Top 10 Retail CIO Priorities For 2014 2
NRF Big Show 2014 serves up a wealth of advice for retail tech leaders looking to embrace digital commerce, adopt a mobile-first strategy, and take advantage of big data.
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Big challenges for retail tech decision makers
Pity the poor retail CIO. There's pressure to support new mobile strategies while also thwarting showrooming. They're asked to personalize the customer experience, but watch out for those privacy pitfalls. They have to get agile, perhaps by moving into the cloud, but then the latest data-breach headline puts their security strategy under a microscope.
The National Retail Federation's Big Show, Jan. 12-15, in New York, puts a spotlight on the often contradictory technology priorities and trends facing the modern retailer. The biggest push continues to be the quest for what Allan Smith, CIO of clothing maker and retailer Lululemon, calls the "single customer experience." This is the latest name for the 10-plus-year-old quest to bring order and consistency to a retail experience that spans physical stores, web stores, call centers, email campaigns, social sites, and mobile applications.
CIOs know well that technology is a big part of the silo problem, as point-of-sale (POS) systems, e-commerce platforms, and order-management applications have served up their unsynchronized, disparate versions of the truth. Integration and sophisticated strategies around cross-channel fulfillment, replenishment, and allocation have helped matters, but technology providers such as SAP's Hybris e-commerce unit were on hand at the Big Show with the latest promise of a single platform that can manage all retail transactions.
It's hard keeping up with the pace of change, and consumer expectations for mobile and social shopping experiences are just the latest examples of the need for agility. Of course, technology vendors ranging from IBM, Microsoft, Oracle, and SAS to eBay, Google, NetSuite, and Verizon were on hand promising rapidly deployable, cloud-based computing capacity and application services. But CIOs like Michael Kingston of Neiman Marcus know all too well that internal process changes and organizational structures are the biggest obstacles to being a responsive retailer.
With mobile, social, and web channels now fueling the growth of big data, there's clearly an imperative to make use of all available information. Kingston of Neiman Marcus (and his counterpart Beth Jacob of Target) also knows all too well that data is a risk, as underscored by the recent Neiman Marcus and Target data breaches. But there weren't too many answers for data breaches discussed, and many of the "security" technologies on display were focused on protecting retailers from theft.
Retailers will take a hybrid approach to the cloud, predicts IBM chairman, president, and CEO Ginni Rometty, with "private" being a key option for sensitive data. A Big Show keynote speaker, Rometty also expects some retailers to follow the lead of banks in appointing chief data officers. As for that other C-suite competitor, the CMO, get used to working shoulder-to-shoulder with him or her, as the challenges ahead for retailers will demand a team approach to meeting customer expectations.
(Source: i95dev.com)
Build a single customer experience
Retailers have beaten the "multi-channel, cross-channel, omni-channel" talk to death, says Allen Smith (inset), CIO at yoga- and fitness-clothing manufacturer and retailer Lululemon. "We use the term single guest experience," he says, admitting it's a bit easier for a 15-year-old firm that has always offered both online and in-store shopping.
Nonetheless, Lululemon has had to bring mobile into the mix, something it has done with an "Om Finder" app that Smith touts as brand consistent and supportive of the Lululemon community. The app uses location services to help customers find yoga classes, teachers, studios, and styles of yoga. It also offers "tips and tricks from local yogis."
Despite continued coexistence of multiple, often-disparate systems across retail, "we all know there's going to be a convergence," says Janet Sherlock (inset), CIO of clothing manufacturer and retailer Carter's. Will point-of-sales system providers, order-management providers, or e-commerce providers prevail? "We still don't know which will be the predominant technology or whether we'll settle for integration methodologies," Sherlock says.
E-commerce vendors long ago dropped the initial "e" and started going after all channels, according to Brian Walker, senior VP of strategy at Hybris, the commerce vendor acquired last year by SAP. At NRF's Big Show, Hybris announced support for a "seamless, omni-channel experience" through an integration of its platform with OneView Commerce to "merge the digital and physical experiences in store." The deal blends Hybris's platform, depicted above, with OneView point-of-sale capabilities. It's the latest -- and certainly not the first or last -- attempt to get to a single transactional platform.
Retailers and supporting vendors are busy trying to dream up useful mobile applications. Microsoft, Accenture, and Avanade are working with retailer Kohl's to pilot the Connected Fitting Room. Proximity RFID sensors automatically read the tags on the items you're trying on and display details on a large touch screen on the fitting-room wall. If the fit isn't quite right, the customer can request a different size or color and press "bring it to me." The requested item is then displayed on salesclerk smartphones (Windows phone inset, above left). An employee accepts the request and brings the item to the designated dressing room. At the end of the day, store managers can call up a dashboard (Windows tablet inset, above right) with data visualizations on which items were purchased, which weren't, and which sizes and colors were selected and rejected.
Will customers look for hidden cameras or wonder whether they're being watched? Customers might like to avoid going back to the sales floor, but will it lead to awkward moments, like sales clerks knocking on the wrong door? As with any mobile retail app, only testing, trial, and error will prove whether you can remake the shopping experience.
With all that data coming in from different retail channels, be prepared not only to store but to analyze. NRF Big Show keynoter Ginni Rometty, chairman, president, and CEO of IBM, says competitive advantage will go to the retailers that are analyzing their data and advancing from descriptive and predictive analytics to prescriptive analytics that advise on next-based actions based on predictive insights.
SAP's Big Data Bus exhibits cutting-edge retail scenarios including a connected stadium (inset left) that works in conjunction with team smartphone apps to enhance the in-game experience. SAP envisions fans ordering food and beverages, watching replays, and digitally socializing with friends and fellow fans from their seats. Teams gain analytics on fan sentiment and stadium occupancy, and they can alert staff when concession orders are backing up and offer seat upgrades to loyal customers.
Stores, like stadiums, are adding data-collection devices. Brickstream, a company that offers video-based sensors for analytic and security data collection, says its platform is used by Asda, a UK grocery chain, to monitor 9,000 checkout lanes across 335 stores. The platform monitors checkout times and, based on the number of customers entering the store, predicts 10 to 20 minutes in advance when additional checkout lanes will need to be opened to avoid poor customer service. Gap and Victoria's Secret are said to be using Brickstream's platform to track store traffic with comparative analysis on purchases per visitor across store locations.
NRF IT exhibitors of all stripes were promising rapidly deployable cloud infrastructure, app services, or "out-of-the-box" on-premises technologies, but Neiman Marcus CIO Michael Kingston says you can't keep up with customer expectations "without complementary changes in internal processes, organization structures, and behaviors -- the technology is just an enabler."
To deliver new customer experiences, CIOs have to have a "greater appetite for risk," Kingston says. "If you're going to make changes to technologies that touch the customer, you're going to have to do it more rapidly than you've historically handled technology change." That makes "really good enterprise governance" all the more important, he adds.
Would better governance have prevented Neiman Marcus's recently disclosed data breach? Kingston did not discuss the incident or respond to questions about security at the NRF Big Show, but one of his fellow CIOs leapt to the defense of retailers (see next page).
Janet Sherlock, CIO at Carter's, defends Target, Neiman Marcus, and several other retailers believed to have been targeted by the same cybergang.
" 'Breach' isn't the term we should use to describe these incidents; it was a theft," Sherlock says. "Breach makes it sound like something that [retailers] have done, but the focus should be on the criminals and not just us."
Echoing retail industry calls for tougher security from credit card issuers, Sherlock acknowledged that the PCI security standards appear to be inadequate. She voiced optimism that chip-and-pin credit card technology, also called EMV, might make a difference. But as InformationWeek has reported, that technology would require new point-of-sale systems, new cards, and consumer education, requirements that have led to tepid support in the US. The Senate Banking Committee, meanwhile, is reportedly set to explore whether retailers should foot the costs incurred by card issuers in the wake of a breach.
SAS research presented at the Big Show reveals that the trend is clearly moving toward centralized analytics teams. As the stats in the inset above show, 48% of retail analytics teams are centralized, 28% are decentralized, and 18% are hybrids. Centralized teams can address myriad problems across an organization, making the most of consistent, shared datasets as well as internal expertise. Analytics teams that once reported to marketing alone are increasingly reporting to chief strategy officers who oversee marketing, public relations, investor relations, and product and corporate strategy, says SAS.
The centralized approach isn't right for every organization. A hybrid approach, for example, can blend in the advantages of being embedded in a business, but the scarcity of analytics talent increasingly calls for a centralized team.
There's no question that retailers will draw on cloud services to improve their agility and quickly deliver next-generation shopping experiences, but Ginni Rometty, IBM's CEO, asserts that there's also no doubt that hybrid cloud deployments will be the rule, not the exception.
"At the heart of the decisions you make about cloud will be speed and agility on one axis and privacy and security on the other," Rometty says. "Experts predict that you'll have to live in both [public cloud and private cloud] worlds. The placement of data and knowing where it is will end up being the most critical design point most retailers will ever make."
More than 100 countries have regulations on data protection, Rometty points out, citing the European Union as the most notable entity requiring data retention within its borders in many circumstances. Cost and security concerns will also be reasons retailers choose private clouds, she says, challenging retailers to ask themselves, "Can I audit the data and manage it as if it were my own?"
Rometty is clearly playing here to IBM's support for private-cloud options that rival Amazon doesn't provide. But make no mistake that most every cloud provider has met or is moving to meet regulatory requirements that call for national or regional data-residency requirements.
"None of us are going to win the talent war if we don't address gender diversity," says Janet Sherlock, CIO at Carter's. "Women account for only about 26% of the technology workforce in general, and in retail, unfortunately, we're a little behind. You're never going to have the best talent and the highest-performing team if you aren't tapping half of the population."
Regardless of gender, the key to keeping good talent, says Sherlock, is making employees feel empowered and proud of what they do, a point echoed by Parinaz Vahabzadeh, VP of global customer intelligence and advanced analytics at luxury retailer Coach.
"In analytics in particular, everybody just wants to work on interesting problems and have their work valued and appreciated," says Vahabzadeh. "There's an incredible lack of talent, so to the degree that we can get involvement from the C-suite level, we try to get their support and validation and incorporate our work into the business. Asking people to solve interesting problems is the best technique I've seen for retaining analytics talent."
Another tip: Map out career paths for your best employees so they have some idea of what lies ahead. If they don't see a future with your organization, you've given them good reason to leave.
There's talk about CMOs outspending CIOs on technology and discussion about a new chief data officer role, but Michael Kingston, CIO at Neiman Marcus, says CIOs shouldn't view these colleagues as rivals. The big challenges -- to build a single customer experience, go mobile, and so on -- are "highly cross functional, and you have to have very good relationships and partnerships among IT, marketing, stores, and other [internal] organizations," he says. "IT shouldn't be defensive about the fact that other parts of the organization, like marketing, are becoming more involved in technology decision making."
These trends may change the CIO's role to being a strategist and business partner, "not just someone who is solely focused on making technology decisions," he adds.
There's talk about CMOs outspending CIOs on technology and discussion about a new chief data officer role, but Michael Kingston, CIO at Neiman Marcus, says CIOs shouldn't view these colleagues as rivals. The big challenges -- to build a single customer experience, go mobile, and so on -- are "highly cross functional, and you have to have very good relationships and partnerships among IT, marketing, stores, and other [internal] organizations," he says. "IT shouldn't be defensive about the fact that other parts of the organization, like marketing, are becoming more involved in technology decision making."
These trends may change the CIO's role to being a strategist and business partner, "not just someone who is solely focused on making technology decisions," he adds.
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