Agile Commerce

Whitepaper: Agile Commerce:

An Introduction for Retailers

Prepared by: Barry Hogan

Deliver a successful Omni Channel Strategy by focusing on

optimising people, processes and technology to service your

customers across all touch points.

Table of Contents

What is Agile Commerce? ....................................................................................... 2

Why is Agile Commerce Important? ....................................................................... 4

What does Agile Commerce look like from the trenches? ................................... 7

Conclusion .............................................................................................................. 10

About Version 1 ...................................................................................................... 11

Agile Commerce: An Introduction for Retailers

Version 1 Whitepaper Page 2

What is Agile Commerce?

Consumers are becoming more connected to the internet every

day. Whether they are using their smartphones to find discount

codes on twitter, using their smart TV to watch digital films that

they purchased free using their supermarket reward points

scheme, buying a discounted screwdriver set via a retailers daily

deal email, using a “Subscribe & Save” service to buy their

consumable goods or switching to a local vegetable box delivery

service purchased and managed through the web.

Users are both engaging with brands and buying products in new

and unexpected ways whilst spreading their purchase journey

across all available touch points. Gone are the days where you

could rely on a customer engaging through a single channel.

The “Internet of Things” has already turned Phones and TVs into

internet connected app stores; soon fridges, heating systems, cars,

watches, radios, printers, glasses and anything else you can

imagine, will become app store platforms, each fighting for the time

and attention of customers and each a viable touch point to include

in an Omni channel strategy.

Retailers are constantly stuck with the dilemma: do you follow the

leaders in the field and risk losing market share to those who were

first to invest or do you invest in a user journey that does not deliver

the ROI that was expected.

Building good consumer facing digital services is hard. Plus

nobody wants to be caught in a three year project to buy, build and

deliver a platform or channel that may be obsolete before it goes

live.

So what do you build first?

Where are your customers engaging?

What will deliver the most ROI?

Figure 2 - Twitter distributed promo codes



Agile Commerce is a set of processes and principles that can be used to help a retailer answer

these questions. Agile Commerce has its roots in Agile software development and Lean

manufacturing, both de facto processes in their respective industries.

Agile can be summed up by the principles of the Agile Manifesto. However, Agile is often most

recognised as a project management tool where the focus is on developing an organisation and

process to deliver value incrementally and consistently.

Omni Channel Retail is focused on delivering a seamless shopping experience across all

channels. Forrester has tried to differentiate Agile Commerce from Omni Channel by making them

competing strategies; however Version 1 considers Agile Commerce and Omni Channel to be

complimentary strategies. Whereas Omni Channel outlines the vision of what a retailer wants to build,

Agile Commerce is the delivery engine that is used to build an Omni Channel retail experience.

Lean Manufacturing (Lean) is focused on the creation of value and considers anything else as

wasteful, thus a target for elimination. The Lean principles can be applied to both the process that

builds the product and the product itself.

“An approach to commerce that enables businesses to optimise their people, processes and technology to server

customers across all touch points.”

Martin Gill - Forrester - 27/11/12

While some organisations have been practicing Agile Commerce principles for some time, it was

Forrester who recently coined the term to identify those retail organisations that where reaching out to

their customers on all relevant touch points using a metrics driven, customer orientated approach.

Agile Commerce is big with the online pure play retailers

and has also become popular with more traditional retail organisations

The one thing that all these organisations have in common is that they are constantly

innovating whilst continuing to deliver growth and new business models for their consumers.

http://agilemanifesto.org/principles.html

http://blogs.forrester.com/martin_gill/12-11-27-agile_commerce_thats_forresters_word_for_omnichannel_right



Why is Agile Commerce Important?

Implementing Change

“Businesses change slowly, but customers change quickly”

Sir Terry Leahy, Teradata Conference, 2011

“Retail is about trying things: constantly adapting, nudging and improving parts of the store.”

Richard Hammond, Smart Retail, 2011

The traditional retail business model is consistently being challenged by new organisations that do not

have the incumbent processes that prevent them from innovating. As a result, retailers are struggling

to find their feet in a digital world whilst new models and supply chains are eroding their customer

base and profit margins.

The online pure plays have built their business models and processes following the same

philosophies that they used to build the software that gave them their competitive advantage. As a

result, they have a core philosophy to embrace change which is enabling them to continue to deliver

and innovate in a constantly volatile environment.

“What is dangerous is not to evolve.”

Jeff Bezos

The IT procurement, implementation and management processes used to buy, deliver and run a till

system are designed to reduce risk by tightly controlling change. These processes are entirely

appropriate for solutions that are very well understood and provide a utility that changes very little

during the lifetime of the service; however they tend to create an environment that is opposed to

change and thus start to fall down when they are used to build, deliver and run a consumer facing

digital service where there is a high degree of uncertainty and an ever changing technology

landscape.

Figure 6 Traditional Buy, Deliver and Run model



Figure 7 – Agile Commerce Model

Organisations that operate in this environment need to adopt a different mind-set that enables them to

constantly iterate against user feedback and metrics, continuously evolving their service to meet the

needs of the consumer. The iterative process at the heart of Agile Commerce is focused around

delivering ideas early and then validating their success.

Eliminating waste

Jim Johnson of the Standish Group identified that the biggest waste in the software industry was

building features that users never used. With the fragmentation of the customer user journey it has

become increasingly difficult to get a cohesive understanding of how online activity drives sales,

especially when considered across channel. By using the techniques identified in Lean

manufacturing, organisations can develop their digital services iteratively, delivering only those user

journeys that deliver value to the customer, therefore eliminating waste and delivering a higher return

on investment.

“Something we haven’t talked about, but that is super important in our culture, is the focus on defect reduction

and execution. It’s one of the reasons that we have been successful for customers. That is something I had to

learn about… Well, by “learn” I mean I literally learned a bunch of techniques, like Six Sigma and Lean

manufacturing and other incredibly useful approaches”

Jeff Bezos Harvard Business Review, 2007

The fourth rule of Lean is that any improvement must be made in accordance with the scientific

method. Therefore all changes have to have a measurable impact, thus Lean thinking uses metrics as

the key driver for change.

Ideas

Build

Deliver

Measure

Data

Learn

Idea

• I believe that an “abandoned basket email will deliver a 15% conversation rate”

Build

• Develop a simple abandoned basket email service

Deliver

• Push the abandoned basket email to 10% of your existing customers (early adopters)

Measure

• Measure the conversion rate

Data

• Review the data

Learn

• Share the data and validate idea

Repeat

• If successful repeat the process and optimise or pivot and try something new

http://blog.standishgroup.com/



“What gets measured gets done”

Peter Drucker, Management by Objectives

The only way to know that a change has had an impact to the value proposition is to measure it. It is

only through continuously iterating, measuring and optimising can digital services evolve into mature

platforms consistently delivering ROI and enabling the business to innovate and engage customers

across all relevant touch points today and in the future.



What does Agile Commerce look like from the

trenches?

Team

SOA architectures are recognised as the foundation for a scalable and maintainable service.

“Any organization that designs a system (defined broadly) will produce a design whose structure is a copy of the

organization's communication structure.”

Conway’s Law

A successful SOA architecture can be achieved by breaking the traditional linear and pillared

approach to software development and implementing cross functional teams that represent the

services required to build an Omni channel platform.

Figure 8 - Traditional Team Structure Figure 9 – Agile Team Structure

Each cross functional team would be responsible for building, delivering and running their service and

should be composed of all the technical and business personal required to fulfil the full Software

Development Lifecycle (SDLC).

“If your team can’t be fed on two pizzas, then cut people”

Jeff Bezos

Teams should remain small, autonomous and decentralised to free them to innovate and implement

change without the fear of derailing the larger ship.

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Process

The most common agile development process used is called Scrum. Scrum breaks down the

traditional V model of a waterfall project into time boxed iterations called sprints.

The vision for the platform is broken down into discreet user stories that represent a user’s needs and

are catalogued in a prioritised product backlog. The product backlog should be easily accessible and

is often represented on a wall using post-it notes for each story. Good user stories are written from

the customer’s perspective and include the “what” and “why”. To make sure that you are tracking ROI

every story should include a metric against which success can be measured:

User Story: “As a customer I want to be notified when regular breakfast cereals that I purchase are included in a

special offer so that I can manage my budget effectively and get the best deal possible”

Metric: Measure email click through rates for personalised emails based on a customer’s previous purchase

history.

At the beginning of each sprint the next set of prioritised stories are selected by the team and they

commit to delivering those by the end of the time boxed sprint. The key to a successful agile delivery

process is to keep the “in process” work as small as possible, therefore when adopting Scrum as the

agile methodology it is important to keep the sprint as short as possible. Version 1 recommends that

sprints should be no longer than one week in duration.

Agile teams should use the same continuous improvement processes used to optimise their digital

service on their delivery process. Thus a mature agile team should be able to measure the time

between idea to delivery to validation in days, not weeks, months or years. Once an agile team

reaches maturity alternative agile methodologies such as Kanban should be considered to replace

Scrum, as Kanban provides greater flexibility in workflow as the need for fixed time boxes is removed.

30 days

24 hrs

Product Backlog Sprint Backlog Sprint Working increment of the

software



Delivery Focused

Agile teams have a strong customer focus that is hinged on software delivery. As a result there are a

number of agile mantras that can often be heard within an agile team.

“Release early & release often”

“Going live is the start, not the end!”

Agile teams look to deliver working software to a live production environment early and often. It is not

uncommon to see agile teams delivering working software daily. This can only be accomplished when

the whole team is focused on keeping software production ready at all times. This focus results in an

engineering environment where automation is used to continuously build and validate the platforms

suitability for a production release. The target would be to have a fully autonomous delivery process

that integrates, tests and deploys the changes automatically into a staging environment so that the

business can make the call for when they want the software changes deployed. It is important to note

that “releasing to live” or “go live” are terms that should be associated with the business deciding that

they are ready to start promoting the service, rather than a technical milestone of delivery and should

therefore be decoupled.



Conclusion

Agile Commerce is a philosophy that combines the best of Agile Software development and Lean

Manufacturing principles to enable a retailer to build a delivery engine that puts the customer first and

delivers value iteratively, based on real numbers.

Version 1 advocates the adoption of Agile Commerce philosophies to enable digital services that

engage customers and support entrepreneurial retailers while at the same time keeping a measured

view on ROI and IT spend.

Next Steps

For retailers considering the Agile Commerce route, the actionable next steps would be to define an

overall vision and start to build a comprehensive product backlog. If existing ecommerce websites,

apps and services are deployed, Version 1 would recommend that the TOGAF Architectural

Development Method (ADM) is used to establish the vision, baseline and target architectures required

and to define a roadmap for incorporating the necessary changes to people, process and technology

required to deliver a viable Agile Commerce environment.

In line with the philosophies outlined in this whitepaper, Version 1 would recommend that the agile

principles are used iterate through the TOGAF ADM and apply lean thinking to evaluate, define and

implement change to the organisation.



About Version 1

Established in 1996, Version 1 is a trusted technology partner to major domestic and international

customers across all industry sectors in Ireland and the UK. Version 1 has accumulated in-depth

expertise in the Retail Sector and helps leading commercial retailers to deliver solutions which

achieve competitive advantage in this highly competitive and constantly shifting market.

Version 1 operates enhanced partnerships with Oracle, Microsoft and Amazon and has achieved

unrivalled breadth and depth of competency in all three. Our 400 strong team, based in offices in

Dublin, Cork, Belfast and London, are focused on proving that IT can deliver real benefits to our

customers’ businesses.



Version 1

Ireland Head Office

Millennium House

Millennium Walkway

Dublin 1, Ireland

www.version1.com

Version 1

UK Head Office

45 Moorfields

Moorgate

London EC2Y 9AE

www.version1.co.uk

http://www.version1.com/

Agile Commerce

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