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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.
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On Location with Life Time Fitness
Step inside a real-world IT department as we document Life Time Fitness' |
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.
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