Retail IT Roadmap: Planning for Competitive Innovation

In the coming years, retailers will face a nearly unprecedented amount of technology disruption and consumer intelligence. If they haven’t developed IT principles to embrace these forces, they are falling behind. With innovative new retailers like Amazon that see themselves as technology companies first, traditional retailers need to act quickly and plan effectively to stay ahead of the curve. They will need a roadmap to address the introduction of disruptive change into their business. But changing all areas of IT at the same rate is not optimal, leading to ineffective allocation of resources and losses of access to effective systems. In order to stay competitive, IT must learn to develop dynamically.

Establish your Plan

At one time, it was common for retail IT shops to operate around a unified, monolithic platform of systems. As IT becomes a foundational component of every retail business, this can no longer be the case. Today, organizations need to innovate while still providing access to legacy systems. By organizing transformation efforts by business specific processes based on needs of the business, retailers can begin to embrace the technology disruptions while continuing to provide reliable business critical services.

Although each retailer’s needs may be different depending on their goals and business model, they must start the journey to a more agile organization than what many retailers have today. They need to drive their business in real time. In order to facilitate this change, retailers must adjust their planning to focus on multiple key service and application groups, each being implemented at independent speeds to maximize growth, reliability, and efficiency.

Group 1: Support the Core – This group involves systems which are stable and require minimum support. These systems often form the core of a retailer’s shared IT services. Upgrades to these systems are infrequent and generally well planned. Any large-scale changes to these systems should focus on development around the affected business process and reintegration into the remaining systems through the implementation of micro services. These systems should also be subject to a high degree of governance to ensure that they meet internal and external requirements. These projects can also benefit from DevOps techniques to increase flexibility and development speeds.

Group 2: Optimize your Change – Many retailers have or are planning to implement comprehensive omnichannel retailing programs. These will typically include integrations of merchandising, distribution, store operations and customer relationship management systems. These integrations will almost always include an electronic commerce channel. This provides a perfect opportunity to optimize those systems closest to your environment by learning from some of the largest electronic commerce retailers. Implementing these applications using cloud capabilities, micro services, big data, deep learning, real time data analytics and other emerging systems will provide critical and timely customer insights, predict future buying behavior and allow for instantaneous changes to maximize the profitability of each channel. They will position the retailer for the agility to respond to all future competitive pressures and market opportunities. These systems require a significant investment – one which should be deployed against a solution set with staying power and great value.

Group 3: Innovate or Die – This group provides the testbed for items in both above groups and includes cutting edge IT services, including emerging technologies, process disruption and service innovation. This area should be leveraged by not only the IT organization but also by other constituencies throughout the enterprise. Successful innovations are then moved into the enterprise via the appropriate group function. This group is subject to a reduced degree of governance and can benefit from a very rapid development schedule using Agile and DevOps.

Disruptive technologies leave nothing unchanged. Introduction of these functions will require a series of organizational changes to maximize the value delivered. It may also change the retailer’s approach to internal versus external application management. Roles and responsibilities will require reevaluation and adjustments. The software acquisition process might need to be modified. The impact of these changes makes it imperative to develop a thoughtful and complete approach to disruption.

The primary concern that retailers should have is not whether or not to innovate, but by how much and in what order. By planning and prioritizing against specific targets, measuring progress and adjusting where necessary, the organization can better optimize its resources and roll out new services according to their value to the business.

To learn more about what Wavestone US can do for your company, visit https://www.wavestone.us/capabilities/.