Articles

Retail Technology – All Pain for No Gain?

A client of mine recently completed a long, painful and expensive technology implementation program only to emerge without profit or business productivity gain of any kind. Many issues, bugs and disconnects are still being worked on to this day with no sign of when they will be resolved. “Liars, cheats and thieves” was how he described the I.T. vendor and the claims he was sold versus the outcome delivered. And he is not alone. There is a growing band of dissatisfied retailers who – having held their technological solutions up to reasonable scrutiny – find no profit gain.

The golden rule of retail business investment has and always will be that you don’t invest a cent unless it returns you a dollar. Too many retailers spend on information technology because they have a budget and an internal champion wanting to spend it. Not enough retailers work through a comprehensive evaluation process before committing to a course of events that may fundamentally alter the fabric of the business.

The problem with a great deal of technological solutions offered today is that they don’t really deliver any breakthrough change. They simply create a different way of getting to the same outcome. And often they add complexity, cost, time and pain – the antithesis of what many vendors claim. A good salesman will make you think you cannot do without what they are selling. But a software and hardware bundle in and of itself is very rarely a solution to anything by on its own.

Lets be clear here. As with all areas of economic activity not every story, nor every vendor, is a disaster. But there is too much unnecessary expenditure and angst created by a business input that is way over-hyped – to the point where expectations are completely out of alignment with reality.

The fault does not lie solely at the feet of the technology solutions industry either. While many vendors make claims that bend the truth, to put it kindly, so to do many retailers in their day-to-day businesses. There’s nothing unfamiliar in ‘salesmanship’. Retailers need to accept the lion’s share of the blame because they simply do not do the due diligence correctly nor set their expectations appropriately before buying. ‘Buyer beware’ should apply to what retailers buy even more than what retailers sell – especially when examining technology expenditure.

Your retail business has an operational rhythm today with a known set of inputs and outputs producing a profit pattern. It is a simple question that needs to be answered – “Can that profit pattern be improved to a level that justifies the investment of cash, time, staff dislocation, customer dissatisfaction, resource support, re-training and lost opportunity?” If the answer is yes, what follows is a logic stream of how it will produce that outcome and the setting of stakeholder expectations for the inevitably bumpy implementation journey.

Technology is not magic or a silver bullet. In most instances it replaces the existing rather than conjures up something that didn’t exist. It is not about fads or fashion or having the latest. Undertaken appropriately it can enhance your profitability. But you need your eyes wide open to what it takes to deliver and what it delivers in return.