©Dean Mitchell via Canva.com
January 1, 2025
How Should Retailers Reduce Tech Sprawl?
According to a recent survey from work management platform Quickbase, half of IT professionals feel overwhelmed by the thought of trying to reduce “technology sprawl” — defined as “disconnected systems, data, and point solutions” — due to challenges from employees, disconnected data and systems, and the costs of completing the task of software consolidation.
The poll of more than 1,000 IT professionals in the U.S. and UK/Ireland found 87% feeling pressure to consolidate their technology stack from both the C-suite and their own IT departments.
Of the respondents, 68% indicate they spend 11 hours or more of their week losing time managing and maintaining software applications. The IT professionals pointed to both human and technological challenges as downsides of consolidation, with top concerns including employee resistance to losing familiar tools and adapting to new systems (37%) and the risk of data loss (36%).
Related cost challenges include balancing known and unknown costs of planning for future upgrades and maintenance, cited by 62% of IT professionals surveyed; followed by customization or integration costs, 50%; and direct or indirect costs of implementing new software or apps, 48%.
“For a long time, organizations would solve one problem at a time with a point solution, without thinking about how that one tool could connect with other teams or projects,” said Ed Jennings, CEO of Quickbase. “Today, that approach is at the heart of technology and app sprawl, full of software, systems, and teams that can’t connect data and collaborate, reducing productivity.”
Tech sprawl, also referred to as “IT sprawl,” can lead to what IT insiders call “Frankenstack,” which is when a tech stack has been assembled piece by piece, often in a reactionary manner, with many parts not integrating with one another.
“With IT sprawl, every new application or service requires additional time, money and expertise to manage and secure properly,” wrote Rajat Bhargava in a Forbes column. “The organization’s tech stack becomes increasingly bloated and complex, burdening IT teams with growing time and budget demands, all while IT spend is wasted.”
Bhargava suggested organizations determine their essential platforms based on their technology needs, automate processes or adopt unified solutions where possible, and consolidate redundant or unnecessary tools.
According to Forrester’s Q2 2024 Tech Pulse Survey, 77% of U.S. technology decision-makers report moderate to extensive levels of technology sprawl. Improving system performance and reliability was the most commonly cited driver of technology consolidation, above cost reduction. Simplifying IT management and enhancing security were also major drivers of consolidation efforts.
Still, Forrester’s survey found that 63% of surveyed IT professionals planned to pursue only moderate consolidation strategies as part of IT maintenance over the next two years.
In a blog entry, Biswajeet Mahapatra, principal analyst at Forrester, said, “Tech consolidation works best in product-centric organizations with a build/run model, where teams use a common backlog for new features and maintenance tasks, including technical risks and debt. Persistent build/run product teams, exposed to the consequences of their earlier decisions, have a more comprehensive mandate to fix sprawl.”
In a recent Forbes column, Richard Kestenbaum, a co-founder and partner at Triangle Capital, said IT departments are seeking more of a “one-stop shopping” option for their technology needs, and he believes tech sprawl will drive consolidation among tech vendors. He wrote, “The problem is that there are so many vendors, no retailer has enough resources to evaluate and implement all the technology that’s on offer.”
Discussion Questions
Do you see an urgent need for retail technology consolidation?
What’s driving technology sprawl, and why is IT consolidation so hard?
Poll
Loading …BrainTrust
Mark Ryski
Founder, CEO & Author, HeadCount Corporation
Melissa Minkow
Director, Retail Strategy, CI&T
Clay Parnell
President and Managing Partner
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Non-tech managers frequently cause tech sprawl by not understanding how new software, systems, and programs work together. Often, non-technical management buys into someone’s sales pitch for something new and shiny that might not work well with other parts of the system.
Resources may be used inefficiently, costs may increase, and security vulnerabilities and a chaotic situation may occur. As a result, it can create a messy, disorganized work environment. The tech company or I.T. employee is expected to fix it quickly in an unrealistic time frame.
Regular cross-departmental meetings can help resolve misunderstandings and clarify current projects between tech and non-tech managers. Non-tech managers can also benefit from ongoing training on the technology their teams are using.
The collaboration between the two groups can be facilitated more smoothly if a clear communication protocol is established, such as using shared tools or platforms for updates.
Tech sprawl is inevitable. And, sometimes it even matters. This isn’t to suggest ignoring it. But there is a very high cost to eliminating that sprawl — and quite often those costs aren’t going to produce results significant enough to spend the money. Retailers need to be especially cautious because there are large numbers of consultants who want to be paid for reducing that sprawl. And while that makes profit for the consultants, it’s not often the case that it will lead to profit for the retailer.
Technology “sprawl” is not a new phenomenon. Part of this sprawl is driven by ‘shining object syndrome’ which has retailers chasing highly touted new technologies that often don’t live up to the promised benefits. But while sprawl is not new, increased effort on cybersecurity and now AI has exacerbated the challenges that IT teams face. It is no surprise that IT consolidation is hard because many systems are simply not easy to integrate and there’s an abundance of legacy systems that are antiquated and require re-building. Retailers need to take a step back and focus on their critical few IT priorities and then focus on delivering these. Systems that directly support revenue generation is not a bad place to start.
I have spent over 25 years working with retailers and their IT estates – and in that time I have made a number of observations as to the largely interrelated causes of this.
One key issue is the rate of change for IT system requirements to match business needs. Retail supply chains, channels to market, merchandise characteristics, commercially driven partnerships, marketing approaches, and many other factors can change significantly from one year to the next. All of these drive different IT requirements – some of which are not supported by existing systems. This can result in work-arounds, specific systems, and other approaches that make the environment very complex. These additional system complexities are also before considering the impact of mergers and acquisitions and how wider technology changes drive new requirements and approaches. Social media based marketing and generative AI are examples here.
ERP has long been the IT backbone of large businesses – not just in retail. The inherent complexity of these systems means that the upgrade or replacement of such system can take perhaps 2-3 years. A metaphor I have heard multiple times is that it is performing heart and lung transplant while running a marathon. Consequently when there is a new business need, it may become necessary to supplement ERP functionality with additional systems.
When it comes to ERP replacement, an additional factor that is not considered is the attitude to risk of key decision makers. People tend to make decisions based on how they are measured and how long they thing they will be in their current role. If they feel something will take 3 years and they only plan to be in their role for 2 years then this may act as a disincentive.
This was best illustrated to me when alongside a much more experienced colleague I met an CIO at a major UK grocer about 15 years ago. The topic of conversation was ERP replacement. We discussed areas at length and from our research and discussions with his team it was clearly needed. However, at every turn he was advising us that his team were wrong. In his late 50s, he told us he had spent 30 years working for them and had recently moved to a much more rural area further away from the office.
As we left the meeting my colleague turned to me and said ‘He’s not going to make any decisions to change – he is riding it out retirement in 18 months.’
Tech Sprawl as described in this article is a direct result of the popularity of point solutions acquired (mostly) by users with little to no IT insight. And when IT is present in giving insight, it usually takes a long time to deliver, further alienating users and indirectly encouraging them to go it alone the next time around.
What to do about this issue is anything but clear. Large IT projects that are all inclusive usually take a very long time to rollout. Open architecture helps, however typically ignores or underestimates the challenge of synchronization between different software.
In order to solve this issue the IT department needs to be open minded about “incoming” problems coming from users, and users have to be flexible in their dealings with IT. I call that interdepartmental trust, a VERY difficult culture to create and nurture, and increasingly difficult the larger the firm.
As a retail merchant and eCommerce leader, I remain concerned about “tech sprawl” from the perspective of its longer-term impact on service customer needs and impacting a retailer’s ability to understand and market to customers in a unified and omnichannel way.
I remain astounded by the number of retailers that maintain data silos that separate their customer’s online and in-store browsing and buying records. The impact of these silos impedes the effectiveness of personalization strategies, limits the impact of User-Generated Content strategies, provides poor customer experiences across shopping platforms, and makes product returns more onerous for all parties involved.
I realize that pulling all of this technology together under one tech stack is hard work, but a strategic view of your technology infrastructure is really critical to serving a customer effectively in 2025 and beyond and now qualifies as “table stakes” for modern retailing.
Tech sprawl is a significant issue, and finding the solution belongs to the entire leadership team.
Retailers and brands are where they are in many cases due to aging, highly customized legacy systems that have been cobbled together over time, and left as they are due to budget constraints and other priorities. Further, any required change in one area has a ripple effect through the various tentacles of related systems, integration, and data.
Today’s modern solutions, which are cloud-based and more configurable, can help mitigate the issues, but it still takes a concerted effort across all functional areas to consider capabilities and processes broadly versus in narrow silos. Many retailers are pursuing a more curated tech stack, focusing first on their critical, differentiated business areas (for example fulfillment, customer experience), and identifying other areas that aren’t going to provide a competitive advantage (e.g., finance).
A composable commerce approach can technically be considered a “frankenstack,” but it allows companies to avoid the issue of systems not working together. It’s ok, and actually good, often times, to want ‘best in breed’ for each component of the tech stack, but firms do have to be sure that each piece is compatible with the other.
With the relentless pace of innovation, the rise of digital and social commerce, and rapidly changing consumer behaviors, retailers have been challenged to keep up with the evolving commerce landscapes. The majority of legacy retailers, especially in the middle segment, have technology stacks designed for another pre-digital age. While these technology stacks have spaghetti-like integrations and, in many cases, are stable enough, maintaining and customizing them to keep up with the rapid rate of innovation is a highly costly endeavor.
By dealing with technical debt challenges, retailers are unable to invest these critical funds into value-generating innovations for both customers and store associates in the digital age of commerce. As AI and GenAI capabilities mature, consider the work that Kyndryl is leading with our modernization strategies & technical debt mitigation capabilities. As retailers continue on the path around modernization and technical debt mitigation strategies, consider its impact, which is significant across various aspects of the organization, including productivity, innovation, financial performance, increasing levels of risk, and increased costs to serve.
Studies have shown that 44% of mission-critical enterprise IT infrastructure are approaching its end of life. As 2025 kicks off, retailers and grocers must prioritize technical debt mitigation, mainframe modernization, and application rationalization efforts, including:
Disjointed systems are the core challenge of tech sprawl – when tools and data don’t connect, productivity and collaboration suffer. The solution lies in managing workflows on a unified platform, enabling seamless integration across teams. By consolidating technology strategically, retailers can eliminate inefficiencies, reduce data fragmentation, and build a tech stack that drives long-term growth and productivity.
This has been a discussion for years. Very few retailers have completely integrated systems because most technology is put together over periods of time. To overhaul and integrate everything would be too costly and challenging for retailers to tackle all at once. And, even if they did, things would only diverge again over time. The best policy is to integrate as integration is done and to ensure that systems can, at least, talk to each other.
IT leaders face a frustrating dilemma: (1) Integrate and manage a motley collection of “best-of-breed” applications favored by decision makers in each functional area of the business; or (2) Install a massive ERP system with central data and/or financial management and a collection of mostly mediocre bolt-on business tools.
It seems to me that the choice comes down to prioritizing end-user priorities versus senior management priorities. The CIO often walks a tightrope here and either option presents a massive, ongoing workload for the IT department.
Instead of focusing on tech consolidation this year, retailers should focus on building a composable infrastructure, one that makes it easier to swap different components in and out without requiring extensive updates or risk breaking the whole system. This helps retailers balance the costs that can come with continuous tech stack upgrades and maintenance, which can be hard to plan for, a concern the article notes is common. It makes a retailer’s tech stack more adaptable in the long term, especially as we see more AI applications and use cases arise in the next few years.