Hypercom IEN Readies Home Depot for Future Growth

Single-Box, Single-Vendor Solution Combines Voice and Data to Make Frame Relay Practical

When Home Depot wanted the most cost-effective way to integrate voice and data traffic from its branch locations, the giant retailer turned to the industry's only single-box, single-vendor solution -- Hypercom's unique Integrated Enterprise Network (IEN) product family. Anticipating extensive network traffic growth into the next century, Home Depot is replacing its costly parallel networks and hard-to-manage rats nest of access devices at each branch location with a single Hypercom IEN 3000 for frame relay data transport and voice SDN services. As a result, Home Depot is significantly cutting its overall communications costs while improving network responsiveness, reliability and manageability.

Founded in 1978 in Atlanta, Georgia, The Home Depot is North America's largest, fastest-growing home center retailer, currently operating 280 warehouse-style home-improvement stores in 24 states and 10 stores in Canada. Top management's ambitious plan is to have 824 stores in 35 states by the end of fiscal 1998, and expand internationally as well. A leading innovator in its industry, Home Depot combines the economies of scale inherent in a warehouse format with a level of customer service unprecedented among warehouse-style retailers. The company was recently ranked by Fortune magazine as America's most admired retailer and second most admired corporation. Home Depot posted record sales in 1993, with revenues in excess of $9.2 billion.

Information systems is a critical component of Home Depot's success. Until recently, the company used a shared-hub, satellite-based, X.25 packet-switched wide-area network to transport both TCP/IP and SDLC protocols between each of the company's 280 branch locations, 17 distribution centers and 6 divisional offices. Home Depot uses the IP protocol to carry all financial merchandising and operational-related information, and SDLC to transport all financial transactions to headquarters from each store's point-of-sale system. Before the new system, voice communications were handled in a more traditional way, with each store's PBX carrying 20 voice channels to the local carrier's central office over a single T-1 line, which in turn, connected it to a long-distance carrier.

Looking down the road, however, Home Depot realized these parallel networks would not meet the giant retailer's needs through its next growth phase. The satellite-based data network was proving to be too unreliable because it was prone to weather-related disruptions, and it couldn't provide the response times Home Depot projected would be needed. In addition, the additional cost of the separate voice network was becoming harder to justify.

"Because of the highly competitive nature of our industry, we are very aggressively pursuing new lines of business," said Dave Ellis, Home Depot's director of network services. "To support this, we're creating new applications to provide a greater degree of decision-making information in a more timely manner. We're also adding extensive inter-company communications via EDI to exchange information between Home Depot and its suppliers, information that originates at the store level."

Home Depot looked at a number of options, including dedicated facilities, other packet-switching alternatives and other satellite and technology providers. Ellis and his associates determined that the best, most cost-effective solution, however, was one allowing them to combine their voice and data traffic over a single access pipe from the store to a carrier for voice SDN and frame relay services. Home Depot could eliminate its current parallel networks through aggregation and significantly reduce its local central-office trunk line costs.

"Despite the attention being given to higher speed WAN links such as ATM, most corporations today can reduce their branch office access costs by as much as 60 percent by merely consolidating their existing data streams to eliminate redundancies," said Paul Wickre, Hypercom's vice president of sales and marketing. "Hypercom's IEN gives branch locations the single premise device they need to effectively consolidate all their network traffic -- legacy protocols, LAN and voice from a PBX -- to a single T-1."

According to Wickre, 70 percent of the branch office networks in use today operate at 19.2 kbps or less, creating a large opportunity for network consolidation by aggregating multiple applications at 56 kbps or higher.

Home Depot chose Hypercom's Integrated Enterprise Network because the IEN's highly integrated solution provided the greatest cost savings, the highest reliability and the easiest management of any other solution available today. The modular, upgradable Hypercom IEN 3000 being installed in each Home Depot store replaces as many as six separate boxes and all the interconnecting cabling. It combines an IP router, an SDLC interface, a drop-and-insert multiplexer for voice from the PBX, a frame relay access device (FRAD), a DSU/CSU and a dial back-up modem in a single chassis. The Hypercom IEN 3000 helps reduce Home Depot's communications costs through aggregation, and its smaller hardware footprint, its lower maintenance requirements and its simplified network management capabilities have additional cost benefits, too.

"The fact that a large percentage of communications failures at a branch location are due to interconnection failures between boxes underscores the critical importance of integration," said George Wallner, Hypercom's founder and chief technologist. "Eliminate the cables interconnecting routers, WAN interfaces, modems and other communications components at the branch, and you eliminate a major source of maintenance headaches."

"The IEN 3000's redundancy and interchangeability gave us improved mean time to repair over the other alternatives," said Ellis. "And because of its architecture, the rest of the system continues to function normally even if one component does have a problem."

The space-saving, single-box approach offered by the Hypercom IEN 3000 simplifies installation and management by eliminating interoperability issues usually associated with multi-vendor environments, and by allowing the entire branch communications system to be managed through a single network management system. The tight integration between communications functions also enables the Hypercom IEN 3000 dial back-up to react more quickly to link failures, providing better recovery, higher reliability and superior network management.

"After looking at all the solutions available on the market, we realized it would take from three to six separate boxes from single or multiple vendors to arrive at the same set of technical capabilities and functionality available in one IEN 3000," explained Ellis. "It's the only system on the market that integrates everything in one chassis, in one network manageable device."

Home Depot's conversion is proceeding smoothly. Each branch location's existing satellite-based system is dismantled and removed, and a single IEN 3000 is put in its place. The IP LAN is connected the IEN 3000's IP router, the output from the point-of-sale system is connected to the SDLC interface and the PBX is connected to the drop-and-insert multiplexer, all housed in the single chassis. The IEN 3000's FRAD is then connected to the carrier using the branch office's existing T-1. No software changes are necessary other than a simple update to the router address table.

Home Depot began the transition to its frame relay network in February and expects to complete the first phase, converting 300 stores, by September. To date, Home Depot has successfully installed the Hypercom IEN 3000 in nearly 70 percent of its retail outlets, and the company is achieving the cost savings it had anticipated during its planning. In fact, Ellis sites this planning as his secret to success.

"We've had a very easy transition," according to Ellis. "After extensive and detailed planning, with cooperative representation from all supplying vendors, we were able to execute the transition from one system to the other extraordinarily quickly and with a minimum of difficulty."

As an integral member of the implementation team, Hypercom continues to play a major role in the transition by coordinating all field service and installation of its hardware. Hypercom is also working with Home Depot on research and development of new feature functionality, enhancing current functions as well as defining new feature functionality and performance levels Home Depot will need in the future.

If all goes according to plan, Home Depot, with the help of Hypercom, will be operating one of the largest frame relay networks in the world, linking every retail outlet, every distribution center and all its divisional offices around the world with its headquarters in Atlanta. Through its more efficient communications infrastructure, Home Depot will be able to carry on its tradition of providing the highest level of customer service in the industry, introduce new products and services, and operate more profitably while offering the best prices on the merchandise it sells.

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