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IT partnership saves Woolworths millions

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It company Reagola is saving retail giant Woolworths millions of rands, thanks to its innovative approach to IT challenges.

Woolworths appointed Reagola to provide IT support to its stores in the Western Cape, as well as desktop support at its head office in Cape Town.  Reagola was also given Woolworth’s insertion business, which is responsible for printing and posting statements to cardholders.
According to Gerhard Roux, chief information officer at Woolworths, the partnership with Reagola saved Woolworths R3.7-million on head office desktop support for the 2006/7 financial year – a 50% reduction on the previous year.
The new IT support model for stores in the Western Cape saved 7.5% in 2006/7, and the lead time for service in the insertion business has dropped from 144 hours to 48 hours. This means that customers are getting their statements sooner which, given Woolworth’s book size, is a big potential saving if the customer pays earlier.
Reagola and Woolworths worked closely together to come up with a new model to provide IT support to stores.  Previously engineers were situated at a regional office.  If a store experienced IT problems, they would call the office and an engineer would be dispatched.  It could take up to four hours for an engineer to reach the store.
The new model places an engineer at a store, and he/she services other stores within a 30km radius of that base point.  Because the engineer is solely responsible for the stores within his/her “clip”, he/she is aware of what is happening with the systems in the stores and can take a proactive approach to ensure that the IT systems are running optimally.  
If a problem does arise, the engineer is in close proximity and can attend to the store quickly.  Reagola also has a few “floating” engineers who can provide back-up assistance if a “clip” is particularly busy.  A relationship is also built between the engineer and the store managers, which facilitates a faster and more efficient service.
As a result of this new model, calls to Woolworths’ IT call centre from stores in the Western Cape have significantly dropped [can we say by how much?].  “While these figures show the impact quantitatively, it is difficult to measure the qualitative benefits of the new model,” says Roux.  “The relationship between the store and the engineer means that IT systems are running more smoothly in stores, which ultimately has a knock-on effect on customer service, staff morale and many other factors.”
Woolworths and Reagola decided to turn the desktop support model on its head.  A small team of Reagola engineers is based at Woolworths’ head office to provide support – most of which happens remotely.  The old-style support model sees engineers physically visiting the desktop to resolve an issue.
“The business model of the old-style support is geared around the number of engineers on site, the number of downloads, devices and interactions,” says Roux.  “The more interactions, the more money the supplier makes.  In the past we encouraged suppliers to be innovative to cut down the costs, but ultimately it was difficult to achieve as it was eating into their profit margins.”
The remote-support model using a small team has halved the Woolworths’ desktop support costs, without impinging on service levels.
Woolworths outsourced its insertion business to Reagola. The insertion business prints cardholder statements, packages them with relevant marketing material and posts them to the cardholder.
Woolworth put a service level agreement in place and Reagola invested in the latest technology, automating the previously manual process.  This enabled Reagola to cut the statement delivery time by two thirds.  If customers are getting their statements earlier, they usually pay earlier potentially saving Woolworths millions of rands.
According to Fareed Regal, CEO of Reagola, the company’s focus on its people, skills and customer service has been key to its success.  “We’re entrepreneurs so we’re agile, make decisions quickly and take innovation seriously,” he says.