Simplifying IT will help companies evolve digitally
The digital revolution has dramatically changed consumer purchasing expectations. Now technologically savvy and empowered with instant access to the information they need to make purchasing decisions, consumers expect to be served when and where they want, at their convenience. This trend is further accelerated by the arrival of Gen Z*, the first truly mobile generation, into the consumer market. As consumer expectations continue to evolve alongside technology, the retail industry is expected to experience greater change over the next five years than it has in the past 50 years.
In this environment, omnichannel is more important than ever. Retailers will have to cater to millennials and Gen Z consumers, who expect omnichannel as a given. They will be under immense pressure to continually reinvent their business models, not just through omnichannel but also through new technologies and innovations.
One great way to overcome this pressure is through simplified IT. For all retailers, large and small, simplification is key to gaining agility and staying ahead of new online competitors. By simplifying IT, retailers can more easily take advantage of agile development and delivery systems, digital-first operations, and lower operational costs, allowing them to respond quickly to market changes.
* |
Millennials/Generation Z: In other countries, those born between 1980 and 1995 are called Millennials, and those born after 1995 are called Generation Z (there are various theories about the age groups). Both are digital natives who have benefited from IT since they were old enough to understand, and in the United States, these two groups together account for more than 50% of the population, making them an important target in the market. |
Simplicity builds a future-oriented company
The IT environment of retail companies is becoming more complex due to an increase in mergers and acquisitions, non-integrated and non-standardized systems and rules, and a fast-paced external environment. Meanwhile, many existing retail companies run their core business systems on rigid legacy environments that are rigid and costly. As a result, companies often struggle with highly heterogeneous and complex IT environments that consist of multiple technologies, platforms and infrastructures. This complexity also impedes their future preparations.
As the five digital forces, as highlighted by TCS, dramatically change business models and create new opportunities, legacy companies are finding gaps in their capabilities to address business needs.If left unchecked, these gaps will widen as the pace of change in the retail industry continues to drive sophistication in modernizing architecture, infrastructure, processes and user interfaces/user experiences.
To keep up with customer expectations and business demands, you need to start simplifying your complex IT environment to make it easier to manage and gain scalability and agility by:
- Consolidation and rationalization of applications, systems and data centers
- Legacy Modernization
- Unifying the operating environment
- Adoption of cloud and open source
- automation
- Tool Rationalization
Next, we will discuss the key elements of a simplification project that will build a strong digital foundation for your enterprise.
A holistic and architectural approach
When faced with limitations in a legacy environment, it is common to try to work around them with workarounds and patches. However, this creates incompatibilities between individual layers in the technology stack or between applications in the same layer. Furthermore, many layers in a legacy environment are closely intertwined, and it is not uncommon for a large burden to be placed on system renewal when introducing the latest technology. In other words, factors of complexity exist throughout the technology stack and its processes. Therefore, a comprehensive view and a simplification mindset that redesigns technology configurations and processes from an architectural perspective are essential. Figure 1 summarizes such a comprehensive simplification approach.
![A holistic and architectural approach](/content/dam/global-tcs/ja/images/insights/trends/gp/18ma-gp20-simplification/Sim_fig1.gif) |
- A major US retailer streamlining its application portfolio used
this approach to reduce mainframe memory usage and successfully modernize its core business systems, including merchandising and supply chain. The architecture includes a responsive front end, a "RESTful" service layer designed to facilitate integration of multiple software, and APIs commonly available for web, mobile, and service providers. The project began
with a systematic evaluation of the portfolio to identify applications, map them to related business processes, and develop a roadmap incorporating the best modernization strategy. As a result, the company was able to seamlessly integrate omnichannels while providing a rich user experience. This approach reduced the
volume of applications by 30% by reviewing the portfolio, and freed up store staff labor by 20% to be allocated to higher-value customer services, resulting in approximately 15% cost savings.
- As applications migrate to the cloud,
it is also important to evaluate the effectiveness of the infrastructure in terms of cost, utilization, performance, availability, alignment, etc. Implementing virtualization and grid computing, optimizing storage, and migrating to a hybrid cloud model can improve performance and achieve significant cost savings. Flexible architectures allow on-demand experimentation at low cost, which in turn promotes IT agility. By migrating infrastructure to the cloud, a leading European company was able to accelerate time to market for new products and experiences, while improving agility, service scalability, and end-user experience. In addition to improving infrastructure performance, the company was also able to improve disaster recovery and reduce TCO by 30%.
- Forward-thinking retailers who build a unified data architecture
can stay ahead of the competition by making smart decisions using data. To achieve this, they are focusing on a unified data architecture that will enable simpler and more proactive enterprise information management (EIM). To make real-time decisions, structured and semi-structured data must be collected from various sources, but a non-unified data architecture can lead to chaotic ETL processes that write data into a database in an easy-to-use format, or they can get stuck between multiple "truths" due to a lack of data, which can make them fall behind their competitors. In this way, the creation of a data strategy (big data strategy) is a very important point to achieve simplification.
- In addition to simplified technical architectures that simplify processes
, IT processes and practices that enable agility are also important. Evaluating IT processes can lead to agile development practices. Continuous integration (CI)/continuous delivery (CD), prototyping, reusable components and APIs, DevOps, and practices such as automation-as-a-culture and innovation-as-a-culture can also lead to significant advances in IT delivery capabilities. Figure 2 shows how the four key
elements of engineering practices, agile infrastructure, automation, and people can evolve IT from an enabler to a business partner. This is exactly what a pioneering US retailer achieved
. By transforming their legacy, mainframe-based IT setup into a multi-tiered architecture supported by agile practices such as continuous integration, libraries of reusable components, and agile development frameworks, the company was able to deliver new products and experiences 15 times faster while simultaneously improving customer satisfaction.
![Simplify the process](/content/dam/global-tcs/ja/images/insights/trends/gp/18ma-gp20-simplification/Sim_fig2.gif) |
- As we have seen, simplification projects
have great potential for businesses, but to be successful, they require a systematic approach to planning and execution. Start with a detailed assessment to derive short-term and long-term plans. Create a practical and specific implementation roadmap and apply project management guidelines for execution. Execution
excellence is key to driving simplification projects. In addition, it is important to proceed with the project according to a solid governance and change management process, with an eye on reducing risk and implementation costs through automation. Here are five
best practices for successful simplification projects in retail companies.
- Have a long-term vision: Your IT architecture must support your company's long-term strategy and be flexible enough to accommodate change.
- Have an executive sponsor: When taking on an enterprise-wide initiative, it is ideal for the IT transformation project to be supported by an executive sponsor, with leadership from the business and final authority on the project.
- Apply a holistic approach: Applications, processes, and infrastructure all need to work together to achieve the goal of simplification and be simplified together.
- Get a quick return on investment to fund future projects: Prioritize areas that will generate a quick return on investment, such as improving user experience and productivity, providing real-time information to support faster decision making, and deploying advanced platforms and infrastructure. Harvest these "low-hanging fruit" and save money that can be used to fund other simplification projects.
- Promote timely communication: It is important to have vertical and horizontal communication within the organization. It is also effective to set up a reporting dashboard or other measures that allow senior management to effectively monitor the IT transformation.
The benefits of simplification
An effective simplification project can transform your retail organization into a more agile and adaptive organization that fosters continuous innovation through digital and other disruptive technologies. Additionally, you can expect to see the following benefits:
- The time to launch of service has been shortened, enabling faster provision and deployment of internal IT services.
- By utilizing agile development processes and cloud infrastructure, it is possible to speed up digital innovation and quickly explore ideas.
- Improved customer experience through more integrated omnichannel and real-time personalized digital interactions.
- By creating a system that can capture and analyze data in real time, it becomes possible to make faster data-based decisions.
- Increased architectural flexibility with an event-driven, plug-and-play framework that makes the design future-proof to accommodate disruptive technologies.
- Significant cost savings can be expected through legacy modernization and the use of open source technologies that reduce software and hardware licensing costs.
- Improve IT management and operational efficiency by modernizing applications, architecture, infrastructure and processes.
Simplify now and set yourself up for success tomorrow
Charles Darwin's theory of evolution, which likens it to the strongest or the most intelligent, is not what survives. It's the ones that are most adaptable to change that survive. This concept is still relevant in today's digital age. The ability to quickly adapt to a changing market may be the difference between a retailer being the one that disrupts the existing ecosystem or the one that watches it be disrupted. Learn how simplifying IT can instill adaptability into your organization's DNA and give you a competitive advantage.
*The contents listed are current as of May 2016.