A large majority of Australian retailers have, to some degree, increased their investments in digital technologies over the past 12 months. They didn’t really have a choice but to increase their online presence and capabilities to adapt to the ecommerce boom and new expectations from consumers.
For large retailers it mostly meant accelerating and expanding on digital transformation plans that were already in the works. For smaller retailers, in many cases it meant taking a first ever step toward digitisation. Either way, the pandemic forced everyone to adapt, very quickly.
On one hand, this rushed digitisation has created amazing potential. IDC has shared that for organisations that have invested in digital transformation, there is an opportunity to minimise the impact of the crisis and emerge on the other side resilient, more digitally fit, and ready to capture their share of the new opportunities as part of the “next normal.”
But on the other hand, rushing to digitisation has left many retailers with disparate tech systems, or prioritising digital investments in some areas of the business more than the others. Today, this is adding a lot of tech complexity, redundancies, data integration gaps, and ultimately is likely to stunt growth.
In this two-speed digitisation process, retailers need to look at which part of the chain is likely to hold their business back.
What’s the weakest link hindering retailers’ business growth?
There are three key, technology-driven areas powering a successful retail experience chain:
- Remarkable customer experiences, which requires responsive, streamlined user interfaces, multi-channel alignment and an evolving experience with new and exciting features
- Personalisation, which requires real-time recommendations, a tailored user journey based on behavioural data, and a way to show that the brand cares for its customers
- Frictionless eCommerce, which requires value chains which work together with no weak links, and seamless application and platform integration
The Theory of Constraints (TOC), which is a suite of management concepts developed by Dr. Eliyahu Goldratt and written about in his bookThe Goal, states that a technology chain is no stronger than its weakest link.
More often than not, disconnects and lags in the technologies used to support one part of this interconnected retail experience chain is responsible for hindering the smooth functioning of the entire chain, and ultimately retailers’ growth.
TOC systematically focuses efforts, energy and attention on the “system constraint.” This constraint, or bottleneck, restricts the output of the entire system and at the same time represents the primary leverage point for improving it.
Oftentimes, that weak link is either a piece of legacy technology, or a misalignment/lack of integration of disparate systems.
Using the TOC principle, retailers who want to streamline their digital operations and create new growth opportunities need to look at five key areas of their digital operations chain:
- Customer interface
- Order management
- Transaction processing
- After sales service
And for each each one of those, ask themselves:
- What to change?
- What to change it to?
- How to cause the change?
Removing legacy systems, improving integration and empowering data-led decision-making
Whether retailers are already fully cloud-enabled or just starting their cloud migration journey, one thing is clear: operating a ‘cloud native’ business is critical to remain relevant and competitive.
We live in an unpredictable world that requires high levels of scalability, flexibility and adaptability.
Cloud offers a unique elastic consumption model, flexible and agile approaches to development, and global reach all of which are playing a critical role in helping businesses react to crises and deal with rapid changes in market demand, as well as enabling operational resiliency.
Cloud-native technologies can be used to help streamline operations and most importantly ensure data integrity and flow is maintained across the value chain. Data is the most important element powering today’s retail experiences and innovations, it is thus key retailers prioritise cloud in their technology investments if they want to stay competitive.
Moving away from legacy technology and disparate technology platforms, towards cloud using the TOC model will help retailers solve some of their current biggest challenges. These challenges include security and regulatory compliance, peak infrastructure loads, the growing complexity of their applications stack, the never ending demand for new features and customer personalisation.
Gerald Bachlmayr is chief architect for Amazon Web Services and Simon Whiteside is pre-sales consultant and retail SaaS expert at Hostopia Australia.