Joining retail’s digital transformation movement can be easier than you think, says Pentaho

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omnichannel_pentahoBy Paul Scholey, vice president EMEA and APAC, Pentaho

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Scholey: retailers are leading digital transformation

There’s endless hype over and interpretations of digital transformation so it’s easy to dismiss it as just another technology fad. Those people, companies, industries, governments and even whole countries that do, however, risk being left far behind.

That’s because the digital transformation movement is about so more than technology: it profoundly alters organisational culture and process. In the report “Strategy, not technology, drives digital transformation” by MIT Sloan Management Review and Deloitte: “what is unique to digital transformation is that risk taking is becoming a cultural norm as more digitally advanced companies seek new levels of competitive advantage”.

Traditionally late to adopt new tech trends, retailers are leapfrogging other industries when it comes to digital transformation. That’s because they’ve witnessed first-hand how it’s already changed the behaviour and expectations of all their customers (not just the young ones). People now live in multiple realms: live, in websites or apps, in social networks, in virtual reality-scapes, and who-knows-where next! Most retailers have at least started down the path of trying to figure out what shoppers want to experience in each of these realms during the customer lifecycle – and how to serve them profitably.

So it should come as no surprise that a recent report from PAC called “Omni-channel Retail in Europe” found that “85% of European retailers stated that their omni-channel retail strategy is in place because customers are demanding it, while 89% said that their omni-channel initiatives are being driven by a need to improve the customer experience”. To be able to do this, retailers need to gather data, lots of data from all different data sources. While the concept of “Customer 360” has been around for a while, only recently have retailers been able to tap into enough data to truly improve the customer journey.

For most retailers this seems easy to say, harder to do. Many still have old systems that aren’t up to processing and storing new and emerging data types, not to mention outdated in-house IT skills. Creating a consistent customer experience across all channels is further complicated by data being held in silos. Different teams are often responsible for the website, the online shop system, the stock management system, the mobile apps, the supply chain system and the POS systems.

The good news is that omni-channel doesn’t have to involve a full, expensive technology overhaul. New generations of analytics tools based on open standards can actually take advantage of most of retailers’ existing IT, data infrastructures and even in-house skills. During the digital transformation process, these technologies can be introduced for a relatively low incremental cost and risk compared to proprietary.

Every retailer’s journey will be different, depending on their situation and the following is only a framework. However, based on our conversations with retailers, these are some fundamental IT milestones on the road to omni-channel as part of the digital transformation process:

One version of truth: the traditional data warehouse (DW) is strained by exploding data volumes, resulting in people not being able to get the analytics they need in time to take appropriate action. However, expanding DW capacity is usually very expensive. The EDW architecture is a hybrid that enables retailers to augment, rather than replace, their existing data architectures with new big data storage such as Hadoop to improve DW performance. This provides the infrastructure that enables a wide range of data sources to be blended, for example existing POS data and inventory data with online data sources or new types stored in Hadoop. Industry analyst Quocirca’s free report Optimising the data warehouse explains this in detail. Having one version of the truth ensures that the different departments have the same view on all datasets to ensure they can deliver a consistent experience.

Delivering blended secure and governed data sets: having all data in one place is not enough. To gain meaningful ROI, retailers need to blend different data sets. A typical reference architecture involves blending relational data about customer purchases with unstructured weblog and clickstream data about customer behaviour patterns. This blended data set may be further mashed up with social media data describing sentiment for the company’s products by region. This “big blend” is then fed into recommendation platforms to drive higher conversion rates, increase sales, and improve customer engagement.

To do all this and respond to rising privacy concerns, retailers need to ensure that the data they are managing is secure and governed. One way to do this is to use a streamlined data refinery (SDR) model. This enables retailers to blend, enrich and refine any data source into secure, analytic data sets, on demand. Among the information about SDR online, Bloor Research provides an excellent overview of this model in its report Managing the Data Asset with Pentaho”.

360 degree customer view – once you have your model setup to deliver cleaned, governed data and processes for blending different data types together, you’ve now done the heavy lifting needed to provide that 360 degree view to create an on-demand analytical view across customer touch points.

Omni-channel – with the 360 degree now available, it’s a short hop across to omni-channel. The 360 degree view provides the foundation to present information to different external audiences through various channels – in-branch, assisted and digital interactions and whatever new comes along. This stage includes training those interacting with the data to get the most out of it to improve and track customer satisfaction and other benefits.

Omni-channel is only part of the more complex process, culture and technology change associated with digital transformation. By travelling through this process, retailers have the option to continue using their legacy systems so that they can handle migration at a pace that meets their budgetary, security and functional requirements.

I’m really excited about the leadership that retail is taking in this brave new world of digital transformation. Other service industries will surely be watching and learning from retail’s creativity and progress.

(A Retail Times’ sponsored article)