In the demanding world of retail, the CIO faces a delicate balancing act between maintaining smooth operations and innovating to meet consumer demand.
By Jeff Warren, Vice President, Oracle Retail
A few years ago, retailers spent a lot of time talking about the challenge of multichannel operations: how to provide the same merchandise and the same level of customer experience online as in the store. Then the use of smart phones exploded, adding in effect a third channel, mobile. Even as retailers were scrambling to deal with this complication, they realized that the boundary lines between one channel and another were vanishing. Customers walk into the store with a phone in their hand, buy things they see on the sales floor, accessorize them with items from the website, and expect it all to be handled as a single, on-the-spot, totally personalized transaction. The expectation is very clear: give the consumer what she wants and how she wants it, and in as close to real time as possible.
Meeting this expectation is essential. In a market in which any advantage in price point and selection can be countered by a dozen competitors, the key differentiator has become customer service. Retailers are striving not only to meet consumer demand but to anticipate it, and to provide an ever smoother and more personalized shopping experience. To do that successfully, retailers are looking to their CIOs to evaluate, adopt, and integrate new technological capabilities as soon as they become available.
But innovation, of course, is only part of the CIO’s job. IT is a cost center, and retail, for all its glamour, is a brutally competitive, low-margin industry. CIOs have to innovate, but they also have to keep the lights on—if the system’s down, you’re out of business—and they have to stay within the budget. How does a CIO create more capacity?
Changing the rules
One way—perhaps the key way—is by moving to the cloud or to a hybrid model that leverages the cost advantages of the cloud while retaining local IT control of core assets and operations. In a recent Forbes article on top strategic CIO issues, Oracle’s Bob Evans noted that “Before cloud computing, the #1 enemy of the CIO was the economic reality that 80% of his IT budget would be consumed by low-value maintenance and integration. Because cloud computing pushes that burden over to cloud vendors, CIOs can liberate huge portions of their budgets and reallocate them to projects centered on growth and customer engagement.”
Once the IT budget is liberated, it stays liberated. The cloud, whether as a total IT environment or as part of a hybrid system, makes it possible for retail organizations to keep abreast of business and technological developments without having to make unexpected investments in IT infrastructure.
The shift to the cloud also enables the continuance of a deep and ongoing change in the role of the retail CIO. A decade ago, retail IT was essentially seen as a cost center. While the CIO was responsible for enterprise-level IT, market-driven functions like ecommerce frequently reported to someone else. This pattern clearly required a change; retail IT broke out of its silo and began working more closely with functions like marketing. Now, with some routine maintenance and upgrade issues moved off their desks, the industry’s CIOs are shifting to become key innovators who work hand in hand with all the organization’s business stakeholders.
In this transition, retail CIOs may find themselves needing to evaluate the cloud and, as it stabilizes, to advocate for it. While the cost benefits more or less make the case for themselves, it may be necessary to explain, and where possible to demonstrate, the redundancy, functionality, security, and scalability advantages of the cloud to executives not versed in IT issues. Trust and performance must be proven.
The end goal is enablement. Today, organizational survival—especially in an industry like retail—depends on embracing new technologies at an unparalleled pace. More than ever before, CIOs need to create capacity and lead—to reach into the cloud and bridge the gap between operations and innovation.