The tragedy of the British high street’s current closures is often blamed on technological disruption. However, while most identify rising customer expectations as one of the key factors driving this, they oversimplify the tech challenge retailers face to become competitive. In this Q&A with RetailTechNews, Robin Webster (pictured below), CTO, Centiq, highlights the nature of these challenges and what retailers need to be doing to tackle these head-on.
RetailTechNews: Store closures are often being blamed on ‘technological challenges’ – what are the nature of these challenges?
Robin Webster: The often unseen challenge of not addressing technical debt can be one of the biggest impacts on the speed of innovation.
There can be an inclination to store up IT upgrades when there’s a perceived game-changing business adjustment ahead. Companies may stop solving today’s problems on the assumption that they will be irrelevant in the future.
But, meanwhile, years pass by and they still can’t perform the basics like test data management or backups. You see this in the code and data footprint, too. There is no department for deletions; no one gets a bonus for reducing the size of unused code or data.
Systems bloat over time and agility is lost, and the legacy systems become a barrier to innovation. All part of what is referred to by some as ‘technical debt’.
There are often lots of barriers to upgrades – some technical, some emotional. It is difficult to balance the investment on projects aimed to remove technical debt that do not have clear ROI, compared to new and exciting business innovation ideas.
Can you be a successful high street retailer without overcoming these technological challenges?
Expectations of target markets have increased, and so retailers will need to evolve to survive – but each change will have an impact on IT needs and any barrier to change will cost them in market share.
High street costs will continue to rise; competition from smaller dynamic online retailers will increase. Staying put will inevitably result in the need to cut costs and gradual decline will be the only outcome. In this pattern, IT will be perceived as a cost rather than a driver of business change.
Companies collect huge amounts of data on their customers’ behaviour. Without a dynamic, real-time, decision-making framework, the growing data becomes a management overhead rather than an important asset.
Saving money on IT, if done without a clear growth strategy, will reduce the value IT delivers.
How can stores adjust their approach to survive?
Change needs to happen quickly and efficiently.
Businesses can learn lots from the Agile and Lean movements by incorporating tight feedback loops that are technology-enabled. For example, if a retailer decides to adopt an in-store, touch screen, interactive catalogue, they need to decide quickly how to get a return on that investment.
They would need to have the ability to test different scenarios and provide statistical evidence to justify changes to the plan. The analysis of buyer behaviour will be key to deciding if the introduction of the technology is a success, but it will also be needed to decide the critical adjustments to the products listed and the overall user experience to maximise the return.
Retail organisations must carefully consider where to invest in order to achieve this. The level of data retained in business systems, without clear reason, has massive costs and soaks up important budget that could be used for more returns elsewhere.
Having a clear strategy for identifying value of data, and treating each type of data appropriately, will enable businesses to put money where it can deliver value. Without a shared understanding of value, your IT department will make assumptions that cause unnecessary costs in the way systems are architected and run.
Simplification and rationalisation of existing systems should be seen as an enabling strategy, rather than a cost-saving strategy. If you are not simplifying, you are steadily increasing complexity and increasing the technical debt.
Organisations will need to find a way to better assess investment in existing systems, to improve their ability to react to change when needed. If you are not a match-fit, you will not win the fight when it arrives.
Why have newer, more agile brands had more success with technology?
Newer agile companies can focus on the future. They do not have to concern themselves with the 40-minute intro that discusses the 10-year history of why ‘we are where we are’ at the beginning of every meeting. They have a vision and can quickly set-up tests to prove or disprove assumptions on the direction of market change.
One of the biggest challenges for older organisations is the cultural changes that are needed to create a more agile organisation. Newer organisations, especially online ones, have the ideas>build>product>measure>data>learn>ideas cycle embedded in their DNA from birth, which means less time is wasted on discussing problems that have been in existence for years, less time discussing strategy, and more time learning.
Learning is core to fast innovation. You want to test the idea and fail fast, adjust and retest, or move on quickly to the next idea, in order to stay ahead of the expectations of customers and the competition.
Why is it that making these adjustments, and moving away from legacy technology, is proving such an issue for retailers?
Some core ERP and analytic systems have been in place for nearly 15 years. That’s a lot of momentum to redirect. You store up lots of problems in that time span, all of which slow innovation. These organisations lose track of what workflows are used and deliver value, and what’s no longer relevant and should be retired.
Consequently, the prospect of changing direction is overwhelming, as the problem looks worse than it really is. There will be 1000s of unused reports, 1000s of lines of custom code, that is never run, that will be quoted as reasons it will be hard to change. It’s a bit like saying we can’t move house because we can’t find a new house that has space for the clothes mangle.
It’s not just about technology, it’s about people and process, too. There are cultural norms that need adjusting in some of these organisations, too. Organisations can end up resisting change to minimise downtime of core systems. It comes from good intentions, but the pace of change will be pedestrian as a result.
The DevOps principle of ‘doing painful things more often’ is the way forward. It forces teams to get good at making difficult changes and builds quality into the system to enable fast change at a lower risk. These are difficult changes to the way people think, and it takes time and the right visionaries to drive it. Getting the right skills in your staff and support partners can also be a challenge.
Organisations need a board/leadership team who can drive transformational change across the the organisation, taking into consideration the changes to people and process that technical innovation requires. Without this, they will struggle to deliver change at a pace that can match the changing market and changing consumer behaviour.