Starbucks Gets Win-Win from Wi-Fi
By Tim Greene
Network World, 07/14/03
Customers of coffee-shop giant Starbucks who browse the Internet from in-store wireless hot spots might be surprised to learn that the same 802.11b network was also conceived as a way to run the retailer's business more efficiently.
Starting with its first Wi-Fi hot-spot trial in the fall of 2001, Starbucks has been considering ways to piggyback its corporate VPN onto the network. If implemented, the VPN would support users accessing applications and databases that streamline hiring, sales, inventory and a host of other business tasks, says James Snook, Starbucks' vice president of IT.
The network, which operates over Cisco wireless access points and T-1 Internet connections, could potentially serve more than 2,300 Starbucks stores in North America already outfitted with the technology. The goal is 2,500 by year-end. Future applications the network could support include videostreams for training and voice over IP to cut down store-to-headquarters phone costs, Snook says.
The company is out in front of other retail stores such as Borders bookstores - which, like Starbucks, has teamed with T-Mobile to provide its customers with Wi-Fi Internet access - and McDonald's, which kicked off hot-spot trials last week at its San Francisco stores. McDonald's has partnered with Wayport to provide its service. So far, T-Mobile has about 2,600 hot spots, the bulk of them in Starbucks stores.
Starbucks' wireless conversion started in earnest last August when it launched T-Mobile HotSpot 802.11b service in 1,200 stores. That announcement was the formal coming out for a service born in partnership with MobileStar - which later went bankrupt - and was taken over by T-Mobile, Snook says.
"We're a network-centric company," he says, and setting up VPN nodes in stores seems an attractive idea made all the more interesting with the addition of the shared 11M bit/sec wireless hot spots, prompting trials. "We've issued wireless laptops to mobile employees such as district managers and HR recruiters. Now they're spending a majority of their time in the stores where they manage, and they can do a lot of the work they formerly had to do at a field office," Snook says.
For instance, hiring employees involves lugging around a lot of paperwork, but not with the wireless technology. "Instead of going to the field office, picking up all the folders and files for candidates, they just bring a laptop," he says. Recruiters then connect to Starbucks' intranet via the wireless laptop and work from corporate human-resources servers located regionally that host hiring-workflow applications and databases of job candidates, Snook says.
Similarly, district managers in the trial can sit down with store managers, call up sales statistics and compare current store sales with historical sales at the same site or with the performance of other stores.
Starbucks also has a salesforce that sells coffee to hotels and restaurants that could use the hot spots as field offices where they log on and gather messages, place orders, check order status and look up pricing.
The hot-spot T-1s connect to the Internet, and laptops connect to the T-1s via wireless, both of which introduce the opportunity for hackers to break in, so Starbucks secures communications using IP Security VPN technology. Company-issued laptops carry VPN software that AT&T supplies as part of its managed VPN service. The VPN software creates a secure connection between laptops and AT&T's network, protecting the wireless and the Internet link from intruders.
These secure VPN connections can also be used for managing store systems, distributing software such as the applications running on cash register terminals, access to Starbucks' intranet and training, Snook says.
IP voice easily could be carried on the network as well, he says. The company has been considering the technology for several years because most phone calls from stores go to other company sites, he says. This traffic pattern means most phone calls go to the same sites already networked for data. "The potential savings is huge. You can trust me that there are business models and business cases behind it," Snook says. "The maturity of the technology has arrived."
He says if it goes that route, the company might impose quality of service on the T-1 to give voice packets guaranteed preference over other packets and maintain voice quality. Or Starbucks might run IP voice over a separate DSL network that has been installed to handle transactions done with prepaid Starbucks Cards and credit card verifications.
These DSL links average 192K bit/sec and were installed in 2001. The company didn't want customers to wait while transactions were processed via dial-up connections, which was the way the stores previously handled credit card transactions. So it rolled out DSL to 3,300 stores over a period of six months before the prepaid card launch.
The T-Mobile HotSpot project is a huge team effort, drawing on the IT staff for technical and logistical planning, and representatives of virtually every business unit to suggest what corporate resources employees might access over the network, Snook says. The planning phase of the project took six months, he says. Starbucks now installs hot spots at a feverish rate, with 100 or more stores being turned up in a good week, Snook says.
Most stores have dual broadband connections - DSL and T-1, which gives Snook the opportunity for innovation. He can test new uses such as voice or video on one network without disrupting the other, he says. And if it becomes feasible in the future, the two networks could be converged.
T-Mobile HotSpot is proving popular with customers, says Lovina McMurchy, director of new ventures for Starbucks Interactive, although she will not reveal numbers. She says customers who use wireless say they plan to continue using it for at least the next six months. "It's very sticky," she adds.
The hot-spot business is still in its early phase, but so far those using the service generally make more than $100,000 per year, work for high-tech companies, or are in management or sales, McMurchy says. About 5% of the customers use PDAs, 85% use laptops and 10% use both, according to a survey of customers.
While the service is a plus for Starbucks customers, McMurchy says the hot spots will become part of a larger, interconnected T-Mobile hot-spot infrastructure that is just being built. Rather than register at Starbucks hot spots and Borders hot spots and airport hot spots, customers will register with one hot-spot service and be allowed to roam all of them, similar to the way cell phone companies provide ubiquitous service, she says.
nwfusion.com |
