CIOs can summarize both their priorities and their challenges in one word: agility. They’re committed to supporting the business roadmap by means of agile IT decision-making, leveraging new technologies and reducing the time it takes to implement hardware and software upgrades.
Still, obstacles remain, including the speed at which CIOs can implement IT changes and the need for increased capital resources.
“We’re focused on how to make IT as agile as the business demands,” says Dave Finnegan, chief interactive and information officer at Build-A-Bear Workshop. “We’ve made solid progress toward driving this shift over the last few years because IT executives now play a more integral role in shaping business strategy.”
“We’re slicing implementation times with an eye toward delivering value in months,” he explains. “We have to challenge ourselves to explore new ways of delivering value quickly to drive business results.”
Tom Litchford, NRF vice president of retail technologies, agrees. “There’s a speed-it-up mentality at retail companies that didn’t exist a few years ago and it’s fueled by the pace of change in retail. … We’re moving away from the ‘hype’ terms ‘omni-channel’ and ‘multi-channel.’ It’s just retail — and it requires a more responsive approach to software testing and rollout.”
Maintaining legacy systems
In mid-December, NRF’s annual survey aimed at sizing up CIOs’ challenges and priorities for the coming year was commissioned. The findings were reported at the council’s winter meeting and were the foundation for an educational session at the NRF Annual Convention & EXPO in January, as well as the new NRF research series “CIO Download.”
CIOs are most challenged by the prospect of matching business process changes to the IT team’s ability to modify supporting systems, according to the survey. While retail tech leaders are fully on board with the need to update systems and roll out new tools, achieving that objective while supporting legacy systems and procedures requires patience and persistence.
Progress is being made. While the 56 percent of surveyed CIOs identified business process change management as their top internal challenge, that’s considerably less than a year earlier, when 75 percent cited this as their top challenge — a shift Litchford attributes to sheer determination.
“Retail technology has changed so much in the last three years,” he says. “If you think back to 2008 and 2009 when IT budgets were largely being used to keep the lights on, you get a sense for how much progress has been made. Today the focus is on improving all aspects of the customer experience using mobile technology and systems that support an enhanced experience.”
Nearly half of the surveyed CIOs express frustration with trying to keep up; 47 percent report that their backlog of projects continues to grow more quickly than their ability to take on new tasks.
The research report, which is due out later this month, suggests that CIOs have mostly resolved issues like regulatory and contract compliance, cost structure reductions and governance, yet they continue to be challenged by turning data into usable business insights and using technology to differentiate their business from the competition.
There are a handful of concerns that IT executives intend to focus on over the next year. The top priority is business integration with an eye toward achieving one view of the company and its customers.
Also topping the to-do list is modernizing merchandising systems to achieve inventory, assortment and price optimization, and improving mobile — especially as it relates to assisted selling in-store and as a tool for enhancing direct marketing to consumers.
Shortly after the survey concluded, news of major data breaches involving retailers began to dominate headlines. While data security is a never-ending mission for retailers, many plan to scrutinize established procedures and conduct a detailed exploration of new methods to possibly deploy.
For Keary McNew, chief information and technology officer at Lilly Pulitzer Group, top initiatives revolve around customer centricity. With the blueprint for 2014 outlining significant e-commerce growth and opening a handful of bricks-and-mortar stores, McNew is looking to improve inventory visibility, point-of-sale clienteling and customer relationship management.
“Right now we can offer the online customer the full inventory assortment, and she can either order online or pick up in the store, but we’re working now to make that … a two-way street — meaning that if she’s in the store and we don’t have her size or the print she wants, our sales associates will be able to see inventory across the chain, source the item from another store or from the DC and overnight it to the customer,” McNew explains.
Real-time inventory visibility is a “functional requirement of being an omni-channel retailer,” he says. Lilly Pulitzer IT staff began tackling integration in 2012, investing in an enterprise service bus (a software architecture system) to bring myriad systems together.
At Books-A-Million, senior vice president of IT Cy Fenton is headed down the integration path in the coming months. Like McNew, his overarching goal is improving the customer experience across the company’s multiple channels.
“Integration will be a multi-year initiative,” Fenton says. “We need to move the entire corporate enterprise stack — mapping all of our back-office systems, financials, warehouse, distribution, etc. — to an enterprise service bus so that all of these disparate systems can finally talk to each other.”
“Consumer technology is moving so rapidly that it’s difficult to keep up,” he notes. “We’re finding that the pace has forced us to rethink some decision-making metrics. ... We’re adopting more of a test-and-learn approach — doing smaller projects and accepting smaller returns.”
The one objective on nearly every CIO’s 2014 project list is mobile, be it mobile-assisted selling, mobile marketing or mobile point-of-sale. At The Container Store, all aspects of mobile are either being investigated or incubated, according to CIO Thomas Birmingham.
“We had assisted selling applications on stationary devices in the stores for some time,” he says. “Recently we created a mobile version and deployed it to one store where we continue to test, learn and refine.”
Birmingham feels that most customers are better served with high-velocity checkout lanes, though he acknowledges that in certain shopping interactions, customer convenience dictates mobile checkout.
That outlook dovetails with Birmingham’s two uppermost objectives for the coming year — strengthening The Container Store’s customer engagement capabilities and its ability to sell optimized custom storage solutions using configurators.
“Last year we piloted our new surprise-and-delight program … called Perfectly Organized Perks,” he says. “We expect that this recognition program, through increased permissions, information and targeting capabilities, will drive increased customer frequency and household spend.
“Our ultimate vision is to more deeply extend customer insights into key operational processes to better ensure the retention of ‘best customers,’” Birmingham says.
McNew looks to roll out mobile POS at Lilly Pulitzer later this year, but “We need to build out core systems before we branch out,” he says. “Right now our mobile commerce is kind of clunky and it’s definitely not optimized. We’ll have a more responsive website in place in a couple of months … . After that we’ll build a mobile app, which we could eventually tie into a customer loyalty program in the future.”
For Cavender’s Boot City, a Texas-based chain with more than 60 stores, the next eight to 12 months will be spent rolling out multiple projects, including a new POS system and a CRM initiative. The IT team will simultaneously tackle upgrades to PCI compliance and data security.
“With the new POS system we’ll be able to introduce mobility and implement tokenization,” says CFO Jim Thompson. “We needed more functionality — right now we can ship from either the fulfillment center or the store. Shoppers are able to return product to either the DC or stores, but customers are not currently able to order online and pick up in store. That’s the missing piece that we hope to gain, in addition to being able to have vendors fulfill directly to our customers out of their warehouse.”
Thompson looks forward to seeing the POS and CRM projects come together in the form of mobile-assisted selling. “The upgrade we’re working on now will allow us to use mobile for line-busting functionality,” he says. “Next up we want to be able to use the devices as a portal to our website.
“Shoppers are loaded with information and they go online to compare everything. … a good experience trumps price, and if we can use handheld mobile devices to deliver better customer service and to accommodate shoppers however they want to be assisted, I think it will make a difference,” Thompson says.
Build-A-Bear Workshop is in the throes of a supply chain project, and is simultaneously exploring loyalty and business intelligence tools and processes with an eye toward greater personalization of messaging to the retailer’s guests.
“This generation of retail is driven from the guest’s perspective and how they interact with various touchpoints,” Finnegan says. “Our guests are the most digitally connected in the history of the planet — completely different from just five years ago — and that trajectory continues.”
Looking ahead, Finnegan is working on apps that tap into play patterns, perhaps blending digital and real play.
“Technology is part of the DNA of today’s kids — and therefore it needs to be part of our DNA too,” he says. “The magic of Build-A-Bear has always been high-touch. Our opportunity is to find ways to use digital to enhance the magic of personalization.