20 February, 2019 | Written by: Tim Goody
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Why technology is the last thing retailers should consider when it comes to digital transformation
Traditional retailers are facing an uncertain future. And it’s not hard to see why. Many find themselves competing with pure digital retailers for the attention of consumers who are themselves have grown up knowing nothing but digital. Most will have implemented some level of e-commerce but some will have got their fingers burnt through poor implementation. And even retailers whose online trade has taken off can struggle to create consistent shopper experiences across multiple touchpoints.
Unfortunately, though, today’s consumers have come to expect – even demand – cross-channel experiences that successfully embrace online, mobile, social and store. Getting this right requires wholesale digital transformation. And that can be a daunting prospect for business who may have been trading before Tim Berners Lee was even conceived.
Research conducted in 2017 by , a manufacturing services provider with a significant focus on the retail sector, concluded that the top five challenges to digital transformation are:
- Employee pushback
- Lack of expertise needed to lead digitisation initiatives
- Organisational structure
- Lack of an overall digital strategy
- Limited budget
These certainly ring true from my 14 years’ experience working with retailers across a range of digital transformation projects. To meet these challenges head-on, and therefore to maximise their chance of becoming effective modern retailers, I believe traditional retail businesses need to follow the following four phases.
Develop a company-wide digitisation strategy
Digital transformation has company-wide implications and needs a company-wide strategic foundation to match. Piecemeal, departmental digitisation projects lead to siloed data and disjointed customer experiences.
So start by going back to basics and laying out some core strategic goals for the business. As a retailer, presumably they’re likely to be variations on “improve customer experience”, “increase sales” and “reduce operational costs to increase margins”. Then take time to audit and document how – and how well – your current operational processes support these goals. Where are the pain-points? What causes them? Where are there gaps in capability (from both a technology and a skills perspective)?
Then consider appointing an enterprise architecture (EA) team to define a roadmap for organisational and process changes that will better serve your strategic goals. You may, for instance, be operating multiple customer service operations. Consolidating those functions stands to both reduce costs and improve customer experience. An EA team can take primary responsibility for identifying a strategy that encapsulates such changes, prioritising the highest value ones where appropriate.
A solid digital, company-wide digitisation strategy is as much about addressing business processes as it is about technology. But it not only directly addresses the fourth key challenge identified in the Jabil report, it can have implications for point five (assuming the EA team has focused on ROI in its strategic prioritisation).
Design your operating model before you capture requirements
Just as the siloed structures that may emerge as retailers try to modernise stands in the way of delivering seamless customer experiences, it can also get in the way of coordinated digital transformation. You may, for instance, have different teams responsible for Store Ops, Web Ops and Wholesale Ops. Getting those people together in a room to agree a set of desired requirements is likely to be a thankless task. Vested interests, ingrained mindsets and a lack of experience of major transformation may get in the way of meaningful collaborative progress.
Much better to look for opportunities to consolidate responsibility across the business, potentially bringing in new expertise from outside the organisation to do so. And before you even start to consider capturing new requirements, set yourself the goal of designing a new top-level organisational structure. Perhaps you need a single point of responsibility for all of ops or marketing, for instance.
Having key team members in place, with a clear view (at a high level) of what areas of business process they own in the new landscape, will put the organisation in a far better place to articulate its requirements to successfully transform. These requirements should be captured at a high- to mid-business process and capability level, with an associated monetary value. The business can then prioritise requirements based on value, dependencies, and identify the corresponding risks and issues.
Taking the trouble to focus first on your future operating model and the right personnel will directly address the second and third key challenges. With the right stakeholder involvement and two-way communication with your people, you will also mitigate the risks of employee pushback.
Select your technology
Retailers who have laid the right strategic and operational foundations can now take a structured approach to selecting any new technology they will need. As well as the prioritised requirements, they should factor in non-functional factors such as security, scalability and the availability of skills in the marketplace to implement and maintain any new technology.
Consider, also, how the technologies you’re considering will work together in terms of day-to-day process. Is it necessary to have best-in-class content publishing capability with best-in-class SEO and best-in-class marketing automation? When integrating technologies together, compromises are inevitable.
And don’t forget to factor in the licensing implications of the technologies you are looking at. Something may seem affordable now, but what if your sales or traffic climb significantly in the future?
Selecting the right tech stack is crucial, of course, but get the strategic foundations in place first and you can head off key issues from the get-go, not least when it comes to expertise and budget concerns.
Select a partner
Enlisting the support of an experienced partner can have any number of benefits, not least when it comes to securing capital funding, perhaps the most significant barrier to digital transformation at a time when the pressure on operating costs is more intense than ever. In choosing a partner, the following may be a useful checklist:
- What are the organisation’s key competencies relating to the project? For example, is there a really solid team who know all about your data?
- Is the project likely to involve moving in-house functionality to the cloud? If so, is there a team available who have done this before?
- Are there the necessary skilled development resources?
- Is there the project management capability to deliver large technological and business change over a prolonged period?
And, of course, if in doubt, talk to your peers. Other retailers on the digital transformation journey can be a real help in getting a detailed understanding of the scale of the challenge.
To talk to IBM about how we could support your digital transformation, email TimGoody@uk.ibm.com