AMC Entertainment always gets the latest blockbuster movies onto its 5,128 movie screens in the United States and three other countries in time for each premiere. It wanted to be as effective in its distribution of corporate information—whether
that meant exchanging data between the theatres and corporate offices, or between AMC and its vendors. By deploying technologies including Microsoft BizTalk Server, AMC is achieving its goal. As a result, AMC expects to gain US$17 million by optimizing theatre
utilization, and it is already saving $2.6 million in reduced vendor costs. The company has reduced IT maintenance spending from 70 to 30 percent of the department budget, freeing staff and funds to meet strategic business needs more quickly and effectively.
On the 5,128 movie screens in the 361 theatres owned and operated by AMC Theatres, characters of different cultures, species, and even planets regularly learn to overcome their differences and live together in just under two hours—and then repeat the
performance several times a day without breaking into a sweat.
In real life, overcoming differences can be a more ambitious endeavor—even for AMC.
For example, consider technology. “We were running VAX/VMS and Alpha systems, various versions of the Windows Server operating system, and a mixture of UNIX-based and Linux-based back-end systems,” recalls Derrick Leggett, Vice President, Enterprise Information
Systems at AMC Theatres. “We were spending 70 percent of our IT budget to maintain this and wanted to shift funds to invest in real-time decision-making and profit-generating systems.”
||Ticket sales optimization is huge, huge for us. But it’s only the start of what we can accomplish with Microsoft technologies.
| Derrick Leggett
Vice President, Enterprise Information Systems, AMC Theatres
If AMC could boost interoperability among these systems—getting them to overcome their differences and communicate more effectively with each other—it would go a long way toward helping the company to realize its goals.
Leggett and his colleagues envisioned enhancing the interoperability between AMC’s systems and those of its vendors—the companies that provide everything from snacks and drinks for the refreshment stands to supplies for cleaning and running theatre offices.
The company had an Oracle e-commerce gateway that it used to exchange digitized purchase orders, invoices, and acknowledgements with its top three or four vendors. But AMC wanted a system that would be cost-effective to use with all of its vendors. That system
would deliver return on investment in the form of vendor discounts for the prompt payments it would make possible, and in savings from greater accuracy and lower labor costs.
There was another type of interoperability that AMC was eager to enhance: interoperability between the company’s field systems—primarily point-of-service (POS) kiosks and registers in theatres—and back-end systems at its Kansas City, Missouri headquarters,
such as business intelligence, financial, and inventory systems. Part of their vision was to centralize what were currently point-to-point communications between these systems. The result would speed the flow of information—such as a new price for popcorn—from
headquarters to the theatres. It would also speed the flow of information in the opposite direction, from the theatres to headquarters. Improving the flow of information—such as real-time sales data—in this direction would enable better, data-driven decision
making by corporate management.
“We had other systems we wanted to address as well,” says Roy Moore, Director, Applications and Integration Systems at AMC Theatres. “But the core opportunity was the same: we saw that greater interoperability among our systems would help to streamline costs,
maximize revenues, and boost productivity.”
AMC approached these issues in stages.
First, it considered a project to improve interoperability and information sharing by installing Red Hat Linux on desktop computers, computer servers, and POS devices. However, the company’s IT team was familiar with Microsoft technologies—particularly those
it already deployed for desktop computers, messaging systems, and directory services. Which set of technologies would better meet the company’s needs?
To answer that question, AMC participated in an Envisioning Center Demonstration and Architecture Design Session at the Microsoft Technology Center (MTC) in Austin, Texas. AMC worked with consultants from Microsoft Services to identify ways to optimize its
infrastructure with Microsoft technologies to gain broader, better, and faster information exchange both within AMC and between the company and its external business partners.
||The better way to solve our problem was also the more cost-effective way to solve our problem. We decided to go with Microsoft instead of Linux.
| Roy Moore
Director, Applications and Integration Systems, AMC Theatres
AMC calculated that a Microsoft-based solution, compared to a Linux solution, would help it avoid about US$1.5 million in spending over five years by not requiring the company to acquire new staff with new technical skills, manage the additional software, or
develop applications. “The better way to solve our problem was also the more cost-effective way to solve our problem,” says Moore. “We decided to go with Microsoft instead of Linux.”
AMC worked with Microsoft Services consultants to create an enterprise data integration strategy and to design the architecture to implement it. At the center of that architecture is Microsoft BizTalk Server 2010, Microsoft integration and connectivity server
software. BizTalk Server is designed for the internal and external connectivity needs of companies like AMC; the software includes more than 25 multiplatform adapters and a robust messaging infrastructure, a rules engine to handle automated information workflow,
electronic data interchange (EDI) connectivity, and more. An offshore development team from Microsoft handled the development work for the initial BizTalk Server deployment (of BizTalk Server 2006 R2).
The new infrastructure uses a variety of Microsoft components, including POS devices running Windows Embedded for Point of Service, updated desktops running the Windows 7 operating system, servers running Microsoft SQL Server 2008 R2 data management software,
an inventory management system based on Microsoft Dynamics AX, and a portal based on Microsoft SharePoint Server 2007.
EDI with Suppliers and Others
With the BizTalk Server architecture in place, AMC next addressed its need for data exchange with its suppliers and business partners. To do so, it relied on “out-of-the-box” EDI standard schema and connectivity in BizTalk Server. The solution also
includes custom-configured dashboards, based on SharePoint Server, for the suppliers, theatres, and corporate users who participate in the purchasing and invoicing process.
A supplier uses its dashboard to initiate a standard EDI X 12 810 invoice and send it to AMC. BizTalk Server receives the invoice, replies with a standard EDI 997 acknowledgement to the supplier, decrypts the invoice, and applies its rules engine to it.
The system includes a custom catalog with supplier data, which the rules engine uses as part of its validation process. Validated invoices are forwarded using BizTalk workflow to the relevant business unit for approval and to the financial and inventory systems.
Invalid invoices are flagged and sent to the business units for manual exception handling. Personnel there use a SharePoint dashboard to view open issues and system-generated recommendations for action. They select an action for each invoice and the invoices
are reprocessed during a daily batch run. The reprocessing cycle continues until all invoices are processed successfully.
Data Integration between Theatres, Headquarters
AMC also worked with Microsoft to design a solution to speed the two-way flow of information between AMC theatres and its headquarters. One end of that solution begins with Windows-based POS devices that capture every transaction made in each theatre—including
both cash and credit card purchases and refunds at the box office, refreshment stand, and kiosks—and deliver the information to the corporate data center as XML feeds every 15 minutes. At the corporate data center, the feeds are received by BizTalk Server,
which uses BizTalk automated workflow to create alerts based on the information, and to forward the data to the internal systems that need it.
Similarly, AMC uses this solution to push data from its corporate headquarters to its more than 5,000 movie theatres. That data might be anything from new prices for tickets or snack items, to changes in movie schedules or screen assignments within multiscreen
While AMC has used BizTalk Server for data integration and interoperability solutions for two of its key data challenges, its use of the BizTalk Server architecture doesn’t end there. “With BizTalk Server, we have a highly flexible data integration platform,”
says Moore. “We can consider its use for any data integration challenge that we face.”
AMC wanted to reduce costs and increase revenues by centralizing the flow of internal and external information through BizTalk Server. It succeeded.
Spurs Projected $17 Million Annual Revenue Gain
Perhaps the most important reason for a corporation to optimize the movement of information through the enterprise is to make better business decisions based on that information. AMC is using the Microsoft-based solution to do exactly that.
Detailed sales information from the theatres quickly reaches AMC corporate offices. AMC executives and managers analyze that information faster and more fully than they could before. With those analyses, the company is in a better position to optimize theatre
utilization, capturing revenue that otherwise would be lost when a screening sells out. The company can switch movies from one auditorium to another within a theatre to better match audiences to screening room sizes; it can increase or decrease the number
of screens showing a particular movie; and it can expand or contract the number of showings per screen.
||We’re using Microsoft solutions to help change the way that the business looks at IT.
| Roy Moore
Director, Applications and Integration Systems, AMC Theatres
Based on its experience with the solution, AMC estimates that it will boost ticket sales by 1 percent as it fully phases in theatre optimization strategies. At the current level of ticket sales, that’s an annual increase of $17 million.
“Ticket sales optimization is huge, huge for us,” says Leggett. “But it’s only the start of what we can accomplish with Microsoft technologies. Knowing what ticket sales are will enable us to optimize staffing—ensuring that we have the appropriate level
of staff to provide great service to our customers, while avoiding excess staffing and unnecessary costs.” AMC also has the potential to use the technology to optimize the use of other systems, such as cooling and lighting systems.
Saves $2.6 Million in Annual Expenditures
AMC is using the Microsoft-based solution to save more than $2.6 million a year. It recouped its investment in the solution in about six months, for a 200 percent annual return on investment.
That return comes almost entirely from reduced payments to vendors. The vendor-related savings are about 12 to 15 percent per vendor, as theatre managers use the solution to buy their supplies through a 153,000-item online catalog with wholesale and discounted
rates, rather than continuing to purchase supplies independently from local suppliers.
Some savings come from a 90 percent reduction in the cost of processing invoices. In addition, the virtual elimination of double billing and other billing errors has reduced the cost of total vendor payments by 1 percent. The virtual elimination of unauthorized
purchases has reduced total vendor costs by another 1 to 3 percent.
“Information is now a tool that we use to cut $2.6 million from current annual expenditures,” says Jennifer Regas, Vice President, Accounting Systems at AMC Theatres and the business sponsor of the EDI solution. “Our use of Microsoft technology makes that
Reduces Maintenance Spending from 70 to 30 Percent of IT Budget
One foundation for these various benefits is more effective and productive IT management. For example, AMC has four IT staffers who manage the EDI vendor system. If not for its use of BizTalk Server, Moore estimates, the company would have needed at
least another two people to manage the vendor system.
Part of the IT gain comes from the greater flexibility that AMC gets from its use of Microsoft technology. “We can hire IT staff with a single, Microsoft skill set, and we can move those people from project to project as needed—adding a vendor to the EDI
system, adding an internal subscriber to the POS log information, or connecting the inventory system to BizTalk Server,” says Moore. “Compare that to four years ago—we had to hire more staff to cover the multiple skill sets we needed, and those skill sets
were each more expensive to acquire. We didn’t have the flexibility to move people around wherever we saw an increased workload.”
Another savings makes it possible for IT personnel to add vendors to the EDI system in four hours—rather than in the three weeks it took with the previous system—for a time savings of 96 percent. Moore attributes the difference to the elimination of custom-code
creation and testing needed with the former system.
In all, Leggett estimates that spending on maintenance has dropped from 70 percent to 30 percent of the IT budget, freeing funds that can be invested in creating solutions that drive competitive advantage.
“We are more productive in IT using Microsoft technologies than we were before,” says Moore. “It means we can be more responsive to the needs of the business. We’re not just doing maintenance and catch-up anymore. We’re building solutions that contribute
to AMC’s success. We’re using Microsoft solutions to help change the way that the business looks at IT.”
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