Winning in retail: how CIOs can lead a robust technology ecosystem

Retail CIOs are taking a strategic mindset as they assess their company’s ambitions and how to tech enable them — and what it will cost to get there.

Consumers want to streamline their interactions with retailers, and they’re using technology to do it. Examples include downloading a store’s app for the latest coupons or virtually trying on clothes through an e-commerce site. Consumers also expect brands to drive deep, meaningful interactions that simplify their lives. Meeting this consumer expectation through a multi-level (retail and brand) will require complex integration in order to simplify vs complicate their experience.

Retail chief information officers (CIOs) are integrating technology to minimize a consumer’s friction while providing useful data. Such data can help drive growth and streamline the front-end consumer experience. Across the consumer journey, modernizing technology ecosystems is crucial to adding value and reducing costs.

Technology leaders are collaborating more closely across the retail value chain — a significant break from the transactional relationships of the past. Retailers benefit from an ecosystem of technology partners who can see the business as more than the sum of its parts. These partners can also dig into the nuances of the processes and use their unique tools to bring the business to the next level. For example, through a successful AI partnership, a retailer may use a digital twin to help improve customer service by proactively identifying and resolving issues.

3. Tools, solutions and capabilities: Focus on the essentials for modernizing enterprise architecture

A big challenge for retail CIOs in developing a tech strategy is identifying the right tools, delivery methods and capabilities for their company’s needs. One notable trend in technology architecture is the adoption of an integration platform as a service (IPaaS). Retailers now have hybrid ecosystems with applications that run within their own private data centers or infrastructure on-premise. They’re also using cloud-based applications, as well as SaaS-based applications that run on third-party platforms.

Modern integration platforms enable multiple applications to interconnect using advanced application program interface (API) methods. Every application in this hybrid ecosystem manifests itself through a set of APIs managed to the same IPaaS and enabling inter-application messaging. It’s no longer necessary to create one-to-one application connections. With an IPaaS solution, all the applications in this hybrid ecosystem can connect in whatever way is needed using well-defined integration patterns.

Overall, rapid integration of front-end features and development platforms (i.e., XR/VR) with back-end systems will require various technology layers to be loosely coupled. Doing this makes solution assembly faster. Consider the following key takeaways:

• Ensure a frictionless connection between external and internal systems with proper layering for maintenance and scalability.
• Couple internal systems loosely to enable plug and play.
• Minimize or eliminate tech debt — legacy systems that are hard to manage and maintain.
• Enable the management and continuous evolution of technical diversity across the entire corporate ecosystem.

4. Building the business case: Get mission-critical functions done first and find creative ways to finance the technology ecosystem

Most retailers don’t have unlimited, or even large, technology budgets. At the forefront of every decision is an age-old consideration: cost vs. potential ROI. Innovation that ties back to strategy, delivers incremental value and stays focused on long-term goals creates a business case. Success relies on identifying mission-critical functions first and targeting those with surgical accuracy. This way, retailers can bolster their growth while increasing capabilities that can then be used to address a business’s less immediate — but still important — technology needs.

Enhancing the consumer experience, driving innovation and remaining profitable will require companies to reevaluate their cost structures. CIOs will need to assess their tech landscape, have a clear dispositioning strategy to support innovation and make quick decisions about accelerating modernization. More than ever, the challenge is to reduce the cost of existing infrastructure and application maintenance and divert investments to innovation areas. These areas can drive a new customer experience and reshape supply-chain execution.

A modern technology ecosystem enables retailers to easily set up new partners and license technology so that the cost to benefit can be scaled. In other words, transfer the risk to the provider.

The market is full of tech startups that have innovative ideas and are looking for a place where they can prove themselves. When shopping around for potential partners that are more established, consider starting small and taking the same type of approach. If the technology works, both parties will get more from the relationship.

To prioritize innovation investments, keep three KPIs in mind: (i) customer lifetime value analysis, (ii) cost-to-serve analytics and (iii) profitability analysis. By understanding a relationship’s potential total lifetime value, the costs to create the desired experience-led consumer journey, and what profitability looks like, retailers can quickly identify where to invest resources to maximize value.