced more omnichannel capabilities for our customers, we knew we had to have a centralized view. We have to have a 360-degree view of our customer, be able to know what our supply chain has and where it is, what our inventory position is so that we can get the right product to the right customer at the right time. That has meant we needed to centralize what we do.

Additionally, a lot of the tooling that you would use these days to move your organization quickly inherently means that you're going to want to adopt a lot of cloud-based services. And in order to do that, you have to think centrally. Those things have caused us to change our architecture, and we needed the underlying network that would support that.

TR: How have changing shopping behaviors impacted your technology needs and decisions at Aaron's?
JT: Twenty years ago, our customer would drive to the store, pick out a product, make a cash payment, and then make all subsequent payments in-store. That obviously is not the way the world is right now. We needed to meet our customers where they wanted to be, and that requires us to centralize things and have an omnichannel view of our customer.

TR: What challenges did Aaron's encounter as it underwent this IT infrastructure transformation?
JT: If you can imagine that decentralized world, I didn't care very much about the network. We would use it to get daily numbers on performance and we would use it for access to email, so very limited things. Nothing was really that critical on the network. You would see that with the level of investment we had in the network. We skipped doing a large mobile point-of-sale network like a lot of companies were doing. We were OK riding on broadband. That actually played really well for us because as broadband speeds and ubiquity increased, that played right into our strategy and we never had to build out that expensive MPLS network. However, we were riding on broadband and the needs to have a strong network became more and more important each month. We went from using POTS lines to voiceover IP, and all of sudden quality of service became more important for our voice capabilities, which are the lifeblood of our stores — to talk to customers and provide customer service.

And then we found that every application that we were building for our team members or our customers needed some type of connectivity, as you would expect in a modern era. We needed to take that underinvested network and find a way to make it perform better and give us confidence and control without having to take that legacy approach of rolling out a large MPLS network, which would have been expensive and, frankly, the wrong time to adapt such a thing. I think that a lot of companies that have a built out MPLS network are probably right now struggling with how they can rationalize the high cost and low bandwidth. While they have a lot of confidence in the quality of that connection, they're not getting a lot for their money. We fought that by going directly to broadband. In all of our stores we're able to have some amazing speeds at a pretty low price. What we needed to do though, however, was find a way to have that same confidence that you would get with a MPLS network. That's where CloudGenix gave us that confidence. It allowed us to leapfrog the MPLS trap that a lot of people were stuck in.

TR: What were the reasons that Aaron's chose to work with CloudGenix, and what are the benefits that you've realized from the relationship?
JT: I knew one of the account reps for CloudGenix, and that person and Kumar, CloudGenix's CEO, came in and spoke to us probably a year or two before we knew we needed the solution. I just missed it; I didn't know what he was talking about, frankly. SD-WAN was a pretty early concept, and it didn't make sense to me yet. Where it made sense was as we had a more traditional network without SD-WAN capability, we had connectivity, we just didn't have visibility into the network. We didn't have a lot of control over the network. What that meant was we were stubbing our toes constantly as we were rolling out new applications because we'd find that we should have all the performance that we need, but we weren't achieving what we wanted to achieve. It was creating a lot of problems for our store associates.

So we said, ‘how can we solve this problem?’ Lo and behold, something that a year or two before Kumar and his team had introduced us to seemed to be the solution. So we looked at CloudGenix and a couple of other solutions. What drew us to CloudGenix is that there seemed to be a good culture at the company, and I love good cultural fits. We were making somewhat of a bet there. That bet so far has turned out to work in our favor. I think we made a good call there. But what really swayed us the most is that CloudGenix seemed to have the most business-centric approach to visualizing the network, because the focus of network optimization was at the application layer, and not at a lower layer like protocol.

What that meant was that I could have a business discussion around how we prioritize traffic or how we validate that we're getting the performance we want, and less of a technology discussion. As we transform our business — it's the same thing we experienced with virtualization in the data center or cloud infrastructure as code — we care less and less about the hardware that we're running on or the feeds and speeds that you normally would have talked about 15 years ago, and more about the business problem we're solving. CloudGenix seemed to get that. We're talking more about application optimization, and not about network optimization.

TR: How has having visibility into data, be it customer data, order data, inventory data, etc., helped Aaron's improve its customer experience?
JT: Having a decentralized model for a number of years means that we have a lot of assumptions built into being decentralized. We have an initiative that we call Darwin which is evolving our decentralized model into a centralized model that supports digital transformation. It really is decomposing that decentralized view of everything and putting it into services. Having those services perform well is vital, and CloudGenix gives us the ability to do that. But what we've been able to do while in the midst of our evolution of our business logic and systems is use the existing decentralized system and have somewhat of a hybrid.

So we have real-time inventory data, real-time customer data, real-time transactional data no more than 30 minutes or so out of date from all 1,600 locations available to our store operators to our analytics team, etc. For example, let's say we have a large promotion. The lifeblood of that is now our analytics capability to provide near real-time information on how well we're growing our business. Having the ability to make sure I'm well connected and that the connections that are most vital to fuel that analytics platform are running well, having that allows me to provide that capability that our business depends upon and have confidence that it's going to be there.

For example, when a customer makes a purchase online, we do a real-time check of local inventory to determine whether the product available. If it is, we offer express delivery, which is a two- to three-day delivery and setup on that product. If it isn't stock, then we offer one week [delivery] by looking in our fulfillment centers. We do all of those checks real time, and we're able to dramatically improve conversion when we can offer express delivery. So having that network connectivity and visibility into the real-time inventory levels at the store is a vital component.

TR: What are the business benefits that Aaron's has realized as a result of working with CloudGenix?
JT: There was a digital product that we rolled out in 2017 that was very network dependent — it provided some additional services on top of the lease services that we offer. Had we not had CloudGenix available, I would have been hesitant to roll that digital product out because it's a membership-oriented capability that's a great value-add for existing customers. Having the confidence in the network has allowed us to roll that program out and be aggressive with it. We were able to deliver it a couple of months early, and that's because we had confidence in our network. It's called Aaron's Club, and it's very similar to a loyalty program in which we add some additional services on top of the lease transaction.

Our customers love it. They get a lot of value out of it, and we were able to implement it earlier because we knew that our network could handle it. That has resulted in great customer success for that product, and financially it has made a good contribution to both the 2018 and 2019 fiscal years. The fact that we were able to accelerate this program has been a win-win. It was good for our business, but it was also great for our customers.

I believe SD-WAN is equivalent to the transformation we saw in data centers. Having that nimbleness in your network is a key technology to support the nimbleness you need in the rest of your organization.