Three and a half Truths about Retail Technology – Reprint

With the holiday this week and an intense engagement underway, I decided to reprint this past post as a still-relevant ” greatest hit.”  Enjoy

–Flora

As retailers across the country take a look at the latest technology and its promises of optimizing resources, minimizing investment and creating loyal shoppers. The usual suspects -Oracle, SAP, JDA and Microsoft- will be selling their hearts out trying to convince business executives that achievable new technology will have their profits back on an upward path and IT folks that “this time it really does work”and that the vaporware they saw last year is now a reality.

Hey, I used to be one of those people, so I am not trying to discount the difficulties of a modern-day technology sales team.

Truth #1: There is very little difference in retail performance based solely on a technology decision. In fact, any decision you make has an equal chance of negatively, positively or not affecting your critical KPI’s performance. THAT’s not something the folks in the big booths at the front of the convention floor are going to tell you. If you want the proof, check out the McKinsey Quarterly article Getting Supply Chain Software Right by Kanakamedala, Ramsdell and Srivatsan.
See it here

Truth #2: What determines success is the CHANGE and the PROCESSES that are implemented, integrated and adopted by the people who have to use the new technology. Those are the real determining factors that separate bold initiatives that change the game and IT investments that never pay back on their original business case. I probably dont have to tell you how many times the goal of a new implementation is to work “just like my old spreadsheet.” Implementations of new technology are usually shoe horned into the processes, job roles and contact points of old systems. The implementation team gets to claim they had high rates of adoption – but the business leaders are usually disappointed with the results.

Truth #2.5: Because of truth #2, efficient retailers know that they can almost always wring out increased productivity by revisiting past technology implementations and exploiting capabilities that are lying dormant. Examples? Connecting real estate databases to store planning CAD’s to increase store productivity and renegotiate lease terms. Using the assortment planning module of merchandise planning or space planning software to distribute assortment decisions closer to stores. Scouring all the “under the desk” Access databases and requiring the IT team to build a data repository that adapts to the real needs of the organization. ANY idea will work. The productivity comes from…wait for it…SEE Truth #2!!

Truth #3: Most retail IT teams cannot actually measure the business results of their technology investments. It is a rare organization that has the discipline and the methodology to forecast the estimated gains from technology in the capital expenditure business case AND THEN measure and report the results to a decision making executive team post implementation. Giving everyone a legitimate cover to claim the project succeeded – or worse yet – that “it’s impossible to know” if it succeeded. There’s usually a lot of talk about soft benefits (unmeasured customer satisfaction, standardized processes, etc) but ask about inventory metrics, customer transaction counts or sales per employee and you are likely to get blank stares.


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