The Evolution of Retail IT

Drive Your Business

The Evolution of Retail ITMajor transformations and how your business can adapt

2 ©2016 WGroup. ThinkWGroup.com

IntroductionWe live in an era where all aspects of IT are transforming. The ability of a retailer to

engage its customer base in an omni-channel manner, innovate, and keep pace with the

customer mandate for immediate information is key to survival in today’s marketplace.

In order to thrive in the coming years, it’s critical that every company carefully analyze

its own business goals and determine how new technologies can help make them more

attainable. This means having a clear understanding of key IT trends occurring right now.

Use IT change to drive business goals

IT is driving major change across practically every industry, retail being no exception. Companies

that don’t pay attention to new developments and adapt swiftly may risk obsolescence. IT is

changing its focus from resource intensive operations centered on infrastructure management

to relationship and service management. That provides significant opportunity to reduce

costs, increase efficiency, and deliver better products and services. The retail CIO needs to

understand how these changes can help their company innovate

and stay competitive in a rapidly evolving market.

IT departments need to leverage the process-oriented

experience and be the champion of next-generation

technology and tools within the business. The

organization needs to develop a shared agenda to

integrate technology with business outcomes by

partnering and aligning with business unit peers,

including merchandising, marketing, supply chain,

loss prevention, and HR. This provides a basis

for future growth in the company and makes IT

a more effective component of the business.

The world of commerce is changing rapidly, and

those who do not stay abreast of new developments

will miss out on major opportunities. This guide

was created to help you understand recent shifts in the

world of IT and how they will affect your retail business.

ThinkWGroup.com


The top four shifts in retail ITAs traditional IT models shift, new frameworks are rising to take their place. In many cases,

these changes can significantly boost an organization’s ability to deliver quality IT services cost

effectively. With the advent of XaaS, the increasing power of IoT, and the realization of zero-

footprint IT, retail CIOs need to drastically rethink their IT strategy, adapt for the future, and align

their goals with business goals. New payment technologies, network, security, and supporting

omni-channel integration are at the forefront of the IT initiatives; customer engagement, customer-

information protection, inventory management,

and employee productivity are the retailer’s

business priorities. Understanding these new

developments and connecting IT objectives

with business objectives is key to success.

WGroup has identified several key shifts we

believe will have a major impact on the way

retail organizations are run. This section

will help you understand these trends and

design effective strategies for the future.

Understanding the new developments in retail IT – and connecting them with your business objectives – is key to success.

ThinkWGroup.com


The future of retail will see changes in the ways companies market to and engage with

their customers. As technologies like mobility, automation, IoT, and big data analysis make

it possible for companies to deliver better, more personalized marketing and service,

consumers are rapidly changing their expectations. It’s not enough to simply have an online

storefront. New generations of consumers demand mobile access with features like 24/7

customer service, automated returns, and personalized marketing. IT must understand these

new possibilities and work with business leaders to use them to grow the business.

Customer engagement1

Proximity-based marketing

With practically every adult carrying a powerful, location-aware

smartphone in their pocket, it’s becoming increasingly common

for companies to deploy proximity-marketing techniques to

engage customers in a more personalized shopping experience.

With the use of wirelessly connected beacons,

retailers can deliver real-time, relevant

messaging to customers as they walk by stores

or consider products. For instance, a customer

standing in front of a shelf filled with hiking boots

might be given information about their durability,

materials, and reviews, allowing them to make

a more informed decision. In many cases this

can make a customer both much more likely

to purchase the item and more satisfied with

their shopping experience. This gives proximity-

based marketing the potential to both generate

immediate revenue and increase long-term brand value.

ThinkWGroup.com


Social networking

It’s no secret that social networks have become one of the most important media platforms of

the 21st century. 72% of men and 76% of women use social networking sites regularly. These

statistics become even more stunning when looking only at those between 18 and 29 years

old, who use social media at rates as high as 89%.1 With its extraordinary salience, the power

of social networks to drive brand growth and encourage sales is finally beginning to reach its

full potential. As advertising becomes more targeted on a wide range of metrics and social

networks like Pinterest and Facebook develop fully integrated shopping

platforms, it is becoming clear that these tools are

extremely important to driving retail growth. Their

importance is also likely to continue to grow for the

foreseeable future as millennials and other future

generations become more important to the sales base.

Effective automation

Automation can provide a range of benefits to retail companies, but one of the most effective

applications is in customer engagement. Fully-automated multi-channel customer engagement

programs are more efficient – and it’s now simpler than ever for systems to automatically

categorize potential customers, send out

personalized messaging, and drive more

customers to the end of the sales funnel.

Automation also can greatly improve the customer

service experience. Effective automation

can perform simple tasks such as answering

customer questions and initiating targeted emails.

Self-healing networks ensure store and customer

connectivity – and stock visibility across the

retail chain. These functions allows companies

to offer faster, more consistent service to their

customers while simultaneously reducing costs.

When retail CIOs understand the power of these

tools, they can use them to grow the company.

The power of social networks to drive brand growth and encourage sales is finally beginning to reach its full potential.

ThinkWGroup.com


Data analytics

Retailers cannot engage their customers unless they truly understand them. Data

collection and analytics through sensors, demographics, geo-spatial localization, mobile

devices, and other new technologies make it easier than ever for companies to get

a more accurate picture of how their customers think and what they want. Empower

sales associates with technology and tools so thay can more effectively engage with

customers and personalize their messaging. But it’s not enough to simply collect data

without having a clear plan for its use. Many companies gather information without

purpose and end up with more data than they could ever use, leading to inefficiency

and missed opportunities. IT must strive to ensure that all of its data collection has a

business strategy alignment – and the analytic capacity to actually use the data.

ThinkWGroup.com


Technology management2

Retail IT departments must move away from being an infrastructure management organization and

focus on using technology to advance business goals. This means undergoing a massive effort to

standardize, modernize, and simplify their technology environment to increase efficiency. XaaS,

zero-footprint IT, and a merging of business and IT goals are all critical components of this process.

Companies should take advantage of new XaaS solutions by sourcing infrastructure and legacy application services where it makes sense.

Utilize XaaS

One critical aspect of streamlining the technology management process is taking advantage of

new XaaS solutions. Internal IT infrastructure is becoming increasingly redundant as third-party

providers offer more powerful, secure, and cost-effective alternatives. Companies should take

advantage of these new solutions by sourcing infrastructure and legacy application services where

it makes business sense. This allows the organization to drastically

reduce its in-house infrastructure, as well as its staff,

leading to considerable savings and improved efficiency.

These solutions also make it easier for IT

organizations to financially justify their actions.

The billing for XaaS services is usually much more

straightforward and its impact more measurable than the

comparably opaque process of investing in an internally administered infrastructure.

Application management

IT must make sure that technological capabilities keep up with business demands. This

involves building a roadmap and executing initiatives to augment –and potentially replace

– legacy applications and data repositories to meet future analytical needs and provide

actionable insight. And as the infrastructure administration shifts, so does the application

management. Teams need to be flexible as new solutions are integrated; being nimble

and quick to adapt helps ensure a more seamless shift away from legacy systems.

ThinkWGroup.com


Business-unit integration

At WGroup, we strive to help companies understand how to use IT to drive business

goals. As technology trends progress, this concept will become even more fundamental to

success. The IT organization is becoming more streamlined as third-party providers take

on traditionally in-house roles, making it important to re-tool internal resources for future

business-unit integration, support, and service management. By integrating business goals

into IT goals and making technology a key part of business decisions, companies can more

effectively achieve their objectives. This is particularly important for retail companies, for

whom IT is such a critical component of future success. It is key that retailers understand how

to merge IT and business units to achieve greater synergy and reach their core goals.

Stay flexible

The new technology architecture framework

itself must be flexible enough to support new

solutions without disrupting existing applications

and systems. This means companies should

have a well-defined plan in place to help them

transform legacy applications and systems without

negative consequences. This necessitates a

clear understanding of processes and service

requirements and a high level of maturity.

ThinkWGroup.com


Relationship and service management

3

The retail CIO is transitioning from being primarily an infrastructure manager to an overseer of

relationships and partnerships both within and outside the company. As XaaS providers take over

a growing number of roles traditionally held by IT departments, it is up to IT leaders to provide

the bridge between the business and the providers. Similarly, the CIO must partner with business

unit leaders to help them understand and address emerging opportunities and the technological

impact of IT on business strategies. This transition provides the basis for the CIO’s ability to make

technology a critical component of business operations, merging IT and business objectives.

Partner with business leaders aligned to your company strategy

The future success of retailers demands that IT and business goals be consistent. It is

extremely important that companies fully understand the potential of emerging technologies

and the impact they will have on business strategies. That’s why the CIO must work with

other business leaders to build integrated business and technology roadmaps. Business

leaders need to strive to make IT implementations cross departmental, reducing the

potential for siloed technological efforts. IT operations should be aligned with business

goals and made more efficient by implementing solutions that can help build the framework

for adopting and enhancing a relationship and service management mindset.

It is also important that IT and business leader work to integrate process-oriented solutions into

areas that are traditionally less apt in these methods, such as merchandising. The technology

vision and roadmap must support the overall retail strategy, particularly surrounding modernizing

allocation, fulfillment, assortment planning, pricing, and inventory. By implementing more efficient

technology-based tools and processes into a diverse range of business functions, business leaders

can make the company more efficient and deliver better products and services to customers.

ThinkWGroup.com


IT leaders should build strong relationships with vendors while regularly reviewing their performance.

Manage vendors – and business outcomes

Many of IT’s traditional functions are being outsourced to third parties. In some cases, it

is possible to have an IT department with almost zero infrastructure footprint. However,

it’s still critical that technology leaders oversee vendor relationships and ensure that they

are delivering on their promises. As new technologies emerge and become critical to

success, it is important for companies to be able to identify valuable partners and leverage

their ability to deliver the services the company needs. Leaders must be able to look

critically at key service management areas, continually

evaluating and refining to make ensure

satisfaction at the business unit level.

Vendor management involves

several critical areas, including

contracts and SLAs; performance;

and risk and security. IT leaders

must establish clear standards for each of these

areas and ensure that they are meeting the needs of the company. This means

building strong relationships with vendors while regularly reviewing their performance

and making adjustments to agreements or seeking new bids as needed.

ThinkWGroup.com


Risk, governance and compliance

4

The advent of new technologies, the increasing viability of XaaS, and the need for greater

integration of IT and business units are all rapidly changing the role of risk and governance

within organizations. As technology becomes a key component of business decisions

and IT aligns with business objectives, it becomes increasingly pertinent to integrate IT

risk and governance objectives with those of the business. The future IT strategy is a

business strategy, and corporate level risk management and governance structures can

help ensure that all parts of the company are working toward driving business goals.

A new definition of security

One of the most important components of risk

management in IT has been information security.

This is particularly important for retail CIOs,

who manage massive amounts of sensitive

customer data while protecting revenue-

generating online storefronts from attack.

Third-party service providers that are

required to integrate security best

practices into their environment typically

have more comprehensive tools to

manage security administration. Specialized

vendors can even provide forensics and

other tools to offer more comprehensive

information security. For most companies, this is a positive development, as they can

reduce their security budget while still maintaining a very high level of protection.

ThinkWGroup.com


Cyber-security management strategies should be part of the company DNA and culture.

Corporate level risk and governance

As IT and business goals merge, it is important to ensure that all aspects of the organization are

aligned with core business objectives. This means that risk and governance structures should be

designed and visible at a corporate level. Cyber-security management strategies should be part

of the company DNA and culture. This allows the company to more effectively monitor, detect,

and respond to threats. Many aspects of IT risk and governance objectives also can be merged

with business loss-prevention objectives to further consolidate IT and align business units.

Business outcome alignment

Every business has many departments,

each with their own conflicting priorities.

That’s why it’s so important for companies

to have structures in place that align IT and business

objectives and keep the organization accountable to those strategic priorities. There should

be a centralized, overarching set of objectives in place that are designed to ensure that

IT is working to drive business goals, and that business leaders are making technology

a key part of their decision-making process. Governance structures can help maintain

this alignment by providing the means for business leaders to manage IT operations and

creating systems of accountability that keep IT on track with core business objectives.

ThinkWGroup.com


IT evolution roadmap

IT departments of the past demanded considerable financial and human resources

to operate effectively. Implementing new services required significant investments

in development, equipment sourcing, and installing. Today, that is changing as CIOs

become more involved in managing relationships rather than building out and maintaining

infrastructure. Now, an IT leader’s primary objective is to facilitate creation of integrated

business and technology roadmaps that align with the overall business strategy.

Resource intensive

Relationship management

One of the most significant trends in IT is the movement from in-house implementations

to cloud computing and remote access services. This is fundamentally shifting the

role of IT in the organization by drastically reducing the amount of infrastructure that

it must manage, because third parties can often deliver services better and more

cost effectively than in-house IT. As such, today’s CIO focus on managing these IT

services from a high level, rather than micromanaging the implementation.

Infrastructure management

Service

management

ThinkWGroup.com


Yesterday’s IT attempted to minimize risk at all possible costs. Today, that strategy is shifting to be

more in line with the company’s broader risk-management strategy. Companies must tailor their

level of risk to be consistent with their business objectives. This means implementing compliance,

corporate-level governance and risk management structures using third-party security solutions.

Risk adverse

Managed risk and security

Most importantly, retail CIOs and CEOs need to understand that the days of siloed

IT are over. The department is now a critical part of core business functions and

must operate as such. This means shifting from a project-centric IT department and

driving toward achieving the business goals in support of the overall strategy.

Project centric

Business-outcome centric

ThinkWGroup.com


At WGroup, we believe that a business-driven approach enables IT to transform technology,

create value, and reduce costs. Retail CIOs must “ReThink IT” as they become a broker for

IT services to the organization instead of the technology implementer. Today’s IT organization

focuses on business outcomes, architecting the business model, driving differentiation with

analytics, managing risk and compliance, guiding innovation, and providing an improved

service management model. The most successful companies of the future will be the

retailers with the most flexible set of technology tools to allow nimble execution of revenue

generation and cost-optimization programs in support of their business strategies.

IT is at the core of the innovative strategies businesses will need to stay competitive in

the future. But understanding how and why IT is changing is sometimes challenging.

Preparing for these changes and learning how to adapt is critical to business success.

In summary

ThinkWGroup.com


[1] http://www.pewinternet.org/fact-sheets/social-networking-fact-sheet/

Reference

ThinkWGroup.com

http://www.pewinternet.org/fact-sheets/social

Drive Your Business

Founded in 1995, WGroup is a technology management consulting firm that provides Strategy,

Management and Execution Services to optimize business performance, minimize cost and create

value. Our consultants have years of experience both as industry executives and trusted advisors

to help clients think through complicated and pressing challenges to drive their business forward.

Visit us at www.thinkwgroup.com or give us a call at (610) 854-2700 to learn how we can help you.

150 N Radnor Chester Road Radnor, PA 19087

610-854-2700

ThinkWGroup.com

www.thinkwgroup.com

ThinkWGroup.com

The Evolution of Retail IT

Technology

Transcript of The Evolution of Retail IT