Retail remains one of the most vibrant, innovative, and disrupted sectors in today’s economy. However, Manufacturing and Supply Chain challenges have added to the uncertainty in the last two years, making Retailers accelerate their efforts to adapt their business to industry trends and consumer demands.
The Pace of change and ever-evolving consumer preferences require quick, scalable, and agile processes and systems, especially in areas like Omnichannel, personalization, and customer service.
The urgency behind transformation efforts often identifies challenges in Retailers’ existing systems architecture. Core legacy systems such as ERPs, Order Management, Warehouse Management, and WorkForce Planning are not readily adaptable to the new realities of more modular architectures and, in some cases, still rely on antiquated data structures and point-to-point integrations. These realities will become serious obstacles in deploying the new capabilities with the flexibility, data volumes, and velocity required. They also tend to drive the effort, costs, and business continuity risks of any changes to prohibitive levels.
When faced with this magnitude of challenges, Retailers have opted for a holistic approach to their Digital Transformation, launching ambitious, far-reaching programs to transform the company’s core to todays’ needs and revert years of investment neglect. However, these substantial transformations bring another set of challenges and, in many cases, fail to deliver on the timelines and budget initially assigned.
We believe a pragmatic alternative to large, overhauling Digital Transformations is a modular approach to Digital Transformation. Each module should focus on a “Use Case” or Solution that integrates related capabilities into End-to-End processes and systems. We can solve an existing business challenge and deliver value quickly and iteratively in this fashion.
These modular solutions rely on modern SaaS tools that can be integrated in an easier and more standard way via APIs, resulting in faster implementations. Connections to the core, legacy systems are still required but can be simplified and contained or, in some cases, abstracted using middleware that will act as a bridge between the new and the legacy. Another benefit of this approach is that it usually generates a deeper review of the company’s architecture and IT strategy that can be achieved over time. The benefits are not limited to the technology deployment; Change Management activities can also be more focused and can drive a positive virtuous cycle of change across the organization given the quick results.
The last two years of the pandemic created an environment where several Retailers had to find ways to go around legacy systems to respond to the immediate challenges they were facing. Despite some tech debt/throw-away work, these initiatives provided a much-needed lifeline to struggling retailers and inspiration to the associates and frontline workers in a time when it was most needed. Examples included innovation in the Omni-channel journeys with new ways to sell and deliver the product as well as Inventory integration across stores and Digital to leverage all inventory available.
We believe this approach presents a pragmatic, results-oriented way to implement new business models faster and overcome challenges from core legacy systems. However, like any other approach, a modular digital transformation is not risk-free and does not represent a silver bullet for deeper architectural challenges. Retailers should avoid creating short-term solutions that do not scale, as this will likely result in other sorts of issues down the road. Particular attention should also be paid to the risk of significantly expanding the number of systems resulting in higher KLO costs and even more complex IT architectures going forward.
When embarking on a modular Digital Transformation, it is essential to also clearly define the elements that should be centralized to maximize the speed and chances of success. A central view of the System Architecture, Data Strategy and Structure, and APIs will ensure that all the functions undergoing Business Transformation speak the same language and build on each other.
The TechTorch platform enables a successful process by providing prepackaged, curated, and battle-tested use cases that can be adapted very simply to a specific business’ needs. The platform also provides you with the environment to quickly deploy and test different use case configurations.