The Pressing Need to Outsource
Three drivers are spearheading the IT renaissance globally. One, to attain better operational efficiencies by helping retailers implement their IT strategy with minimum business disruption; two, to develop a smooth migration from the legacy IT systems; and three, to focus on core business.
“Retailers seeking to deliver experience-based differentiation find the need to upgrade aging technology alongside investments in innovative ones to tailor consumer experiences,” according to Forrester report Trends 2006: IT. This doesn’t mean PoS, as the majority of retailers tackled their aging PoS platforms by at least initiating their upgrade or replacement in 2004 and 2005. Rather, retailers seek differentiation by tackling price and revenue optimization, merchandise optimization, demand forecasting, and product information management — alongside upgrading more established technologies like warehouse management, inventory management, and order management and fulfillment.”
And this is not a simple task.
Bikash Kumar, CEO, Integrated Retail, an IT implementation and management service provider that supports retail automation for over 100 retail companies across Asia says, “IT outsourcing and management requires an in-depth engagement with the client. The vendor has to proactively identify the possible issues and has to oversee the migration and implementation of the new IT systems till the entire environment is stable.”
InterraIT, a smaller software IT firm, believes it is the kind of service that you deliver that will leave an indelible mark on the retailer’s business. “Only those retailers who can move information, products and resources more efficiently to the right stores and across channels; to and from consumers as they are demanded; use technologies to determine the right prices, promotions, and assortments; and develop strong supply chain and distribution network are going to survive,” says Souvanik Sarkar, VP and
CTO, InterraIT.
Global retailers who outsource to India, China and other countries take partner relationships very seriously and look for partners who believe in the foundation of ultimate service, superior performance and positive impact. “We started working with InterraIT after being referred by an existing partner. InterraIT has provided a level of service and professionalism that is truly top notch,” says David Crews, Manager, Business Strategy, and projects of a $1.5 billion retailer.
Weaving IT into Analytics and Supply Chain
Backed by sophisticated algorithms and raw data-mining power, retail applications help category managers make decisions based on scientific methods and data — such as the technical analysis used in the investment market. Not only are marketing analytics hot items on the shelf, products like Retail Pro from Integrated Retail and other specific products are increasingly in the market.
As industry consolidation continues, retailers are mining their supply chains for reductions in cost and improvements in speed. In short to medium terms, retailers will focus on demand, replenishment systems and transport optimization. Emerging technologies like radio frequency identification can create significant disruption to supply-chain management, and retailers will continue to experiment with this technology, particularly in the short term to manage returnable assets.
The advent of new technologies that can deliver in-store, personalized promotions to customers offer retailers more ways than ever to access their customers and to provide more efficient ways to carry the inventories. “Hence, category management or CRM software in retail is not limited to a single application but a suite of applications that together help retailers define, plan, execute and monitor category and CRM plans,” says Talisma’s McNerney.
Walking the Tight Rope
According to Dr. Rathi Dasgupta, former Director, Target Technology Services, the captive IT center for Target Corporation, the world’s second largest retail chain, “There are two risks in this sector — you will either invest a huge sum of money in wrong technologies or deploy technology that does not anticipate your future needs. Striking a balance between these two is what will propel retailers
to success.”
And, Colruyt’s Sergers couldn’t agree with this more. “Finally when you look at outsourcing, apart from the need for resources, you have to see that the technology fits in with your processes and the vendor’s culture fits in with your business culture,” Segers points out.
