"We've had some ups and downs. It wasn't a straight line to success," says Wesley Bertch, director of software systems.
"It wasn't a belly flop either," CIO Brent Zempel chimes in.
"Sometimes it felt like a belly flop," Bertch says with a hesitant laugh.
This is the inside story of a midsize fitness club operator that continues to overhaul its application infrastructure to help the company grow 50 percent per year. At the center of that activity is the two-year-old, custom-developed MMS, which Life Time uses to track customer demographics, provide daily field reports for operations managers and finance executives, conduct electronic funds transfer for bill collection, and offer one-second check-in for club members. The system also takes advantage of a Web services platform--built on Java 2 Enterprise Edition tools, a BEA Systems application server and SOAP (Simple Object Access Protocol) interfaces--to connect member records with an ASP-provided online scheduling application.
Life Time's developers define Web services as cross-enterprise application integration in which one application has permission to make calls and pull data from another. This kind of integration will be extended further as the company expands into ancillary markets.
Already a 4,800-employee company headed toward the $200 million revenue mark this year, Life Time aims to become a billion-dollar company in the next few years, not only by adding six clubs each year, but also by selling nutritional supplements, fitness apparel, health magazines and related products to its members, whose numbers grow by some 15,000 per month. Web services let Life Time give partners access to specific data and applications, whereas a VPN (virtual private network) provides all-or-none access to systems behind a firewall, systems architect Gary Lien says. (For a technical walk-through of MMS, see "MMS: The Muscle Behind the Life Time Fitness Machine.")
In many ways, Life Time's risk-taking culture is the ideal setting for one of the first documented trials of cross-enterprise Web services technology. The company isn't overly burdened with legacy systems, so it doesn't have much to lose by tapping Web services to connect with partners. Yet it desperately needs to develop these connections, and fast, to support its aggressive growth plans.
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Big Business
Revenue diversification, the linchpin of Life Time's plan to go public within 18 months, depends on new ways of tracking customer demographics and preferences using MMS.
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"Everything in the press says Web services isn't ready for prime time," Lien says. "Do you think that Wells Fargo and Chase are going to say, 'Hey, I'll use Web services?' We're willing to take the risk and try this because we're not invested in something old like EDI."
In other ways, building MMS was out of character for Life Time. The $25 million the company spent to develop the system is more than it has spent to open any of its lavish clubs. Most of that expense went to hiring development consultants when, in the middle of MMS' creation, Life Time switched from a Microsoft architecture to Java, even though it had no Java expertise in-house.
Microsoft spooked Life Time's development team early on when it declared that it would no longer support Web forms in Microsoft Commerce Server. "We said, 'OK, Microsoft has done this how many times before?' " Lien says. Worried that Microsoft would take away support for other underlying technologies Life Time planned to use, the development team decided to switch to Java, which they deemed more predictable over time.
The company's frugality is renowned in the industry, which helps explain how it can charge as little as $40 per month for access to state-of-the-art fitness facilities equipped with basketball, squash and racquetball courts, indoor and outdoor swimming pools, cavernous weight rooms, locker rooms with marble treatments, and day care centers that are Apple Computer iMac-equipped and fully secured.
On Location with Life Time
Fitness
Step inside a real-world IT department as we document Life Time Fitness'
nationwide applications infrastructure rollout. Check in
frequently to catch the
IT crew at work and at play. You can even post questions for the Life Time IT
folks. and they may have a few questions of their own for you!
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But Life Time wants to be more than an upscale gym operator. It wants to extend its brand to other fitness categories and wring more revenue out of its existing membership base. A big motivator is the company's plan for an initial public stock offering (IPO) in the next 18 months. Wall Street likes to see consistent, aggressive growth, and a revenue model that isn't dependent on any single source.
"It's very labor-intensive and cash-intensive to evolve 120,000-square-foot buildings into a nice cash-producing engine," says vice president of operations Mike Brown. "If we could leverage that same membership population that is coming through our facilities at an average of $60 per month and get an additional $60 of revenue off that same population, at probably a 60 percent margin, that's where our growth opportunity is."
Sales of ancillary products represent only 5 percent of Life Time's revenue today, but the company plans to push that number as high as 20 percent in the next 12 months, Brown says.
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