Reference for the project where IT was the core of the business model in old-school industry of department store. Main focus in solution was to create IT-landscape flexible to business model changes. The approach named model-oriented management.

1. Consistency of
IT-architecture & business goals
in retail company
Sergey Gumerov

2. Initial problems
Launch of fashion department store operations in 1 year
75% revenue generate on-line channel
75% CAPEX to the old building reconstruction
Competitiveness bases on Digital Fashion
“ERP” implementation
Thisisnot
technology.Really
?
Business
Expectation from IT
Huge gap

3. Management system
Constraints
Main architecture question
Why?
Retail
business
ROI
Maximization
Products
Channels
Consumers
Business
modelModel-oriented
management

4. IT-architecture services
Fashion retail technology
Business
model
Retail
business
Monitoring &
Analysis
Planning &
optimization
Trade operation
enabling

5. Information model
Cascade development
of Management system
Math.model
Retail “channel”
parameters
Goal
KPI
Classes & Instances
Catalogues
Products
Suppliers Consumers
Processes & projects
Software system
Trade & Stock
LeadsOrders
Information technology equipment & networks
Planning &
Optimization
Trade & Stock
operations
Monitoring &
Analysis
Main retail processes & enabling processes

6. Business model formalization
KPI
model
Function-structure model Procceses
Product
matrix
Supply-Sale
channels
Consumer
segmentation
Technology program generates
Fashion retail technology
Structure of technology program
Technology development & implementation
Architecturemanagement
Programmanagement
Information model & catalouges
Software system
Products Channels Consumers
MDM 1C Magento SugarCRM Cognos

7. Product
characteristic
Consumer
Characteristic
Fashion-retail technology services
ROI Maximization
Fashion retail technology
Consumer pick-up
Catalogue Store “Look”
Product pick-up
Buying Sales Lead
Channel pick-up
Loses minimisation

8. IT-architecture services
Information management
Referenced catalogues:
Products, Channels,
Consumers, Counterparties
References models:
KPI-model (finance), Information
model & algorithms
(technology), processes
Facts & documents warehouses
Transactional systems
Visual
merchandising
Trade & Stock operations
E-commerce
& CRM
Analytical systems
Planning &
budgeting
Modeling
Analytics &
reporting
GUI, API to
suppliers
GUI, API to
consumers

9. Financial model
Varia
bles
Description
(for each channel)
S (t) Sales
X (t) Expenditures
U (t) Expenditures speed
C (t) Cost of goods
v (t) Cost of sales
w (t) Fixed costs
m (t) Margin
k (t) Expenditure to cost of goods
ratio
γ (t) Sales to EX ratio
K (t) Efficiency ratio
E = S - UU
C
v
w
m k γ
KУлучшение
Канал N
Assortment
Other
dimensions
Consumer
segment
Channel N
Channel
Location

10. Optimal turnover level calculation
Expenditures – main management function
Best distribution U*
for ХХХ-retailer is
Ustore = 0.62 U,
Uecomm = 0.38 U
Conclusion 1:
Optimal level of EX per
channel
2U0 < Uoptimal < 4U0
Conclusion 2:
Expenditures could be
re-distributed by
optimal level
Whole business

11. Var Description
A Turnover assets
q Income part coming back to turnover assets
1-q Income part to dividends
ω Turnover speed
μa (ϒ-1)ω
P Initial capex
ι Income tax
μp Capital cost
Optimal expenditure management
for goal ROI targeting
S -
U
A
P
t0 t0+Δt
q(S-U)
E
ΔP
ιE
ΔA
Channel

12. Example of business plan benchmark
& business monitoring
Store
OnLineWhole store

13. IT system
Operational numbers
Some conclusions
• Aligning business & IT enables by formalized business model, which
connects goal KPIs with internal & external business condition
parameters through functional-structure decomposition
– system modeling as a core of IT & enterprise architecture
• Business model is the basis for
– Development, adjustment of integrated plans & its execution monitoring;
– Integrated information system, which accumulate operational & condition
parameters to adjust plans to achieve target KPIs.
Plan numbersGoal KPIs
Functional-structure business model