In today’s digital age, it’s no secret that data has become a vital resource for businesses across nearly every sector. This is particularly true for the thousands of retailers who, in recent years, have had to quickly adapt a more data-centric approach in order to thrive in a market driven by rising customer expectations and fierce competition. As a natural result, Chief Information Officers (CIOs) are under greater pressure to implement strategies to optimise these ever-increasing quantities of data. But transforming into a data-driven company isn’t exactly a straightforward process…
In this article, we will delve into the expectations versus the reality of CIOs in retail today, including their evolving role, goals, their challenges – and how the utilisation of data factors into the equation of business success.
What are the Expectations of the Modern Retail CIO?
As the technology leader of the company, it falls to the CIO to constantly develop, implement and manage systems that meet the evolving demands of the entire organisation, but that’s not all. At any given moment CIOs must be ready to step into the role of visionary, strategist, educator, or operator, often simultaneously. In a perfect world, we’re able to embody these roles while also balancing strategy, project, and operations, along with maintaining standing relationships with management, teams, other businesses, peers, and vendors.
But then there’s the reality of working in highly decentralised organisations. On the one hand, CIOs must juggle managing the information systems (IS), with optimising business operations of multiple stores and warehouses at different locations (all while understanding omnichannel stakes and impacts on processes, organisations, and IS). On the other hand, is the challenging task of managing data from multiple operational systems, which at times, can be incoherent and conflicting, particularly in larger organisations operating with different brands or different countries. Frankly, it’s enough to make anyone’s head spin.
However, CIOs of smaller enterprises are certainly not immune to different, but similarly challenging obstacles. Unlike heterogeneous organisations with a wide range of store sizes and geographical locations, small organisations have simpler IS, but they often suffer from a critical lack of IT expertise within their ranks. For example, when I was CIO of a 4bn€ revenue group, we bought a small retailer (50 stores, 50m€ revenue) and I was asked to evaluate the IS and IT expertise. Imagine my surprise when I discovered that the IT was only 2 people: one for developing the applications, one for running them. The IS was simple, but the team was working so hard!
What are the Goals of a CIO in Retail?
Like any C-level executive, CIOs in the retail sector have lofty goals motivated by the desire to propel our companies into ever higher levels of success. Here’s the ideal scenario:
You’re intricately involved in the process of developing company strategy. You’re able to identify and implement opportunities that help differentiate the company from the competition. Your budget increases in line with the company’s progress towards digitalisation, enabling the simplification of IS and the elimination of old legacy technology. Your data is a critical factor in informing all major company decisions, leading to greater efficiency and higher returns. On top of everything, all systems and applications work seamlessly with no major incidents ever occurring. That’s the dream…
In reality, however, CIOs are often looked at as technicians or engineers, rather than strategists. On more than one occasion when a boardroom TV was not configured correctly, I was the person that was tasked with solving the issue. Meanwhile, when operational expenses need to be cut in order to preserve margins, the IT department budget tends to take the brunt of the reduction, making it difficult to implement innovative new strategies. And despite efforts to integrate data into key decision-making, most company moves can be attributed to individual feelings, rather than the valuable information that is readily available.
As a result, the process of phasing out legacy technology – a difficult, time- and resource-intensive process – retains a permanent position on the back burner of priorities, while maintaining current systems and continuously circumventing their potential issues remain at the forefront. After all, as every CIO knows, IT is only considered normal when it works perfectly; any incident that occurs is regarded as an abnormal event (regardless of how many accumulated weeks without problems).
What Challenges Are CIOs in Retail Facing?
CIOs in the retail sector must navigate a number of challenges unique to their role. Among the most significant are:
- Convincing business leaders of the critical role of IT. While it is not the heart of the business, IT functions as the lifeblood of the business, supporting its growth and progress, yet for many organisations, it is not treated as a top priority.
- Obtaining sufficient budgets. In particular, ensuring budget allocation for change management is vital for transformation projects, especially within decentralised organisations.
- Short turnaround requests vs. long time constraints. As CIOs, we are often caught between the pressure to deliver new functionality quickly, and the need to ensure proper architecture, legal compliance, and security.
- Cost of large-scale application deployment. The retail industry’s large employee populations make deploying applications and infrastructure across the organization an extremely complex and costly undertaking.
However, in my experience, a more nuanced challenge in the digital era has risen. These days, external vendors constantly oversell the ease and simplicity of implementing new systems and applications, assuring top management that it will be a quick, low-risk, and cost-effective process. However, we, as CIOs, know the reality is far from simple. As a general rule, integrating new systems into existing complex architectures takes time and effort, will introduce new risks, and will cost more due to integration costs in the IS, and change management costs on the field.
That isn’t to say there aren’t instances where these systems work flawlessly right out of the box. In one of my companies as a CIO, we deployed new loyalty systems (concerning 1500 stores and 10 million customers) without migration trials and global stress tests due to timing constraints and business pressure. We deployed the new systems on a Sunday night and, amazingly, everything worked perfectly. It was like jumping out of a plane with no training, only to miraculously pull the chute at the precise moment needed to land safely.
How Can Data Solve the Problems Retail CIOs Are Facing?
When utilised to its full extent, data holds immense potential to address the biggest challenges faced by retail CIOs and revolutionise business operations. As anyone in this industry knows: retail is detail – and this is also very true for retail IT.
Used correctly, data is essential for optimising processes such as sales and inventory management, can help facilitate effective promotions to targeted audiences, and negotiate favorable purchasing conditions with suppliers. Internal data can provide valuable insights into IT performance, allowing CIOs to monitor and enhance system efficiency. On the flip side, the integration of external data from suppliers and partners holds the promise of improving overall data quality and responsiveness to business requests.
In reality, however, retail entities often grapple with significant data management challenges such as data silos across departments and inconsistent data definitions that are not unified across the organisation which cause discrepancies in data interpretation. As an example, even something as simple as company revenue may have more than ten different versions. Furthermore, field-collected data is often of poor quality, and because of complex IS with multiple application interfaces, data quality is greatly impacted by incidents in data transfers and difficulty to resynchronise after problems.
Today’s CIOs must recognise the realities of data management within retail organisations and take the steps to become a true, seamless, data-driven company. By focusing efforts on elevating data maturity across the enterprise, eliminating data silos, automating omnichannel marketing, creating new data streams to improve customer knowledge, modernising customer analysis, evaluation, segmentation, and governance practices, companies will be able to extract the true value of their data and lay a solid foundation for future success.
Turn the Value of Your Data into Sustainable Success
Devoteam is a trusted ally for retailers looking to embark on a digital transformation journey to become proficient in leveraging data, and enhance their data maturity level, unlocking opportunities for innovation and sustainable growth.
If you’re ready to unlock the true value of your company’s data, connect with one of our expert tech advisors for a consultation.
