Stelzer Speaks to Technology Challenges
By Ronald Margulis, Managing Director, RAM Communications
I spoke at length with John Stelzer, director of retail industry marketing for the business integration solutions provider Sterling Commerce, on technology trends in the retail industry at the National Retail Federation conference in New York earlier this year. More recently, I asked him to address four broad questions on the topic. Here they are, along with his responses.
What are the most critical technology and operations issues facing retailers in 2006?
John Stelzer: Retailers have long operated in three worlds — customer-facing; internal operations; supply-facing. As they’ve sought to address challenges, they’ve typically implemented solutions that dealt with one challenge in one world — or a sub-segment of a particular world — at a time. Now, faced with multiple channels for conducting business and numerous islands of automation, retailers are rapidly realizing that, to present a single face to the consumer, they must unify their three worlds, the multiple channels within each of those worlds, and the parade of technology that they’ve implemented over the years. A failure to do that translates to reduced profits and undermined customer experience.
How are retailers addressing these challenges?
Stelzer: Retailers are using applications to provide the added business processing capabilities needed and infrastructure to integrate the many disparate technology silos currently in place. They’re turning to a service oriented architecture (SOA) to more tightly integrate their widely-varied technological parts. And, they’re turning to solutions that span all three retailer worlds to enable them to present a fully-integrated unified customer experience from source to sale. Where an initiative involves parties outside the retailer’s enterprise, they are utilizing community enablement services for faster implementation and lower total cost of ownership. This combination of applications, infrastructure, and community management allows the retailer to span technology silos, multi-channel business processes, and diverse trading community participants to focus on core competencies and present a single face to the customer… regardless of the channel(s) through which the customer is interacting with the retailer.
What pushback is the average retail CIO facing from company executives or management teams in terms of technology implementations?
Stelzer: Integrating multiple channels means bridging fiefdoms that were often managed autonomously before attempting to bridge multi-channel gaps. Often, those silos occurred because individual business units or departments invested in a solution that was specific to only their needs. As more and more point solutions were implemented, they created islands of automation that complicated a retailer’s ability to create a unified customer experience.
Integration technology can only go so far to tie these silos together because there’s a need to perform business analysis, exception identification/recovery, etc. at a meta level. Taking a holistic view of how the retailer touches the customer requires these units to work with one another to create a unified customer experience. But, it also requires a business processing level above and between these individual applications. This has spawned today’s multi-channel applications that span multiple existing applications and enterprises to provide seamless source-to-sale business processing and management capabilities.
Are executive teams calling on technology to grow sales or reduce costs?
Stelzer: Both, but there has been a decided shift toward adding growth initiatives in the last 18 months. A survey of CEOs conducted by CIO Magazine showed that seven
of the top ten expectations that CEOs had for IT in 2005 were related to growth. Increasingly, senior executives are coming to the realization that growth and competitive advantage
can be improved through the innovative use of information to deliver unique customer value. And, they realize that IT is the source of the tools and expertise to best leverage
Moderator’s Comment: Are retail executive teams calling on technology to grow sales or reduce costs?
I’ve heard arguments supporting both sides of this question, and the only commonality I see is that high volume retailers tend to be deploying technology
that helps reduce costs, and high margin retailers tend to be looking at technology that helps them sell more. –
Ronald Margulis – Moderator