Last updated on May 29, 2023.
As the retail industry continues to go through a dramatic digital transformation, the role of the CIO has never been more important.
With the increasing pace of change and complexity in technology and the numerous operational challenges such as supply chain, cost containment, and security, retail IT organizations require skills and experience that combine a perfect blend of technical knowledge and business acumen. This shift is indicative of a greater trend where IT is now considered a critical business partner that focuses on aligning the business’ evolving goals with appropriate information technology.
Even though these challenges and opportunities already create a lot of pressure on even the most progressive, well managed IT organizations, it’s the holiday shopping cycle that can multiply those pressures by 1,000.
Here are four key questions every retail IT organization needs to ask this holiday shopping season:
Is my infrastructure scalable?
The digital transformation of business and consumers is creating limitless possibilities for IT-inspired innovation in new product and service offerings that can enhance customer engagement and drive sales. Consumers are adopting mobile payment capabilities, such as wallet apps, at a swift pace, driving retailers to transition their terminals and develop e-commerce platforms that accept these new payment methods and engage with consumers. There is also an increasing array of in-store technologies being implemented to draw in potential customers.
Once the main source of consumer intelligence for merchants, point-of-sale information is now one point in a multi-dimensional world of data. Millions of IoT devices are being deployed and connected in the retail environment to collect and send data that provides valuable, real-time insights. Further, it’s critical to invest in analytic systems to enable data-driven decision making in the business. These new types of mobile payments, deep customer analytics, and in-store digital experiences are just some of the innovations and approaches that progressive retail IT organizations are implementing. This year, it is also expected that retailers will accelerate cloud adoption, not as a cost savings technique, but to better leverage innovative cloud-enabled solutions to optimize and advance the business.
On top of the need to stay ahead, the holiday shopping cycle also continues to grow. In 2015, shoppers continued to migrate to online shopping and away from traditional bricks and mortar. In the U.S., 2015 e-commerce sales went up by double digit growth overall at $7.5 billion for the retail trinity of Thanksgiving Day, Black Friday and Cyber Monday combined. In that period over one third of people used a mobile device for online shopping.
Retail CIOs need an IT infrastructure that is scalable and flexible to accommodate the dynamic needs of their business, new technologies, and the increasing demands of the evolving retail business. With the constant innovation expected, it’s important that they not get bogged down in day-to-day manual processes. Instead, they need to be freed to focus on rapidly enabling and expanding, with an infrastructure that is easily scalable, eliminating the need to re-architect and re-invest each time there is a change in network infrastructure.
Is my enterprise secure?
Retail CIOs are constantly pushed to support innovation, but must balance implementing technological advances with maintaining a secure environment.
As the retail industry adopts new ways of engaging customers, managing transactions and collecting data, more data is at risk. It is expected that DDoS attacks will continue to get bigger and more frequent, and that, over the next few years, cyberattacks overall will increase in severity. An unsecured infrastructure has major long-term ramifications on customer trust, the brand, and, ultimately, the bottom line. With the rapid digitization of employee and consumer data, annual overall cybercrime costs are expected to reach a staggering $2 trillion by 2019. More specifically for retail, a recent report estimated the average cost of a data breach for a retail company in 2016 is $172 per stolen record.
The holiday shopping season, which brings with it dramatic increases in traffic, transactions, and risk, is often a time when many IT leaders take stock of how secure their networks really are. Retail network security is challenging because the ecosystem is so complex, with multiple vulnerability points and no single compliance standard. The ability to instantly preempt and filter malicious activities across devices and applications before business-critical data is compromised is paramount to a successful IT security strategy. In addition, IT must implement solutions that provide automated, immediate, and thorough visibility into the intent of every endpoint on the network.
Is my network resilient?
On Black Friday, Cyber Monday, or any other shopping day of the year, downtime means lost data, lost business and a negative impact on the brand. It’s estimated that the average cost of a data center outage in 2016 is $740,357, or $8,851 per minute of lost revenue, with human error accounting for almost one quarter of these unplanned outages. Human error is a natural by-product of the manual IT environment, which is saddled with bad data. The result is lack of visibility, complicated and inefficient deployments, and an overall high effort to maintain. This, in turn, forces the IT team to be more focused on day-to-day manual activities that come from internal requests or errors that inevitably occur, instead of spending cycles implementing new retail-centric technologies that help grow the business.
An automated, connected, and centralized DNS infrastructure can enable a more efficient IT environment and ensures the resiliency of core network services. Seamless automation drives efficiency and reliability, moving the business away from the risks of manual processes and, at the end of the day, letting the retail IT organization focus on optimizing for important cycles like the holiday shopping season.
Can I control costs?
Today’s CIOs in the retail sector are expected to not only help the business grow, but also control costs. IDC forecasts worldwide spending on digital transformation technologies will reach $3.4 trillion in 2026, with a five-year compound annual growth rate of 16.3%. Retail IT organizations are tasked to respond to the pressures and opportunities of new devices, technologies, and user demands and expectations to help grow the business.
However, it’s not just about making money. It’s also about saving money. For example, retail organizations are looking at cloud strategies as a way to reduce system and operational costs throughout the organization with things like server consolidation or data migration via cloud deployments. The move to more centralized and shared services is also a key initiative used to manage costs. And, as already noted, architecting a secure and resilient network and preventing the high costs associated with downtimes or breaches are always critical initiatives, as is moving to a more automated infrastructure to streamline previously flawed manual processes. Ultimately, IT organizations should seek a network implementation that can support all of these initiatives and work with solution providers who can support these initiatives within a predictable pricing model.
The retail sector is one of the most dynamic and challenging industries from an IT perspective, presenting new technological opportunities and new risks on a constant cadence. The successful CIO needs an infrastructure built on a foundation of flexible, automated, open, and adaptive networks to place their organization in the best position for success during the holiday retail season and beyond.