A quick glance at the new retail technology announcements made by first-mover retailers across the globe in 2018 offer a picture of where CIO and CTO investment might be going in 2019.
Making retail technology investments in 2019?
An integrated, omnichannel retail management solution, like iVend Retail, can help
UK grocery chain Asda and general merchandise high street player Argos were among the most noteworthy retailers to deploy voice-enabled technology in its various forms to drive new ways of customer engagement.
Meanwhile, global fashion house Gap, Inc. has committed to support all its brands with a switch of cloud technology provider and, in Europe, supermarket group Carrefour has opted to put artificial intelligence (AI) at the heart of its operations via a comprehensive Google tie-up.
There are various other examples of big retailers unveiling major changes to their tech strategies and placing their bets on AI, voice, and other emerging technologies, as well as forging partnerships with the big technology houses in an effort to Amazon-proof their organisations and drive forward. Where big companies lead, the wider industry tends to follow a few months down the line.
And with major security breaches announced throughout the year – be it European electricals retailer Dixons Carphone’s problems in August or, most recently, hotel chain Marriott’s data breach that affected circa 500 million guests – investment in cybersecurity is sure to take more budget share. Dixons Carphone, for one, said in December as part of planned infrastructure investments in the next year, info-security improvements are high on the agenda.
In short, the items on the retail CTOs’ wish-list in 2019 are likely to be data related in some form, and for the CIO, it will be about getting the budget secured, choosing the right providers to support strategies, and then ensuring the tech they introduce is a force for organisational change.
Retail technology for the modern age
Retailers’ investment in technology will grow by 3.6% globally in 2019 as growing customer expectations surrounding their capabilities put pressure on them to perform, according to Gartner, which expects retailers’ investment will hit $203.6 billion over the course of the year.
And the type of product and solution retailers are going to be spending their money on replicates some of those 2018 trailblazers mentioned above.
Software is the fastest-growing category of technology spending, says Gartner, as retail CIOs and CTOs prioritise the likes of analytics, digital marketing, mobile applications, e-commerce platforms and AI as the technologies that can help them achieve their goals.
Voice-enabled technology fits in this category too, as does retail management suites and other omnichannel tools that help join up retailers’ physical and digital assets. It’s encouraging to see that this is the highest growth category for retail technology investment – with only IT services and internal services expected to receive a higher total spend in 2019 – because it shows businesses have moved from research stage to actual deployment. That will be music to many CIOs and CTOs’ ears.
As Molly Beams, senior director and analyst at Gartner, explains: “Retail CIOs used to be tasked with minimising risk and cost. Now they are held accountable for business results. They are prioritising ROI and other measurable business impacts.”
The elevation of the CIO
Forbes Media chief marketing officer, Tom Davis, said earlier this year that the skillsets expected of CIOs are shifting. Commenting as part of the media organisation’s research into the CIO role looking at what is expected of the job in today’s market, he said: “They need to contribute to corporate strategy and manage a lot of change.”
The Forbes Insights studies suggested digital transformation is changing every corner of business, which it said creates a new demand for tech expertise and leadership, and consequently creates an elevated and different role for the CIO in many organisations. In 2019, after several years of exploring this changing landscape, it will be time for CIOs and their board colleagues to start mastering it.
Forrester’s ‘Transformation Goes Pragmatic’ report, which contains the analyst group’s 2019 enterprise predictions, argues that the key priorities for CIOs as they map out a way forward include “refactoring and automating core systems, putting in place a data governance environment, testing AI technically and operationally, and using technology to differentiate customer experiences”.
“CIOs will spend the time to build their leadership teams, empowering trusted operators to handle much of the day-today,” the reports states. “Arguably the most important outcome of 2019 is that leading CIOs will build a model that translates tech-led innovation into customer value.”
In retail, this challenge is as pertinent as it is anywhere else, underlined by the experiments with new innovative technology and infrastructure investments we’ve referenced.
Don’t forget to keep the lights on
Before the digital era unfolded 20 or so year ago, the IT department’s main focus was to choose a core system, manage infrastructure, and in the words of many in the field, ‘keep the lights on’ or fix problems. This is all still important in 2019 and beyond, of course, but it is perhaps now more complex due to the choice of technology available and the interconnected systems and sales channels that comprise retail today.
In the 12 months ahead, retail CIOs and CTOs will want their seniors to recognise this fact and ensure the IT teams are being resourced effectively – allowing them to achieve the fundamentals of tech support while providing a platform for innovation. All business verticals are looking for talented business intelligence analysts, cloud architects, cloud systems engineers, and data scientists, but in retail the scramble for these skills is perhaps elevated because many companies are playing catch-up.
The CTO will be calling for these type of job positions to be filled with suitable and ambitious individuals, and it’ll be up to the CIO – in his or her more influential position within the retail business – to ensure the board act decisively and understand the benefits of this recruitment policy.
With these resources and structures in place, retailers will give themselves the best possible opportunity to locate and start relationships with the most suitable retail technology partners, which should lead to the development of connected ecosystems, containing an array of customer-centric solutions, and open source technology that positions these organisations for future success.
A strong working relationship and alignment between CIO and CTO – albeit it’s usually only the bigger organisation that have both – will be crucial to the right retail technology investments being made in 2019. For the smaller retailers and hospitality companies, which may have a CIO and/or chief digital officer or head of technology making the key tech strategy decisions, a direct hotline between IT department and boardroom will be ever-more important.
People, process and product is what will be on the CTO and CIOs’ wish-lists in 2019. It was ever thus, but the right-skilled people are more difficult to find, the processes are increasingly complex, and much of the retail tech product they require will be more central to the overall business’s success.
The year ahead looks like being another one of transition, but thanks to the growing recognition within organisations that IT and digital investment is crucial, it looks like the CIO and their team are set for an influential 12 months ahead.