CASE STUDY : HONG KONG JOCKEY CLUB

Hong Kong Jockey Club Bets Its Future on Open Systems...and Wins

Betting on the Future: The Hong Kong Jockey Club's IT Investment Strategy

Though more than 100 years old, the Hong Kong Jockey Club is anything but provincial when it comes to its IT management strategy. In just a few years, the Club has implemented a standards-driven transaction processing IT infrastructure that has already saved the organization millions of dollars in procurement and operational costs while increasing revenues due to increased transaction processing throughput.

Founded in 1884, the Hong Kong Jockey Club operates two racecourses, Happy Valley in Hong Kong and Sha Tin in the New Territories. Together they generate US $12 billion in revenues annually. Prior to each race, the Club handles many thousands of bets, requiring a highly sophisticated transaction processing IT infrastructure. In other words, it's a "game" that's all business.

In the late 1970s, the Jockey Club implemented what was then considered a state-of-the-art information system. In the early 1990s, concerned that it was falling behind the technology curve and that it had come to rely too heavily on a single vendor, the Jockey Club began laying plans for systems that would interoperate across existing IT investments and any new developments.

The Open Group played an educational and consulting role in the project from the beginning. Between 1992 and 1994, The Open Group held a number of sessions on Distributed Computing Environment (DCE) for Jockey Club executives and groups of Club engineers.

DCE would become one of the networking standards selected by the Jockey Club. The executive sessions helped Jockey Club management understand the business case for DCE, while engineering sessions allowed developers to get up to speed on DCE. The Open Group consultants also filled staff project positions, assisting developers with integration issues.

The project would be a major undertaking, with the Jockey Club's complex information systems and networks reflecting the tremendous volume of bets and cash that must be transacted. A single race can take in over 275 million Hong Kong dollars. Bets can be placed by any of several different methods: through traditional teller windows at the track, on cards that are marked up and inserted into on-track card readers, or through off-track betting branches. The Jockey Club even supports 70,000 hand-held mobile units that enable individuals to place bets from anywhere in the world.

The infrastructure required to manage these transactions is complex, with over 3,000 operators handling account betting telephone calls. Then there are another 8,000 operators taking cash bets at the two racecourses and at 125 off-course betting branches. Together with the transactions originating from the hand-held betting terminals, this places a transaction processing load of several thousand transactions per second on the back-end bet processing systems.

The decision to redevelop all of the Jockey Club's information systems represented a significant milestone. "We had relied largely on a single vendor so our systems were proprietary through and through," says Robert Neely, the Jockey Club's Research and Planning controller, who was brought in to manage and align strategic technology planning with business objectives. "To achieve maximum flexibility, we had to have heterogeneous multi-vendor systems."

The Club also sought scalability and enhanced security. In the critical minutes before a race, a system with insufficient throughput might not be able to keep up with the betting, turning some betters away and causing revenue loss. Neely sought to ensure that the new designs could scale from a transaction rate in the low thousands per second to 6,000 or more per second without any need for radical change to the architecture. And with millions of dollars at stake, the Jockey Club had to ensure the highest integrity of data. "We needed to achieve security beyond the banking industry and even at military security level on some of our systems."

"DCE was very much the single choice," recalls Neely. "Our interest was always the brand. We liked the idea of a branding process with teeth that ensures ongoing compliance by the vendor."

Off to the Races

The Jockey Club's transition to standards-based systems began in 1992 with intensive monitoring and active participation in various consortia, including The Open Group founding organizations, the Open Software Foundation (OSF) and X/Open, to identify and track viable standards-based technologies that the Club could adopt in its new systems. According to Neely, "We wanted a commercially relevant consortium." Neely developed a five-year "road map" that outlined a series of steps that would move the Club away from its legacy of single-vendor proprietary, next to a small set of preferred vendors committed to de facto marketplace standards, then to a group of preferred vendors working to standards, and finally to best-fit vendors working to standards.

Because Neely's group did their homeworkconducting extensive research on evolving standardsthe Jockey Club was able to leverage its standards-based systems strategy early in the procurement process. "We could tell the vendors, you don't sell to us, we buy from you. Now let's see what you've got that matches our open systems standards."

With its standards-based systems road map in place, Neely took the next step, releasing a Technical Framework that detailed policies and strategies. While the document constrained architecture, it did not specify individual products or vendors. TCP was the chosen network protocol; The Open Group's XPG4, the operating environment; The Open Group's DCE, the distributed computing infrastructure; and Object Oriented Language the application development language.

DCE supports the use and maintenance of distributed applications across heterogeneous systems. "DCE was very much the single choice," recalls Neely. "Our interest was always the brand. We liked the idea of a branding process with teeth, which ensures ongoing compliance by the vendor."

Racing to the Finish line

The Jockey Club's migration to standards-based systems is now well established. The new account betting system has worked very successfully for two racing seasons and is considered a showcase in Hong Kong. Benchmarking organizations now study it as an example of best practice in the region. The branch network replacement is also seen in Hong Kong as an open systems showcase and has been running successfully since December 1996.

The current focus is on the redevelopment of the betting systems and this continues the Club's pervasive commitment to open standards and technologies even for the highest levels of performance and security.

Both the new and the old back-end betting systems are running side by side until completion of a very careful cut-over strategy. Unlike many IT organizations resigned to living with older legacy systems indefinitely, Neely sees the eventual decommissioning of all of its older systems. "When our people are absolutely convinced that it's safe to turn off a legacy system, we do it," says Neely.

With so much focus now on getting return from IT investment, the Jockey Club's strategy has yielded both operational and financial success. John Markwell, the Club's Board Member responsible for Information Technology has estimated that the Club's technology strategy has already achieved savings of "well over $100 million dollars."

On the operational side, the Club's tradition of extremely high availability is being maintained at 99.98 percent of scheduled up-timea vital requirement when downtime just before a race results in millions of dollars of lost revenue each minute. As Neely notes, "With what's at stake in Hong Kong betting, our systems are not just security-critical but safety-critical as well."

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© The Open Group 1995-2007  Updated on Wednesday, 11 July 2001