VOICE/DATA NETWORK TO REDUCE COSTS AT HANNAFORD

ADAM BLAIR

SCARBOROUGH, Maine -- An event that took place miles above the Earth had a significant effect on communications at Hannaford Bros. here, which relies on satellite technology for transmitting data such as credit and debit authorizations.

The retailer had been testing a land-based communications network employing Asynchronous Transfer Mode technology at four of its Maine stores since September. The ATM system, described as the next generation beyond frame relay technology, is capable of transmitting voice, data and video through one stream.

Linking to the ATM system "gave us 80 times the capacity [of our existing system] for the same price," Bill Homa, chief information officer at Hannaford Bros. told SN.

The celestial event was the failure of the Galaxy IV telecommunications satellite just prior to the Memorial Day weekend. Hannaford had already been planning to expand the ATM network to the remainder of its Maine facilities when the satellite failure knocked out much of the chain's communications.

"We were able to get some of the stores on dial backup, but we would have had to repoint the satellite dishes at each store, which might have knocked out communications for a week," said Homa. "Instead, we linked all but two Maine stores to the ATM network -- it was faster to do than repointing the satellite dishes."

Hannaford Bros., with supermarkets in eight states in the Northeast and Southeast, has 46 corporate-owned and 11 independent supermarkets in Maine, as well as its headquarters and two distribution centers.

Homa estimated that the retailer would achieve a return on investment from use of the ATM network in Maine in "less than one year." Hannaford plans to expand its use of ATM technology chainwide by June 1999, but issues, including prices for calls and regulations involving interstate long-distance communications, need to be settled before the rollout can proceed.

One reason for the savings in Maine is that voice transmissions are essentially included in the cost of using the network for data transmissions, said Homa. "It allows us to reduce the number of phone lines and the number of long-distance calls," he said. "Some of our largest stores have as many as 30 outside lines, for which we're charged $42.50 per month each."

Indeed, the ATM network has more capacity than Hannaford could possibly use, said Homa. The retailer has been involved in developing products to enable it to link to the system's infrastructure, originally established to provide communications to the state's governmental and educational institutions, since 1996.

"We were involved in a joint venture with a telecommunications product company to develop a communications switch that could bring it down to a T-1 speed," said Homa. "We ran field trials and were able to have input on what the product could do."

For example, the switch needed to interface with all Hannaford's phone systems, which include both analog and digital technology in different supermarkets.

"We wanted the product to be able to carry six voice circuits, plus fax, data such as credit and debit information, and eventually video," said Homa. "When we began this project, our data needs had increased 15 times in the previous three years. We were bumping against the limits of our satellite networks, which was affecting our pharmacy and credit/debit customers."

Hannaford is currently using the ATM communications network for both real-time communications, such as voice, e-mail, pharmacy price adjudication and credit/debit authorization, as well as to distribute software electronically and transmit batch files of less time-sensitive information, such as time and attendance and item-maintenance data.

Plans for the ATM network include more use of such data-based communication, part of the retailer's effort to eliminate paper from its operations. Even further ahead, "we could use it for videoconferencing and for centralized video security," said Homa. "For example, if we got an alert that a cash drawer was open for more than one minute, we could remotely swing a video camera to that lane from our headquarters. But this is not happening tomorrow," he added.

The ATM network is operated by Bell Atlantic, New York, and the communications switch hardware is from Cisco Systems, San Jose, Calif.