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Resetting the CIO's Role for Smart, Digital Retail

By John Kenwood, VP, Capgemini [Euronext: CAP] And Charlie Li, EVP-Chief Cloud Officer, Capgemini [Euronext: CAP]

John Kenwood, VP, Capgemini [Euronext: CAP]

The great retail renaissance is underway, enlightened by digital, enabled by the cloud and enriched by an endless sea of data. This digital reawakening requires CIOs at traditional retailers to retool their role and reset expectations in the business. What’s needed is more freedom to innovate and experiment around new approaches in store, online and within the datastream.

In our view, the new breed of CIO who will play a key role in building smart, digital, omni-channel stores will need to focus on three essential areas: cloud, data, and machine learning.

The Struggle at Retail

Our latest research shows that shoppers see less value and pleasure in the physical retail experience, as one-third of consumers would rather wash dishes than visit a retail store.

While many retailers are taking steps to remedy this by combining the virtues of physical stores with new technologies, over half of the retail executives we surveyed feel that the digitization of their stores is moving too slowly as they struggle with a range of challenges, from adequate training for store associates to the difficulty of measuring the ROI of digital investments.

Brick and mortar retailers can improve the shopping experience through the use of cloud, data, and machine learning where they can leverage data analytics to drive traffic, deepen engagement, and increase transactions.

As a CIO, you already have access to terabytes of data both internally and competitively. You know competitor prices. You know where your inventory is. What you might not know is that your store associates don’t fully trust inventory data, so they might be less inclined to take advantage of this information to provide a better customer experience. Moving your inventory data to the cloud can fix this.

Getting to Cloud 9: A Digital Maturity Model

Cloud technology can accelerate growth and add agility, which starts with a more effective and innovative use of customer data. With the need for virtually unlimited data storage to inform insights, no retailer can afford not to move to the cloud. But how much and how fast?

Starting from a low-risk adoption stage and moving to an all-digital, everything-as-a-service model, the business value from the cloud increases significantly along with a company’s digital maturity (see Fig. 1). Like all projects, however, it is important to start with the right strategy. This includes a comprehensive view of what’s available, filtered through a combination of what is technically feasible and what offers the greatest strategic and economic value.

Depending on a company’s needs, and where they fall on the maturity map, there are three primary transformation strategies to consider.

1. Infrastructure modernization– Transform legacy data centers to a public, private, hybrid Insight-as-a-Service (IaaS) system while mass migrating lift-and-shift applications to the cloud.

2. Application modernization– Leverage SaaS and born-in-the-cloud solutions to modernize and accelerate business technology. Re-factor and re-platform more complex existing applications to make them cloud ready.

3. Nimble and digital enterprise – To become a true digital enterprise, organizations must embrace a new applications platform that is cloud native to simultaneously provide rich user experiences across the web and mobile devices, while providing dynamic insights through Machine Learning and Internet of Things. A cloud-native platform must also serve as a new hub for integration and APIs to enable a richer application ecosystem that supports the monetization of an API economy.

The goal is to move up the cloud maturity ladder using a combination of the above strategies.

As retailer move to level Two, they integrate cloud and non-cloud apps to maximize productivity. Level three is where the results of cloud transformation start to multiply. Now you can move fast and be more agile with cloud-based data tools as you re-architect applications.

Charlie Li, EVP-Chief Cloud Officer, Capgemini [Euronext: CAP]

Level Four cloud maturity is focused on data and the insights gained by using common APIs to connect sources with analytics tools. With all your data in the cloud, connected with and accessible by Machine Learning programs, you’ll have access to insights quickly—almost immediately—not months later when the data is outdated. The benefits of speed continue in Level Five, the ultimate in cloud maturity. This ideal state is where everything is accessed and delivered as a service, at the speed of ideation.

Game-changers for Retail CIOs

Now that you have a strategy and roadmap, how do you send the signals that you are the right person to lead the charge into this brave, new world of retail? Here are four ideas to bring people and teams together, to use data, automation or machine learning to spark innovation:

1. Be an Agent of Automation and Machine Learning

Take the lead in introducing new insight platforms like IBM’s Watson, Google’s Cloud Machine Learning Engine or Intel’s Retail Platform to improve customer engagement and the in-store experience. Create a use case and take one or more of these tools for a test drive.

By training the software to recognize your best customers, what they like to wear and the events they RSVP to online, sales associates can more confidently reach out and delight customers with their timely suggestions.

2. Be a Hackathon Hero

Sponsor a hackathon for area programmers and students, and invite them to tackle one or more store-level challenges. Start by finding new use cases and ways to leverage internal and external data. You can offer data sets such as reviews, cross-promotions, and price checks against competition, with the goal of identifying what to sell online vs. in store, or to improve stocking models for sizes and colors.

3. Be a Business Architect for New Models

Take the lead in looking at new ways of doing business. Can you offer a subscription service instead of selling items one at a time? It’s not just dog food and diapers that get consumed on a consistent schedule. Socks, athletic wear and undershirts also need to be replaced regularly. Broaden the sale and increase your share of wallet by showing and selling more complete outfits, or complementary products, much as IKEA has done with their 3D room renderings.

Figure out what people don’t like most about shopping and do something different. People have been exasperated by the difficult and error-prone drive-through ordering experience.

4. Be a Culture Change Evangelist

Changing a culture takes time, especially in larger organizations, but the rewards can be seen throughout the organization, especially in employee turnover rates and recruiting statistics. Encourage experimentation by providing support and encouragement for new ideas. Instead of long cycles of build-test-deploy, offer incentives for incremental ideation.

Iterate quickly and recover quickly. Fail fast and try again. Ensure your team understands the concepts of cost-to-serve and opportunity cost (using a standard hourly rate), then encourage people to suggest where to iterate for the most immediate gains.

Be a digital leader who has the agility and vision to stay ahead of what consumers want. Be part of the new breed of retail CIO who delivers more from the physical store through cloud.

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