The Evolution of Retail IT

Drive Your Business
The Evolution
of Retail IT
Major transformations and
how your business can adapt

2 ©2016 WGroup. ThinkWGroup.com
Introduction
We live in an era where all aspects of IT are transforming. The ability of a retailer to
engage its customer base in an omni-channel manner, innovate, and keep pace with the
customer mandate for immediate information is key to survival in today’s marketplace.
In order to thrive in the coming years, it’s critical that every company carefully analyze
its own business goals and determine how new technologies can help make them more
attainable. This means having a clear understanding of key IT trends occurring right now.
Use IT change to drive business goals
IT is driving major change across practically every industry, retail being no exception. Companies
that don’t pay attention to new developments and adapt swiftly may risk obsolescence. IT is
changing its focus from resource intensive operations centered on infrastructure management
to relationship and service management. That provides significant opportunity to reduce
costs, increase efficiency, and deliver better products and services. The retail CIO needs to
understand how these changes can help their company innovate
and stay competitive in a rapidly evolving market.
IT departments need to leverage the process-oriented
experience and be the champion of next-generation
technology and tools within the business. The
organization needs to develop a shared agenda to
integrate technology with business outcomes by
partnering and aligning with business unit peers,
including merchandising, marketing, supply chain,
loss prevention, and HR. This provides a basis
for future growth in the company and makes IT
a more effective component of the business.
The world of commerce is changing rapidly, and
those who do not stay abreast of new developments
will miss out on major opportunities. This guide
was created to help you understand recent shifts in the
world of IT and how they will affect your retail business.

The top four shifts
in retail IT
As traditional IT models shift, new frameworks are rising to take their place. In many cases,
these changes can significantly boost an organization’s ability to deliver quality IT services cost
effectively. With the advent of XaaS, the increasing power of IoT, and the realization of zero-
footprint IT, retail CIOs need to drastically rethink their IT strategy, adapt for the future, and align
their goals with business goals. New payment technologies, network, security, and supporting
omni-channel integration are at the forefront of the IT initiatives; customer engagement, customer-
information protection, inventory management,
and employee productivity are the retailer’s
business priorities. Understanding these new
developments and connecting IT objectives
with business objectives is key to success.
WGroup has identified several key shifts we
believe will have a major impact on the way
retail organizations are run. This section
will help you understand these trends and
design effective strategies for the future.
Understanding the new
developments in retail IT –
and connecting them with
your business objectives – is
key to success.


The future of retail will see changes in the ways companies market to and engage with
their customers. As technologies like mobility, automation, IoT, and big data analysis make
it possible for companies to deliver better, more personalized marketing and service,
consumers are rapidly changing their expectations. It’s not enough to simply have an online
storefront. New generations of consumers demand mobile access with features like 24/7
customer service, automated returns, and personalized marketing. IT must understand these
new possibilities and work with business leaders to use them to grow the business.
Customer engagement1
Proximity-based marketing
With practically every adult carrying a powerful, location-aware
smartphone in their pocket, it’s becoming increasingly common
for companies to deploy proximity-marketing techniques to
engage customers in a more personalized shopping experience.
With the use of wirelessly connected beacons,
retailers can deliver real-time, relevant
messaging to customers as they walk by stores
or consider products. For instance, a customer
standing in front of a shelf filled with hiking boots
might be given information about their durability,
materials, and reviews, allowing them to make
a more informed decision. In many cases this
can make a customer both much more likely
to purchase the item and more satisfied with
their shopping experience. This gives proximity-
based marketing the potential to both generate
immediate revenue and increase long-term brand value.

Social networking
It’s no secret that social networks have become one of the most important media platforms of
the 21st century. 72% of men and 76% of women use social networking sites regularly. These
statistics become even more stunning when looking only at those between 18 and 29 years
old, who use social media at rates as high as 89%.1
With its extraordinary salience, the power
of social networks to drive brand growth and encourage sales is finally beginning to reach its
full potential. As advertising becomes more targeted on a wide range of metrics and social
networks like Pinterest and Facebook develop fully integrated shopping
platforms, it is becoming clear that these tools are
extremely important to driving retail growth. Their
importance is also likely to continue to grow for the
foreseeable future as millennials and other future
generations become more important to the sales base.
Effective automation
Automation can provide a range of benefits to retail companies, but one of the most effective
applications is in customer engagement. Fully-automated multi-channel customer engagement
programs are more efficient – and it’s now simpler than ever for systems to automatically
categorize potential customers, send out
personalized messaging, and drive more
customers to the end of the sales funnel.
Automation also can greatly improve the customer
service experience. Effective automation
can perform simple tasks such as answering
customer questions and initiating targeted emails.
Self-healing networks ensure store and customer
connectivity – and stock visibility across the
retail chain. These functions allows companies
to offer faster, more consistent service to their
customers while simultaneously reducing costs.
When retail CIOs understand the power of these
tools, they can use them to grow the company.
The power of social
networks to drive brand
growth and encourage
sales is finally beginning to
reach its full potential.


Data analytics
Retailers cannot engage their customers unless they truly understand them. Data
collection and analytics through sensors, demographics, geo-spatial localization, mobile
devices, and other new technologies make it easier than ever for companies to get
a more accurate picture of how their customers think and what they want. Empower
sales associates with technology and tools so thay can more effectively engage with
customers and personalize their messaging. But it’s not enough to simply collect data
without having a clear plan for its use. Many companies gather information without
purpose and end up with more data than they could ever use, leading to inefficiency
and missed opportunities. IT must strive to ensure that all of its data collection has a
business strategy alignment – and the analytic capacity to actually use the data.

Technology management2
Retail IT departments must move away from being an infrastructure management organization and
focus on using technology to advance business goals. This means undergoing a massive effort to
standardize, modernize, and simplify their technology environment to increase efficiency. XaaS,
zero-footprint IT, and a merging of business and IT goals are all critical components of this process.
Companies should take
advantage of new XaaS
solutions by sourcing
infrastructure and legacy
application services where it
makes sense.

Utilize XaaS
One critical aspect of streamlining the technology management process is taking advantage of
new XaaS solutions. Internal IT infrastructure is becoming increasingly redundant as third-party
providers offer more powerful, secure, and cost-effective alternatives. Companies should take
advantage of these new solutions by sourcing infrastructure and legacy application services where
it makes business sense. This allows the organization to drastically
reduce its in-house infrastructure, as well as its staff,
leading to considerable savings and improved efficiency.
These solutions also make it easier for IT
organizations to financially justify their actions.
The billing for XaaS services is usually much more
straightforward and its impact more measurable than the
comparably opaque process of investing in an internally administered infrastructure.
Application management
IT must make sure that technological capabilities keep up with business demands. This
involves building a roadmap and executing initiatives to augment –and potentially replace
– legacy applications and data repositories to meet future analytical needs and provide
actionable insight. And as the infrastructure administration shifts, so does the application
management. Teams need to be flexible as new solutions are integrated; being nimble
and quick to adapt helps ensure a more seamless shift away from legacy systems.

Business-unit integration
At WGroup, we strive to help companies understand how to use IT to drive business
goals. As technology trends progress, this concept will become even more fundamental to
success. The IT organization is becoming more streamlined as third-party providers take
on traditionally in-house roles, making it important to re-tool internal resources for future
business-unit integration, support, and service management. By integrating business goals
into IT goals and making technology a key part of business decisions, companies can more
effectively achieve their objectives. This is particularly important for retail companies, for
whom IT is such a critical component of future success. It is key that retailers understand how
to merge IT and business units to achieve greater synergy and reach their core goals.
Stay flexible
The new technology architecture framework
itself must be flexible enough to support new
solutions without disrupting existing applications
and systems. This means companies should
have a well-defined plan in place to help them
transform legacy applications and systems without
negative consequences. This necessitates a
clear understanding of processes and service
requirements and a high level of maturity.

Relationship and
service management
3
The retail CIO is transitioning from being primarily an infrastructure manager to an overseer of
relationships and partnerships both within and outside the company. As XaaS providers take over
a growing number of roles traditionally held by IT departments, it is up to IT leaders to provide
the bridge between the business and the providers. Similarly, the CIO must partner with business
unit leaders to help them understand and address emerging opportunities and the technological
impact of IT on business strategies. This transition provides the basis for the CIO’s ability to make
technology a critical component of business operations, merging IT and business objectives.
Partner with business leaders aligned
to your company strategy
The future success of retailers demands that IT and business goals be consistent. It is
extremely important that companies fully understand the potential of emerging technologies
and the impact they will have on business strategies. That’s why the CIO must work with
other business leaders to build integrated business and technology roadmaps. Business
leaders need to strive to make IT implementations cross departmental, reducing the
potential for siloed technological efforts. IT operations should be aligned with business
goals and made more efficient by implementing solutions that can help build the framework
for adopting and enhancing a relationship and service management mindset.
It is also important that IT and business leader work to integrate process-oriented solutions into
areas that are traditionally less apt in these methods, such as merchandising. The technology
vision and roadmap must support the overall retail strategy, particularly surrounding modernizing
allocation, fulfillment, assortment planning, pricing, and inventory. By implementing more efficient
technology-based tools and processes into a diverse range of business functions, business leaders
can make the company more efficient and deliver better products and services to customers.

IT leaders should build
strong relationships with
vendors while regularly
reviewing their performance.

Manage vendors – and business outcomes
Many of IT’s traditional functions are being outsourced to third parties. In some cases, it
is possible to have an IT department with almost zero infrastructure footprint. However,
it’s still critical that technology leaders oversee vendor relationships and ensure that they
are delivering on their promises. As new technologies emerge and become critical to
success, it is important for companies to be able to identify valuable partners and leverage
their ability to deliver the services the company needs. Leaders must be able to look
critically at key service management areas, continually
evaluating and refining to make ensure
satisfaction at the business unit level.
Vendor management involves
several critical areas, including
contracts and SLAs; performance;
and risk and security. IT leaders
must establish clear standards for each of these
areas and ensure that they are meeting the needs of the company. This means
building strong relationships with vendors while regularly reviewing their performance
and making adjustments to agreements or seeking new bids as needed.

Risk, governance
and compliance
4
The advent of new technologies, the increasing viability of XaaS, and the need for greater
integration of IT and business units are all rapidly changing the role of risk and governance
within organizations. As technology becomes a key component of business decisions
and IT aligns with business objectives, it becomes increasingly pertinent to integrate IT
risk and governance objectives with those of the business. The future IT strategy is a
business strategy, and corporate level risk management and governance structures can
help ensure that all parts of the company are working toward driving business goals.
A new definition of security
One of the most important components of risk
management in IT has been information security.
This is particularly important for retail CIOs,
who manage massive amounts of sensitive
customer data while protecting revenue-
generating online storefronts from attack.
Third-party service providers that are
required to integrate security best
practices into their environment typically
have more comprehensive tools to
manage security administration. Specialized
vendors can even provide forensics and
other tools to offer more comprehensive
information security. For most companies, this is a positive development, as they can
reduce their security budget while still maintaining a very high level of protection.

Cyber-security management
strategies should be part of the
company DNA and culture.
Corporate level risk and governance
As IT and business goals merge, it is important to ensure that all aspects of the organization are
aligned with core business objectives. This means that risk and governance structures should be
designed and visible at a corporate level. Cyber-security management strategies should be part
of the company DNA and culture. This allows the company to more effectively monitor, detect,
and respond to threats. Many aspects of IT risk and governance objectives also can be merged
with business loss-prevention objectives to further consolidate IT and align business units.
Business outcome alignment
Every business has many departments,
each with their own conflicting priorities.
That’s why it’s so important for companies
to have structures in place that align IT and business
objectives and keep the organization accountable to those strategic priorities. There should
be a centralized, overarching set of objectives in place that are designed to ensure that
IT is working to drive business goals, and that business leaders are making technology
a key part of their decision-making process. Governance structures can help maintain
this alignment by providing the means for business leaders to manage IT operations and
creating systems of accountability that keep IT on track with core business objectives.

IT evolution roadmap
IT departments of the past demanded considerable financial and human resources
to operate effectively. Implementing new services required significant investments
in development, equipment sourcing, and installing. Today, that is changing as CIOs
become more involved in managing relationships rather than building out and maintaining
infrastructure. Now, an IT leader’s primary objective is to facilitate creation of integrated
business and technology roadmaps that align with the overall business strategy.
Resource intensive

Relationship
management
One of the most significant trends in IT is the movement from in-house implementations
to cloud computing and remote access services. This is fundamentally shifting the
role of IT in the organization by drastically reducing the amount of infrastructure that
it must manage, because third parties can often deliver services better and more
cost effectively than in-house IT. As such, today’s CIO focus on managing these IT
services from a high level, rather than micromanaging the implementation.
Infrastructure
management

Service
management

Yesterday’s IT attempted to minimize risk at all possible costs. Today, that strategy is shifting to be
more in line with the company’s broader risk-management strategy. Companies must tailor their
level of risk to be consistent with their business objectives. This means implementing compliance,
corporate-level governance and risk management structures using third-party security solutions.
Risk adverse

Managed risk
and security
Most importantly, retail CIOs and CEOs need to understand that the days of siloed
IT are over. The department is now a critical part of core business functions and
must operate as such. This means shifting from a project-centric IT department and
driving toward achieving the business goals in support of the overall strategy.
Project centric

Business-outcome
centric

At WGroup, we believe that a business-driven approach enables IT to transform technology,
create value, and reduce costs. Retail CIOs must “ReThink IT” as they become a broker for
IT services to the organization instead of the technology implementer. Today’s IT organization
focuses on business outcomes, architecting the business model, driving differentiation with
analytics, managing risk and compliance, guiding innovation, and providing an improved
service management model. The most successful companies of the future will be the
retailers with the most flexible set of technology tools to allow nimble execution of revenue
generation and cost-optimization programs in support of their business strategies.
IT is at the core of the innovative strategies businesses will need to stay competitive in
the future. But understanding how and why IT is changing is sometimes challenging.
Preparing for these changes and learning how to adapt is critical to business success.
In summary

[1] http://www.pewinternet.org/fact-sheets/social-networking-fact-sheet/
Reference

Drive Your Business
Founded in 1995, WGroup is a technology management consulting firm that provides Strategy,
Management and Execution Services to optimize business performance, minimize cost and create
value. Our consultants have years of experience both as industry executives and trusted advisors
to help clients think through complicated and pressing challenges to drive their business forward.
Visit us at www.thinkwgroup.com or give us a call at (610) 854-2700 to learn how we can help you.
150 N Radnor Chester Road
Radnor, PA 19087
610-854-2700
ThinkWGroup.com

The Evolution of Retail IT

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