Savvy IT investment can add value and pave the way for future growth, but are retailers evolving quickly enough? Retail Week, in partnership with Citrix, brought together leading IT names to find out
Retailers that still perceive the IT function as a cost saver rather than profit driver could fall dramatically behind the competition. That was the key message from a group of some of the UK’s most influential IT leaders who came together at the inaugural Retail Week CIO think tank lunch, in association with Citrix, which took place at the recent Retail Week Tech & Ecomm conference.
With digital innovation ensconced in every aspect of retail, from real-time inventory and supply chain management to targeted marketing and in-store theatre, embracing technological change is imperative. But, despite ecommerce and m-commerce having long demanded the top spot on business agendas, why aren’t retailers embracing digital change more quickly?
Mobile: ready or not?
For IT bosses at the event, although retailers are at varying stages of making their businesses IT-agile, many have yet to realise the full potential of mobile. Consumer spending on smartphones and tablets was £9.7bn in 2014 and is forecast to rise to £53.6bn by 2024, according to research from Barclays. The bank also forecasts 42.2% of retail sales will involve a mobile device “in one way or another” by 2024, which means the influence of mobile on spending is expected to soar from £18.4bn today to £112bn.
Whether it is through apps or mobile-compatible websites, ensuring a seamless customer experience on mobile devices has never been more important for retailers. And that includes making sure that technologies being introduced are native to the device being used by the consumer. “The worst thing you can do is give the customer an app that is not fit for service,” according to Pete Connor, retail consultant and Home Retail Group’s former information systems director speaking at the think tank.
CIOs at the event urged retailers to be careful that digital change and implementations improve customer experience and are not detrimental to legacy systems that work. “Somehow you have to balance the change in SAP and legacy systems, which can take a long time, and keep up with the fast pace at which apps, devices and technologies generally are changing,” Connor told the CIOs.
Balancing creativity with operational fluidity is a challenge that applies to people too. Connor explained: “As you transition into more of a technology-driven retailer you create roles for people who want to play with technology and be creative. But how do you enable that and still govern it? While bringing in creative, technologically-minded people is important, so is keeping the right architecture and systems in place. There is always a healthy tension in that area and I’m not sure that will change.” While bringing in the right employees will help retailers with their digital evolution, change must start at the top.
Hiring tech-savvy personnel
The good news is that the skill sets needed to take business models forward are out there, but tapping into relevant talent pools can be challenging. Retailers at the event said new employees often bring the hangover of IT cultures from previous employers with them. And for retail bosses to introduce digital innovation successfully, buy in from staff both on the shopfloor and behind the scenes is essential.
“Digital transcends every aspect of a customer’s life, so when they come into a store they expect that digital experience to continue, whether it’s a customer service agent giving them real-time information in store or speeding up a transaction,” said Citrix UK & IE country manager Jason Tooley. One retailer at the event said customers cannot be expected to embrace the technology they encounter on their buying journey when employees are unenthusiastic.
CIOs attribute staff reticence to bad experiences in their own use of technology within the company, for instance, not being permitted to use websites such as Facebook. A change in company culture around staff use of technologies and devices could go a long way to improving employee attitudes to new technologies introduced to the business. Effectively done, this could boost staff and consumer confidence in digital implementations, improving take up and helping technology investments pay off.
And those investments are essential to guaranteeing that the business is on track with the demands of the connected consumer. The widespread use of multiple mobile devices by shoppers and the consequent introduction to retail of constantly evolving technologies such as iBeacons, RFID, apps and augmented reality have thrust IT and digital strategy to the forefront of businesses.
The sooner retailers accept wholeheartedly that IT drives growth, the sooner they will reap the reward. CIOs agreed that business transformation is not happening quickly enough to meet the relentless pace of digital innovation and the evolving demands of consumers. Adapting operations and IT functions for the mobile revolution will ultimately help differentiate retailers, as well as generating new levels of productivity and ensuring they have the edge in an increasingly competitive market.
Embracing a new way of working
For IT bosses at the think tank, traditional perceptions of the IT function are inherently problematic, slowing decision making and essential change.
Much of the conflict arises when businesses operate in siloes, with communications between functions falling short. These detrimental setups are often inherited from previously established business structures, and compounded by archaic expectations of what the CIO role entails and how IT interacts with the rest of the organisation.
“The CIO role has changed from historically being about control and technology selection into being much more about business focus and leveraging consumerisation,” said Jason Tooley, UK & IE country manager at Citrix. “It is now about adding value at the front end of the business to drive new revenues by ultimately differentiating your brand and products.”
Gone are the days when IT was confined to keeping the lights on, instead it is poised to deliver value for money to the business. One retailer at the think tank said: “The last thing you want is for the CIO to become the head of legacy systems and other people to be in charge of a technology-driven store experience.”
To be at the heart of bringing digital advantages to in-store experiences, CIOs need to be interacting with the lines of business that know the customer best and working collaboratively with sales, marketing and finance. Building trust between IT and other functions is key, while taking risks and managing failure is all part of the journey towards digital agility. The risk involved with creating a truly multichannel business may comprise significant changes to an organisation’s infrastructure. This must be done with careful consideration. For instance, introduce a click-and-collect service in too much haste and this could place the back-end of the business under unmanageable strain.
When many IT systems were established no one could have predicted the ways technology would develop and consumers would be shopping, so infrastructures simply were not built for the emerging digital generation.
And getting the technology and the systems that support it right are not the only challenges. IT leaders still face uncertainty from bosses. Convincing the board that investment in technologies will help with cross selling and upselling, ultimately delivering revenue growth, can be a battle. Helping management to see IT differently, as delivering a return on investment rather than, as historically viewed, having a services function, can be beneficial.
Pete Connor, retail consultant and Home Retail Group’s former information systems director, believes that attitudes at top level are already more open. “In terms of investment, I think it is very difficult for boards. Bringing about digital change requires investment but there are so many differing options available that knowing what is going to make a difference is often hard
to determine. “They are having to balance competitive pressures, the need to go fast and cost,” he said.
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