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Comment: Technology - hero or villain?


Our business aspirations are thrashing our technology capability to a point where ‘IT’ and ‘success’ are never heard in the same sentence.

The unstoppable trend to omnichannel retailing illustrates the conundrum where every new channel both requires considerable investment yet simultaneously erodes margins – the so-called “Race to the bottom”. Unless you are very lucky, legacy systems were never designed to do what we now ask if them. This isn’t just a problem for the ‘IT guys’ to resolve, it is a business wide challenge.

There’s a lot of momentum

Within omnichannel retailing, customer expectations are sky high and rising. Pure play consumer businesses like Ebay, Amazon and iTunes have set a high bar with near flawless, real-time service and customers have been conditioned that online means rock bottom prices.

Modern customers are disloyal, impatient, intolerant and savvy and their voice increasingly shapes products and services. This isn’t just confined to retail. Consider technology-driven change in our banking sector where we can pay bills or transfer money without ever visiting a branch. Or the rise of social media as an unfettered news channel destroying the old model and role of traditional newspaper businesses.

Consumer demand is accelerating the perceived need to digitise almost every business regardless of sector or offering and this isn’t going away.

5 factors to consider when weighing up new business technology

Scale of investment - Technology investment suffered since 2000 after Y2K projects soaked up corporate funds in an elaborate risk mitigation exercise. The impact of sustained under-investment is showing. Like maintaining your car, there comes a point when it is no longer economical to continue. Many large IT functions are being ‘re-platformed’ but unlike a new car purchase, re-platforming is expensive, disruptive and risky. The rumour is Argos are investing around £300m for their digital transformation and earlier this year Asda reportedly paid around £700m for their ‘click and collect’ offer.

Boxwood image
Boxwood image

Complexity - Coupled with under investment is the impact of iterative decision making. The future was not known or considered so many organisations have developed hugely complex, technology eco systems. Now so involved that no single person can master them.

Lack of detail - Without clear, detailed direction from the board, poorly understood visions are being pushed on middle management to implement. Strategy has to be detailed and aligned. Leaders need to be prepared to get into the detail.

New associated skills and technologies - Cloud based solutions can be difficult for traditional in-house IT functions to manage. Some of your most able, committed and loyal staff may have been deeply embedded in legacy systems for too long.

New business models and new possibilities - Made possible by emerging technology and exploited by nimble fresh players. This forces the pace of change. Leaders must be prepared to advance into radically new areas.

Where to start

Start with a clear vision and detailed plans. Otherwise, risk exhausting your resources and career building a folly. Think about IT as a strategic asset.

  1. Get the CEO’s involvement, interest and buy in.

  2. Assemble a war cabinet. The digital agenda is a business challenge – not a technology one. Clarify your needs as determined by your customers and competitors, then consider the options.

a. Ensure all core business areas are represented

b. Get the right IT resources on board (avoid deep techies who share no business empathy).

c. Get the right external advisors - Your organisation can’t be expected to find all the answers itself and independent facilitation can be essential to reach decisions quickly.

  1. Be clear on your vision and what it means. Seek specialist advice from other organisations, consultants and IT vendors.

  2. Factor in time, affordability and risk, then determine what must happen now and what can wait.

  3. Check your planned route will build for the future by reducing complexity.

Is this really important? Only if you value your career!

Retailers know digital services are here to stay, so be prepared. Major business initiatives have been stopped dead because of something crawling out of the IT woodwork that wasn’t properly understood or acknowledged.

Get your technology team on side early. They have real constraints and the ability to destroy visions and careers without trying!

The drive to digital isn’t a technology ‘bolt on’ - it is your new business. As M&S CEO Marc Bolland recently stated “…our store of the future is the web”. The challenge is to pull it all off without breaking the bank or destroying margins.

Published on Friday 30 August by Editorial Assistant

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