InsightaaS: Bain & Company is one of the world’s leading management consulting firms, employed by senior executives at major corporations to help them to "make better decisions, convert those decisions to actions, and deliver the sustainable success they desire." The post featured today illustrates why Bain is viewed as a source of essential advice. In it, principals from the Retail and IT practices combine to assess the ways that IT can support evolution in retail, and what it must do differently to contribute to this process.
In some important ways, retail is at the front edge of major trends in technology. Customers have blurred traditional lines between physical and virtual by using mobile devices as a companion input to what they see in brick-and-mortar stores - and are as a result driving a need to embrace an "omnichannel" approach to the business. Competitors (like Amazon) have emerged to illustrate the power of an integrated, technology-centric business model. And social and analytics are reshaping the ways in which retailers interact with and understand their customers.
The Bain post examines the impact of "SMAC" (social, mobile, analytics and cloud) technology in retail, and the overall requirement for retailers to build agile IT/business approaches. Through this analysis, the authors highlight several key points. One is in a shift away from maintenance as the main consumer of IT budgets: a graphic within the post shows that in one firm, demands associated with omnichannel drove 70% CAGR in the "transform" part of the IT budget, making it the largest category of IT spending. The post then explores some of the ways that this emphasis on IT as a transformational capability affects the IT function: it forces better and more systematic prioritization involving IT and business leadership, it drives investment in new technologies, and it creates a need for new IT operating models, which in turn impacts strategy and alignment, roles and structure, process. people (including performance measurement and rewards), and leadership and culture. In the end, Bain notes, "Change of this magnitude is difficult and can be achieved and sustained only with a committed, aligned leadership team that reinforces new behaviors." This post helps to indicate what these new behaviours should include.
Retail executives tell us they need more from their CIOs. Yes, IT needs to keep the online store running and cyberattackers at bay–but that’s table stakes. The retail industry is changing quickly, and what executives need most in a technology partner is someone who understands social, mobile, analytics, cloud (sometimes called SMAC) and all the other technologies spurring rapid change in their industry. They need partners who can help them discover and build new business capabilities that will set them ahead of the competition.
Few retailers say they are getting this today from their IT function; until recently, most had not asked for it. Across the industry, CIOs are busy maintaining their decades-old legacy systems while locked in an arms race against increasingly sophisticated cyberattacks and a shifting stream of new technology requests from the business. One week the business asks to explore in-store mobile payments; the next week, the priority shifts to aggregating customer data across channels.
As they explore these technologies, executives are getting a better picture of what they need to deliver a true omnichannel experience–that is, a seamless, integrated shopping experience, whether the customers are in the store or on their mobiles. To deliver against that promise, executives are looking for CIOs who can build IT organizations that are more nimble, collaborative, agile and responsive.
These CIOs and the IT organizations they run will need to build these new digital capabilities in ways that play nicely with the legacy environments that run the business. Just as important, technology executives are going to have to change more significantly than they ever have before, as their insights and capabilities become increasingly vital to success...