Indiana Nets Big Savings

INDIANA'S DEPARTMENT of Natural Resources (DNR) is transforming the state's entire supply chain of hunting, trapping and fishing licenses, thanks to its new Internet Point of Sale (IPOS) sport licensing system and online portal.

Incremental improvements to DNR’s existing system would not have been sufficient, says John Ryan Jr., director of accounting for Indiana’s DNR, adding that the process had to be streamlined from end to end. “Improving any aspect of the manual system would have only highlighted the remaining inefficiencies,” he says. “What we needed was a transformation of the entire supply chain.”

The timing was certainly right for such an update to one of the state’s core business processes. The need for quicker, more accurate reporting was rapidly becoming a requirement for investing scarce funds wisely. This, combined with grumbling from retailers and the difficulty of expanding the number of retailers involved, drove the state to put its inefficient processes in the crosshairs.

The benefits of IPOS aren’t just anecdotal. DNR has saved more than $400,000 up front as it no longer needs to print and mail license books to retailers. The total cost reduction for the next three years is expected to exceed $3 million. Since January 2005, the system has processed over 450,000 licenses.

The program is particularly appealing to large retailers looking to generate additional consumer traffic and longer visits to their stores, since the cost to join the program is low and the management is automated. Major chains, including Wal-Mart, K-Mart and Marsh Supermarkets, have signed on to the new process. From the state’s perspective, such distribution translates into customer convenience and choice when it comes to buying a license.

“We had been hearing for some time from our customers that Kentucky, Missouri and Illinois had computerized systems for selling licenses,” says Laurie Schwartz, owner of Schwartz’s Bait & Tackle in Noblesville, Ind. “When DNR indicated they were planning to roll out a Web-based system, we immediately volunteered to be a test site.”

Out With the Old

Prior to IPOS, the process of providing licenses was expensive and cumbersome for the retailers and frustrating for the customers. Retailers had to decide which of the more than 25 license types they would sell. Plus, they had to estimate license sales, secure funding to prepay or purchase a bond (which was held as collateral against license revenue), procure and secure an inventory of paper licenses, and record every transaction manually using a 104-year-old carbon-paper-based ledger system.

“The paper-based system was a real hassle,” says Brian Nobbe, proprietor of 52 Pik-Up in Brookville, Ind. “During the beginning of the busy season, we would sometimes have as many as five employees processing licenses to keep up with customers. It took several minutes per transaction.”

This inefficiency represented lost revenue. Many retailers reported that they sold licenses only as a service to customers and to stimulate additional purchases. A system that could broaden the license types for sale, eliminate the manual bookkeeping and cut the risk of booklet stock would translate directly into increased revenues.

Other inefficiencies were evident. DNR had unreliable tracking data and reporting tools for capturing license types sold and for monitoring inventory. Plus, retailers’ inventory could run into the significant six-figures. Customers could not be certain that a specific store sold the particular license they needed, or they might come across a store that had sold all of its available inventory.

The timely exchange and clearing of payments was also a source of continuing irritation between the state and the retailers. It slowed the state’s ability to obtain matching funds available from the U.S. Fish and Wildlife Service, which prevented it from accessing more than $100,000 in available funding.

Because of this, many establishments in which outdoor enthusiasts expected to be able to purchase licenses did not sell them. The startup and administrative investment was just not worth the trouble.

Accommodating Customers

DNR wanted to create a highly reliable and simple-to-use system that would work for the more than 600 retail establishments where the bulk of licenses are sold, while still accommodating citizens who might want to purchase licenses online.

Even though early research revealed that 40 percent of the retailers owned computer equipment, DNR decided to introduce a standard retail configuration as part of its overall program. Because helping retailers through the transition included providing technical support, platform standardization was essential to keeping support cost-effective.

With this in mind, DNR did not stop with the creation of a secure Web portal, which might have appealed to citizens and to large-chain retailers with Internet-enabled point-of-sale terminals. DNR thought through the entire transaction lifecycle from the perspective of the primary user — a local shop retailer. It then adopted the motto of “no retailer left behind” to ensure all approved Indiana license issuers were able to easily make the transition to the automated process.

It was determined that the minimum configuration would be a package that consisted of a thin-client computer, a 15-inch flat-panel monitor, a 56K modem and a Hewlett-Packard LaserJet color printer, along with comprehensive training and reference materials. Also, DNR offered business-class Internet connectivity service for retailers that were not already online at the front counter.

Creative Uses

Thin terminals are traditionally used to connect to a terminal server where various applications can be accessed. DNR used the terminals as on-demand Web browsers, connecting via a Secure Sockets Layer virtual private network to a server hosting the IPOS application. One of the biggest benefits of the thin client selected by DNR is that the unit has no moving parts, which reduces the cost of ownership. Users are also able to easily connect to the state’s Web site for government information and services.

Extensive Web browsing is not provided through the terminals. This is to reduce the risk of viruses and prevent surfing of inappropriate sites.

“Retailers told us that they did not need general Web browsing through the system,” recounts Gregg McCollam, DNR assistant director of fish and wildlife. “We learned that the retailers who want it already have Internet access where they need it in the store. They preferred a dedicated-use terminal for conducting state-related business.”

By thinking in terms of a total transformation instead of a technology automation project, DNR attained the largest single benefit of all: An interface with the Bureau of Motor Vehicles’ database prepopulates licensee information. This dramatically shrinks the transaction time per customer and makes efficient use of dial-up bandwidth.

“I can’t say enough about what a time-saver the driver’s license information is,” said Bonnie Kelley of Kelley’s Bait Shop in Lakeville, Ind., which has sold DNR licenses for 40 years. “We can process Indiana customers very quickly since there is almost no keystroking. We still have to enter information for the out-of-staters, but only once. Come renewal time, they’re already in the system too. It’s much faster than the manual process.”

The early functional trials produced benefits that were so compelling for everyone involved that Indiana committed to a statewide rollout and conversion of every license retailer — down to the last bait shop — to the real-time system by the end of 2005.

Now retailers can sell all the license types available, without the financial burden of prepurchase and without the management burden of inventorying paper licenses or the tedium of manual transactions. They can also void licenses, administer and store user accounts, and run a variety of reports.

Exponential Transformation

Most customers get their licenses in less than two minutes, which is especially important for customers who purchase multiple licenses. There are no more shortages, and customers are spared the worry of private information — such as a Social Security number — being written down and kept in the shop until the license booklets are returned.

DNR gets real-time license information reporting, highly configurable reporting breakdowns to track license trends and individual retailer monitoring. Because Automated Clearing House/Electronic Fund Transfer payment processing is built into the system, funds can be collected weekly, and retailer compliance with funds handling can be audited with up-to-date information. Should a retailer become delinquent, the store’s ability to continue selling licenses could be halted immediately.

Support for the program was provided via the original installation team that helped with the orientation, the reference materials, online help inside IPOS itself, and a 24 x 7 call center to handle technical issues and take license orders manually if an outage were to occur. Post-installation surveys of understanding and usability were conducted two weeks after initial training and will be re-run later in the year to provide ongoing customer satisfaction analysis.

Although the technology that made IPOS possible was crucial, the overall strategy — to overhaul the process — was the real key to the program’s success, Ryan says.

“The program started with a set of functional goals, a set of tough barriers and a set of current retailers,” he says. “What got every component to work together to streamline this convoluted business process was not the technology, but the program — the communications, training, support, quick payment and accurate reporting. The tech is the golden egg, no doubt about it … but the program is the goose.”