Early ecommerce was driven by retail marketing departments rather than IT. As we move into a cross-channel world will they continue to dominate strategy or will the CIOs take a greater leadership role? Penelope Ody investigates.
Time was when information technology was regarded by certain retail Boards as ranking somewhere below store design and possibly slightly ahead of facilities management: it was there to keep the lights on – to make sure the tills worked and the management reports were produced promptly. The reams of analytical data produced by EPoS systems – usually printed on green and white striped continuous paper – were considered quite useful to prop doors open.
Today we live in a digital age and retail technology is no longer the preserve of IT. Retail staff, like all consumers, use the internet, smartphones, tablet computers, social media and so on; they expect such tools to be available in the workplace and if the app they need is not, well it can easily be downloaded or bought using Software as a Service with no need for any recourse to the IT department. Small wonder that Gartner suggests that 25% of the IT budget will sit with the marketing department by 2014, while an IBM survey suggests that the CMO’s IT spend will outstrip the CIO’s soon after that.
So in a cross-channel world where does that leave IT? Largely outsourced? Simply there to manage the infrastructure? Or as a major strategic player capable of understanding the potential of all digital activities? “We’re starting to see retailers appoint ‘digital strategy officers’ who have greater Board accountability and – as the name suggests – are responsible for guiding future omnichannel strategy,” says Richard Eynon, Senior Manager with Kurt Salmon . “A lot of these people are coming from marketing departments and not many from IT. The IT department is seen by many retailers as there to keep things running. In the past IT has been all about back office and driving efficiency. Now it should be about driving innovation and demonstrating that it is keeping up with strategic trends. If it does not do that, then it may end up being regarded simply as a commodity.”
Simon Evetts, Partner, IBM Global Business Services and Smarter Commerce leader for UK and Ireland, has also noted the shortage of IT executives moving to the ‘digital strategy’ role: “Some retailers are creating ecommerce innovation departments to trial new concepts and test new things,” he says. “This needs knowledge of digital functionality and IT skills so it is a cross-departmental role – digital agency plus retail IT. IT also doesn’t seem to be picking up on the importance of customer experience. They work with the business to make use of tools but they also need to understand the business and understand the constraints that those tools involve.”
IT departments – with their CIOs or CTOs – are obviously as variable as retail businesses themselves.
A tier one CIO may have 300-400 staff in their department while at the opposite end of the scale numbers may be in single figures. “It depends on the type of business, the individual and the respect they can gain at Board level,” says Martin Schofield, Operations Director at Itim, but for many years Retail Operations Director at Harvey Nichols. “Some CIOs have been closely involved in guiding strategic direction, others more focused on technology. IT has always had two distinct functions – business continuity, which ensures that ‘the lights are kept on’ and the core systems reliable, and business improvement, which is about conceiving and delivering the future vision.”
Some IT directors may be more visionary than others, but as Schofield adds, today IT also has to be more customer-facing so can no longer be confined to the back office. IT directors need to be involved in the business and be more ‘omnichannel retailer’ than ‘IT specialist’.
While retailers may be more customer-facing, cross-channel activity is also being driven by changing consumer behaviour and that too is impacting the role of IT. “Retail should always be focused on ‘delivering what the customer wants’.” says John Bovill, Commercial Director for fashion retailer Jacques Vert. “But within the retail landscape, the customer is increasingly shaping purchasing behaviour through technology. The role of IT as a ‘back office’ function is therefore no longer relevant within a more transparent, collaborative and connected user and customer community. IT has to be a business partner, innovator and catalyst to thought leadership across the organisation, to ensure this change is seen as an opportunity rather than a threat.”
While IT directors like Bovill – formerly Group IT Director at Aurora Fashions – are, as his new role suggests, fully aware of the need to be focused on business and strategy, many retail businesses still regard the IT department as back room boys concerned only with keeping those “lights on”. “IT directors are not always on the Board and so do not always have visibility of the entire business,” says Tony Bryant, Head of Business Development at K3.
“We have had totally unrealistic ‘requests for information’ or ‘invitations to tender’ from business folk and on occasion, although the CIO has said the project is too complex and impossible to implement, he hasn’t had enough clout to intervene. We’ve pulled out of short lists before now because the proposal can never work and is so clearly a doomed project from day one.”
More optimistically, Bryant also finds that sales presentations to the majority of retailers are now made to combined business and IT teams rather than simply talking to one or the other. “Achieving cross-channel customer insights will be a major preoccupation for many retailers over the next couple of years,” he adds, “and the CIO is the only one who can understand the integration issues to guide the business.”
Frank Lord, VP Oracle Commerce, also finds that in the past three or four years IT executives have become much more business aware. “IT is becoming more business and cross-channel oriented,” he says. “Retailers are having to include more and more IT attributes and we’re seeing more CEOs coming from the ecommerce side of the business. In the past much of the business wasn’t interested in IT but online is often the only growth area and everyone is now focusing on customer experience and that transcends departmental issues.”
In many retail businesses ecommerce remains firmly associated with marketing and has often been a fringe activity for the IT department, but as Lord points out, customers are using technology in different channels so the experience has to be consistent and IT needs to be involved. Chris Collins, Managing Director of i-Realise, believes that the increase in mobile channels will also help push IT back into pole position. “Mobile is definitely IT,” he says. “It is a technology-led event. Marketing may want to interact with the customer but IT has to provide the delivery mechanism.”
Simon Evetts, too, sees the use of consumer smart phones in-store as heralding a raft of newer technologies that IT will need to explain. “The role of the store is changing significantly with multichannel now inside the store as shoppers use their smart phones to check prices – but that is just the start they will want to check stock, place orders or use augmented reality to find out more about a product.”
Integrating the mobile channel with existing ecommerce and core systems – let alone augmented reality – might just prove a little too challenging for the marketeers. As Martin Schofield says: “Like any business function, IT needs to demonstrate value but IT deals with complex systems and processes which can be both a blessing and a curse. A blessing because things often need to be taken on trust and once this trust is established the competent IT director can be left to their own devices. A curse because of the need to explain the complex to people that just want things to work like their phone.”
Or as John Bovill puts it: “The cross-channel retail journey and outcome is yet to be defined and this creates incredible opportunities. We are very lucky to be participating in this shift in behaviour.”
For CIOs willing to take the lead, “living in interesting times” might just prove to be rather exciting and enjoyable.
