A Whole Different Ballgame

By Ben Thompson, Senior Editor

Barry Bonds may have been hitting the home runs and grabbing the headlines on the field of play over the last few years, but behind the scenes at the San Francisco Giants’ AT&T Park, Bill Schlough has been scoring some equally impressive results. Ben Thompson catches up with Major League Baseball’s most innovative CIO.

Nestled in the heart of Silicon Valley, you’d expect the San Francisco Giants to be amongst baseball’s technology big hitters; they do not disappoint. With backing from some of America’s largest IT companies and a tech-savvy fan base that’s willing to embrace (and in many instances, demand) cutting-edge facilities, the Giants have been topping the table in terms of innovation for almost a decade – both on and off the field.

Leading the technology team is CIO Bill Schlough. Having joined the San Francisco-based outfit in 1999, he initially oversaw the on-time, on-budget construction of the information technology infrastructure of Pacific Bell Park (now AT&T Park). Since then, under Schlough’s guidance, the Giants have demonstrated a sustained commitment to creatively leveraging technology. He says there’s no such thing as a typical day, but sees his work falling into two primary areas of responsibility. On the one hand, he needs to keep the lights on – keep the infrastructure up and running, as well as make sure the facility itself is operational from a technology perspective (meaning that everything from the scoreboard to the turnstiles to a number of other fan-facing technologies at the Giants’ state-of-the-art ballpark work as they should). Provided he is successful at the operational side of things, he is then free to do what he calls “the more interesting stuff”.

“In many ways, we’ve been very fortunate,” he explains. “Based on where we are geographically and the commitment to technology innovation shown by our leadership, we’re able to spend a lot of time exploring new and different technologies that might enhance our success – either off the field in terms of generating revenues or enhancing the fan experience at the ballpark, or on the field in terms of player performance.”

In this regard, Schlough oversees a number of project managers and application developers that are rolling out new technologies and exploring the needs of the Giants’ various business units. In baseball, revenues for a typical team range from around $125 million for low-end teams all the way up to teams like the Yankees and the Red Sox that have revenues close to $400 million, thanks largely to their huge broadcast deals. The Giants are amongst the higher-value teams with annual revenues in excess of $200 million, meaning Schlough has one of the biggest IT budgets in baseball – although because of the unique nature of the sports business, he’s never sure exactly what money’s in the pot.

“As far as our technology expenditures go, it’s really difficult to pin down,” he admits. “A lot of our deals are done through marketing partnerships so I’m not necessarily writing checks, and my annual operating expenses in terms of just keeping the lights on are probably less than one percent of revenues, around $2 million. But as far as new capital investments go, that’s a different story. Last year was a big year for us in terms of capital technology investment; we spent around $10-15 million, with the majority of that going on our videoboard initiative here at the park. A typical year may be more in the $5 million range. It just varies depending upon what projects are on the docket.”

And as Schlough explains, it also depends on what the Giants’ marketing department has negotiated in terms of sponsorship deals and contra arrangements. “It’s an unusual situation,” he says. “When you’re in the sports business, we don’t necessarily always look to choose the best functionality or the best price for our technology investments. A lot of times we’re looking to do business with someone who’s willing to do business with us.” He cites a recent storage acquisition process as a typical example. “We’re in the midst of finalizing a major storage purchase to service the needs of our video coaching and scouting system, which is in the 10-plus terabyte range, potentially growing to as much as 100 terabytes when we look at our future requirements. Let’s say I wanted to do business with Vendor A, the market leader and the provider we feel has the best products. Well, if Vendor B, their main competitor, came in and said that while they might charge just a little bit more and their product may not quite have the same functionality, they’d love to do a $1 million a year marketing partnership with us, then as long as we feel like their quality and performance meets our minimum standard, we would definitely choose them. Whereas a lot of companies would go with the lowest price or the highest functionality, we’ve got this third element that comes into play: whether the organization is willing to do a marketing partnership with us. It’s an element that goes into all of our purchase decisions.”

Unconventional challenges
While such arrangements can certainly help with the financial aspects of running a large IT department, they also bring a number of unconventional challenges to the role of the CIO. For one thing, he has a much closer relationship with the marketing department than chief information officers at other organizations. Schlough’s office is right next door to that of the Giants’ marketing chief, and a significant proportion of his time is spent talking with him and his marketing staff every day. “It’s a huge part of our job,” he says. “It’s good in some ways because it helps us on the budget side, but it also can tie our hands and be a little frustrating. Normally if we’re making a purchase, we evaluate the options, we negotiate the deal and we move forward. But because of this third element, not only are we negotiating a deal as an IT department, but on the other side of our operation, our marketing department is also negotiating a deal with the marketing department of the vendors. Very rarely do those parallel negotiations conclude at the same time. Almost always, we’re pushing at the end to get the marketing deal done so we can get the technology installed in time for opening day. It’s one of the major challenges we face as an IT organization.”

The upshot, however, is that such deals have enabled Schlough and his team to drive the Giants to new levels of sophistication in terms of their technology deployments. The user-acceptance of a tech-savvy fan base has also helped him push through a number of initiatives to ensure a more high-tech experience at the ballpark, while at the same time retaining an old-time feel. “We’re not trying to make the stadium into some sort of spaceship from the 22nd Century,” he maintains, “but we want to use technology wherever we can to enhance that experience. For example, it may be behind the scenes. Wi-Fi is one of our favorite technologies, because it’s not something you see as you walk around the ballpark. When we rolled it out four years ago, we were one of the largest hotspots in the world and we’re still one of the only sports facilities to provide Wi-Fi access through its entirety. Are fans more likely to come to our ballpark because of the Wi-Fi? I’d argue that a few are – it improves the experience significantly to be able to access information, statistics, even video when you’re at the ballpark, so it augments the experience. Did that drive hundreds of thousands of dollars in ticket revenue? Absolutely not. But what it did do was help us to attract marketing partners to our facility because of the fact that we continue to demonstrate a commitment to new technology.”

In fact, he attributes the Giants’ reputation for innovation to their location at the heart of America’s technology heartland. “It goes far beyond just the fan base,” he asserts. “It also has to do with the critical mass of technology vendors that are based in this area and their willingness to partner with us. In past years, Intel was very excited about partnering with us and showcasing their Centrino chip by leveraging our Wi-Fi network. We’ve currently got Oracle as a major partner here, HP has been a partner in the past, and there are many other vendors that may not even be based in the Bay Area that want to get the attention of our market. Companies like Mitsubishi, Sony, Panasonic, Sharp – not only do we showcase their technology here, we also have marketing relationships with them.”

And it’s not just the partners that are bringing technological sophistication to the table; the team’s ownership group – the majority of whom are based in the Bay Area and many of which made their fortunes through high-tech – plays a part too. Schlough’s in no doubt that it’s given his team a competitive edge. “They understand the value that technology can bring to a company and they understand the value that IT can bring to a sports organization,” he says. “That’s why we are able to invest as much as we do: because our ownership group gets that. Other sports organizations maybe don’t have that kind of culture.”

Commitment to innovation
Indeed, since moving into its new, state-of-the-art ballpark in 2000, the Giants have shown a commitment to leveraging technology to enhance the fan experience and improve performance on the field that has put rivals to shame. Back then, the team were the first in professional baseball to go completely digital with its video system. Before that, teams used VCR-based systems that involved cutting tape for each player, then fast-forwarding and rewinding to the at-bats or pitches they wanted to see – a cumbersome process. Going digital cost over $1 million, but was worth every penny according to Schlough. “We had a giant DVD jukebox that stored several terabytes of data, which allowed our players and coaches to query video footage and access any footage of our players, or of players they were about to face, to improve their game preparation and improve their performance,” he says. “We set up various viewing stations at the ballpark where the players could sit down before games – even during games –to access footage from various camera angles. They could do side-by-side views. They could look at their most successful at-bats if they were in a slump to see any differences in their swing. And in the first few years, it definitely contributed to our success on the field, and we had some very successful seasons as a result of that technology. Fast forward seven or eight years, and every team is doing this. But at the time, we were the first to make that leap.”

In the first few years at AT&T Park, the Giants went to the playoffs three times and to the World Series once. “We came agonizingly close to winning that World Series, and our assistant GM at the time, Ned Colletti, publicly stated that the video coaching system contributed to us winning at least a couple of tight games because of the improved preparation we were able to do. If we’re able to get one or two extra wins on the field as a result of that system, the investment we made was a no-brainer; we’d happily pay $1-2 million dollars for that. The commercial returns we get for making the World Series or the playoffs more than justify the outlay.”

The Giants were also pioneers in the secondary market for tickets, a business that now generates tens of billions of dollars in revenue. Recognizing that 28,000 of 42,000 seats were allocated to season ticket holders with a ticket to all 81 games, and that very few fans would actually be able to attend all those games, the team resolved to make it easier for them to justify that initial investment. “We wanted to roll out a system that allowed them to transfer those tickets and resell them on the public market,” says Schlough. “Remember, when we launched in 2000, StubHub did not exist; eBay existed but their ticketing business was very small, and so we launched a system we called the Double Play Ticket Window that allowed our fans to resell those tickets at any price above face value. And over the past eight years, we’ve generated over $40 million in revenues reselling close to 800,000 tickets for our fans, putting that money right back in their pockets so that they’re more likely to renew their relationship with us year after year. It’s been a huge success, and today virtually every Major League Baseball team has set up a similar system – most of them leveraging the proprietary activation and deactivation technology that we developed in 2000. In fact, Major League Baseball recently signed a deal with eBay so that in 2008, if you want buy baseball tickets on the secondary market and you go to eBay, StubHub or any of the team sites, it’s all the same marketplace.”

The most recent development has been replacing around 350 standard CRT televisions with Sony plasma and Sharp LCD high-definition TVs throughout the ballpark. “Upgrading our infrastructure to be able to deliver high-def has really added to the wow factor at the facility; we currently have 225 high-def flat panel displays rolled out today, and we’re looking at rolling out another 100 this off-season to complete the transition to high-def everywhere in the ballpark,” says Schlough. The team also replaced its videoboard to provide a totally high-def experience for its fans, rolling out a Mitsubishi Diamond Vision screen, 103-feet wide by 31-feet high, in center field. The new board consumes 76 percent less power than the old board, cutting power costs significantly, and provides great opportunities for selling alternative events at the ballpark. “It’s the biggest investment we’ve made,” he continues. “The entire project was in excess of $10 million, with the majority of that going on the infrastructure at our production facility to enable us to deliver high-def content to the fans on that big board. During this season alone, we had Barry Bonds break the homerun record, we hosted the All-Star Game here, and it’s hard to imagine what that experience would’ve been like without our videoboard, because that was really the centerpiece for showcasing a lot of different content around those historical moments.”

Changing the game
As with any good CIO, however, it’s future developments that really fire Schlough’s imagination, and he’s always on the lookout for technology that will offer the next competitive advantage. In terms of the baseball-side, he’s keeping mum. “ We have a pretty good idea of one area that we think will help enhance our ability to evaluate talent that we’re focusing some investments on this off-season,” he reveals, tantalizingly. “But I’m not going to give away too much at this point. Technology only remains an advantage as long as the competition aren’t using it too.” However, when it comes to the off-field operations, there are a number of things he’s currently focusing attention on. “It’s almost like a portfolio strategy; you want to have your hand in a lot of different technologies to see which one is eventually going to take off.”

The first of these is a continued focus on video technology. Whereas in the last few years he’s concentrated on the move to high-def throughout the facility to improve the video experience in the ballpark, now he’s switching attention to look at the Giants’ historical assets. “We have 100-plus years of history in Major League Baseball, and we have many decades of video footage on tapes and in warehouses that cannot be accessed by the fans,” he says. “Figuring out how to make the video history of our organization available to our fans is something we’re putting a lot of time and energy into.”

Another initiative that features high on the to-do list is a revamp of the park’s point-of-sale side in an attempt to streamline the purchase experience for the fans. “We’re looking at things like RF-based credit cards and gift cards, and I think we’re going to continue to invest in that area in an effort to move in the direction of the cashless park,” he continues. “We’ll also continue to rollout e-ticketing – moving towards a point where you don’t need to bring a ticket to the game anymore, you just need to bring a driver’s license or a credit card, swipe it at the kiosk, print your ticket out, and you’re good to go. We just want to make it as easy as possible for fans to access our facility and enjoy the experience – whether they’re waiting in line for a restroom and looking at one of those high-def TVs; sitting in their seats, watching the game on the field and watching replays on the high-def videoboard; or using a Wi-Fi device to pull up a video of a game that happened five years ago. It’s about trying to leverage technology in different ways to enhance that fan experience. That’s the ultimate goal, and we’ll continue to find new and different ways to do that.”

So in terms of the future, where do his priorities lie? Is there any tension between the baseball side and the off-field operational side? “Our baseball people like to think that baseball is always going to be our number one priority,” he says. “However, while we’re certainly here to play baseball, we’re nothing if we’re not filling the seats. That’s where the revenues come from, so we always try to strike a balance between the two – between investing in technology that enhances our ability to make money, and investing in technology that enhances our ability to play the game. Typically, the balance would be 50/50; I’d say we’re probably leaning a little bit more towards the baseball side this off-season than we do in a typical year, so it’s maybe more of a 60/40 split. But we always need to strike that balance.”

About the contributor
As CIO, Bill Schlough is responsible for setting the technological direction for the San Francisco Giants. Under Schlough’s guidance, the Giants have demonstrated a sustained commitment to creatively leveraging technology to enhance the fan experience through innovations such as the Double Play Ticket Window, Ticket Relay, the Digital Dugout, contactless credit card payments, HDTV and the first 100 percent wireless facility in professional sports. He directs a team of dedicated professionals that provide day-to-day technical support while working with internal clients to develop, implement and support innovative IT solutions that enable the attainment of the Giants’ strategic objectives.

Schlough is a proven leader with diverse experiences in technology spanning various industries. Before joining the Giants, he worked as a management consultant with Booz-Allen & Hamilton’s IT Group and spent four years as a technology consultant for Electronic Data Systems.