Digital Retail Transformation - It's all about the Technology
In today’s increasingly complex world of retail business – being seen ‘Digital’ is a necessity. In the eagerness to be seen as such, many traditional retailers have embarked on ‘Digital Transformation’ programs on a war-footing. What are the critical success factors in such a change? Firstly is it needed, and if so in what way? This paper seeks to answer that question and make some recommendations from a technology standpoint
Why is this important and what is needed to better the chances of success in a transformation of this sort? First of all, it is a huge change – and nowhere should it be trivialized as just about technology. On the other hand, too often it is in not incorporating technology into the overall vision, purpose and execution where most organizations fail. So to keep it simple – it’s all about the technology and not just about the technology!
The classical management theory of “focus on core competence” has meant most traditional retailers have seen the role of technology as an enabling department – like “IT” or “IS”. This has not only throttled investment into this key area, but also caused deep inter-departmental schisms in the organization that have undermined business goals and objectives.
No retail organization (or any others for that matter) can now say they are “not in the business of technology”. Saying so will end the strong customer, market and operational leverage they need to survive – if not immediately, then through a painstaking slow decline. Does that mean the core competence has to now shift to technology? No, the whole paradigm has to change. For e.g a retail organization has to move merchandize to sell – does that mean it shouldn’t see Logistics and Supply Chain as its core activity? It cannot afford to differentiate – this is the way it should be with technology as well.
In the traditional view of the organization seen as layers closer to the customer, versus others that were back-office, technology was relegated to the back-ground. In today’s digital world – technology strongly shapes how the customer (or colleague) interact with and experience the business. It cannot be non-core!
Strong execution of the strategic road-map is central to success. This means not just business plans – but tightly integrated programs of work that include technology, human resource, business process and capital. Here the traditional structure will break-down – unless it can lend itself to an agile and collaborative model. Think Product and Service, rather than departmental projects. An organization with a strong product orientation will incorporate business and IT in cross-functional digital teams, who will work together to achieve common goals. The days of a separate IT team are numbered, as teams move to compact, collaborative and fluid structures. Agile and Lean methodologies and culture are key to making this succeed operationally.
From a pure technology perspective, there are several key aspects to the transition:
This requires a strong technology roadmap and capability to design and engineer restful APIs, based on relatively flat and un-structured data that will allow for rapid Apps development to cater to the various channels. It will also involve a sound engineering program of work to be able to wrap around existing assets and deliver these API’s to both the intranet and the internet consumers. This will allow greater extension and outreach of the organization to its customers, suppliers and community.
This is by far the most critical aspect – and can itself either make or break the transformation to digital. It is also the most challenging change management topic – and one where the top leadership should be fully engaged. The move to digital firstly demands a differently skilled workforce, one that moves from “IT” to “Digital”. While using Lean & Agile methods is a given – small tightly integrated units operating in a DevOps mode, being empowered to make their own decisions will be essential. The technology skills now required to succeed have to be omni-channel, mobility, data science and sound product management practise. One of the critical challenges is to embed this design thinking in the entire culture of the company – from thinking Minimal Viable Product (MVP) while studying the business case, to innovative short-cycle product design, develop and run teams, structures and processes.
Going digital therefore is an imperative for traditional retail business to re-invent and stay relevant in today’s age. This can be done not by copying models used by technology platforms, but leveraging their own business acumen, operational capability and scale with strong technology focus and collaborative team spirit.traditional retail business to re-invent and stay relevant in today’s age. This can be done not by copying models used by technology platforms, but leveraging their own business acumen, operational capability and scale with strong technology focus and collaborative team spirit.