Overheard: A Candid Interview with ThoughtWorks Retail Innovators
ThoughtWorks Retail works side-by-side with some of the most ambitious CIOs, CEOs and CTOs around the world, every day. We sat down with four members of the ThoughtWorks Retail leadership team and got candid answers about the state of modern retail and the technology shaping its future.
Meet our panel:
● Giles Alexander, Head of Technology, ThoughtWorks Retail
● Robin Copland, Vice President of Retail, Americas
● Patti Purcell, Practice Lead, Strategy/Business Architecture
● David Schmitz, Director, eCommerce
Changing Consumer Expectations
Most retailers are sitting on top of what we refer to as an “Archeological Dig.” They have layers and layers of legacy technologies that have been added over the years in response to various changes in retail as technology and customer buying patterns changed. Much like looking at rock formations and understanding earth’s history we are able to determine how and when a retailer's business and processes evolved over time. From when catalogs were introduced to the addition of commerce and virtual inventories – the signs are all there, hidden in the various systems and code bases that underlie current operations.
Deciphering the “dig” is a critical first step as we help retailers work through what a future state could and should look like. Retailers don’t have the luxury of throwing out the old and starting from scratch. As one CIO said to me, “we have to change the engine while still flying the plane.”
From here, we help retailers architect in a way that stabilizes their existing operations while at the same time moving them to a place where they can experiment much more frequently and at a much lower cost and risk to the business. This is a key factor in ensuring that they are able to remain competitive and move forward as newer organizations enter the market without the operational burdens of the legacy systems that they have.
Okay - a bit of context here. The term ‘omnichannel’ was first introduced around 2010.The fact that there are actually very few true omnichannel success stories is telling. In the rush to make all things ‘omnichannel,’ retailers hastily knit together operational systems that were never designed to support (at speed) the pace of change driven by technology and the digitally-enabled shopper. We recognize that simply tethering these systems together without taking the time to address policies, information, processes, and organization design created more problems than it solved. So now, we’re working with clients facing internal silos, competing profit centers, duplicate merchandising teams for online and offline, and policies that don’t support the single view that the customer is owned by the brand, not by one channel.
The work we’ve been doing with several larger, more veteran retailers specifically focuses on developing a deeper understanding of the interaction between the digital and physical selling environments and the capabilities required to support an ever-changing customer experience across both domains.
One way that we help move retailers along this path – we work to shift their from creating more internally focused applications: inventory control, merchandising, supply chain management, etc. toward creating consumer-grade capabilities supported by next generation product design, planning, manufacturing and fulfillment platforms. We then help design “pivot friendly” architecture that enables our clients to respond to the demands of their customer, to quickly add new business models, channels, and address competitive threats immediately.
Changing Roles of CIOs
I see huge opportunities for CIOs in the next five years. For too long IT has been seen purely as a cost center. CIOs had to be accountants aggressively focused on cost reduction, to the extent that I’ve seen CIOs reporting to the COO in some organizations. There’s not a lot of opportunity for value creation in that world. Two trends are creating a space for CIOs to change: the CTO has emerged as head of product for technology companies — but who is looking for the strategic value of technology in all those other businesses? And, shadow IT is becoming the norm: microservices and extended product teams means that there is no longer much of a business/IT divide to be cost-managed by a CIO anymore.
David Schmitz: I agree with Giles, the rise of the CTO has brought business and tech closer together, but there’s still a way to go. Tech leaders need to encourage and reward regular and ongoing collaboration between IT and business stakeholders to fuel a culture of experimentation and delivering incremental value in shorter cycles (i.e., hours/days/ weeks vs. months/ years). Since technology is behind nearly all customer touch points today, the CIO's ability to positively influence others, embrace collaboration, drive stakeholder alignment, and ultimately be an effective change agent are success criteria above and beyond the core technology expertise that led to past success in the position.
Advice for CIOs
DS: I have seen several instances of large omnichannel initiatives spanning multiple years and multiple millions in investment that fail to deliver the promised business value aligned with the originally defined scope, timing or budget. I believe CIO's and their C-level peers need to rethink these "big bang" transformation initiatives typically centered around one of the enterprise monolith eCommerce platforms being deployed via traditional waterfall delivery methodology. The alternative approach consideration should focus on an Agile delivery methodology with highly automated test and continuous delivery infrastructure capability to enable smaller, more frequent deployments of code releases into production.
Some alternative approaches to big monoliths are:
1. A hosted SaaS-based solution, but only if the retailer is willing to accept parity with their competitors from a capability perspective and if the pricing scheme isn't prohibitive from a projected online sales volume perspective.
2. A custom microservices-based solution. Deep expertise in defining the architecture and granularity of services is key to the success of this approach. Going too fine in the services architecture design can introduce similar limitations as encountered with the monolith enterprise solutions in terms of reduced flexibility and increased maintenance complexity.
3. Choose an open source/open standards based solution. A few products are pushing the envelope in terms of non-proprietary solutions leveraging open standards. They tend to be less complex and therefore shorter implementation timeframes are possible to deploy a Minimal Viable Product (MVP) release. The degree of platform modularity, performance scalability and product roadmap commitment are important factors as these companies traditionally serve smaller markets and are less mature than the larger platform providers.
GA: Standards and governance are meant to support and help, not constrain and control. As simple as that, really. For a CTO or CIO, this means that you should be expecting that different parts of your IT landscape should be assessed with different tools. For example, your HR system should be expected to be reliable over flexible. This seems obvious, but there is a twist. Right now, HR might be straightforward, but what if your community of customers could become a value-add? That’s going to require some experimentation with those HR systems. No centralized control will be able to react effectively: instead, if someone comes to you wanting to experiment with HR, let them — but ask them to explain how they’ll be running their experiments, ask them how they’ll be ensuring some base level of reliability, offer them a standard, if one is applicable. But don’t constrain them, and don’t try to control them.
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