Taming Technology

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The technology landscape continues to grow ever more crowded as mobile devices, social networks, e-commerce, network security, and more join the already numerous technologies that grocers have to support. Though it has never been easy, determining how to make the right technology investments becomes more challenging every year.

To better plan for and allocate investments in technology, we find it useful to organize the universe of available tools and solutions in a five-part framework.
 

• Stable, foundational systems and tools
• Evolving foundation systems and tools
• Sophisticated analysis and optimization tools
• Rapidly evolving and appearing technologies
• Infrastructure systems and services

Grocers should approach each category of tools with an understanding of its role—and potential business value.
 

STABLE FOUNDATIONAL SYSTEMS AND TOOLS

This group includes the finance, HR/payroll, merchandise management, shelf planning, automated replenishment (or computer assisted ordering), and labor management systems. The functional capabilities, business processes and benefits associated with tools in this group tend to be well established and understood.

EVOLVING FOUNDATIONAL SYSTEMS AND TOOLS

This group of solutions includes Point of Sale (including self check-out) and warehouse management systems. While these solutions are also relatively well understood and widely deployed, they have seen and will continue to see significant changes over the next few years. Warehouse management systems have evolved to support a variety of operational efficiencies, including directed put-away, pick-to-light, voice pick, put-to-light, and more. And grocers, needing to drive operational efficiencies in the supply chain, will want to upgrade and enhance the capabilities of their WMS continually. POS systems have faced an ongoing need to integrate with more and more devices, from integrated scales to credit, debit, and loyalty cards, as well as the PCI security standards that come with the use of credit and debit cards. And grocers can expect continuing changes in the POS area, as enhanced loyalty offerings, mobile payment, mobile coupons, and other capabilities develop to respond to the proliferation of smart phones and other sophisticated handheld devices.
 

SOPHISTICATED ANALYSIS AND OPTIMIZATION TOOLS

This category includes a number of tools and solutions, including Business Intelligence (Data Warehouse), Price Optimization, Merchandise Planning, Promotion Planning, Assortment Optimization, and Shelf Optimization tools. These share several important characteristics:

• All continue to get strong vendor attention, resulting in significant advances in functionality
• There are multiple vendors for the solutions, and the solutions are intended to integrate with most any set of core systems
• Impressive benefits have been claimed Successful implementation of any of these tools can yield significant benefits

But achieving that success often requires process changes and a level of analytical sophistication that many organizations fail to attain. As a consequence, many are disappointed with the results. Grocers commonly face problems with technical integration, data redundancy and inconsistency between optimization tools and core systems, and problems with historical data consistency, accuracy, and completeness. Further, recommendations and outputs from these tools are often poorly integrated into the merchandising decision-making processes and day-to-day management activities.
 

RAPIDLY EVOLVING AND APPEARING TECHNOLOGIES

As cloud computing, Saas, mobile POS, mobile commerce, mobile marketing, Groupon (and similar deal-of-the-day services), and social networks abound, grocers and other retailers grapple to keep up with these fast changing technologies. The rapid surge in smart-phone adoption and the astounding popularity of Facebook is forcing all businesses to re-examine how they engage with consumers, while giving consumers more and more control over that engagement. Grocers, after the brief excitement caused by Webvan, had largely escaped the need to invest in E-commerce. While the need for an effective web presence remains, the proliferation of smart phones and smart-phone apps, and the prominent role played by social networks, bring additional opportunities and even more challenges for grocers. But to a certain degree, the biggest challenge in this category is not with technology, but with the need to break out of the weekly-circular-oriented promotion and marketing planning cycle that dominates most grocers’ operations.
 

INFRASTRUCTURE SYSTEMS AND SERVICES

This final group consists of all the hardware and systems that Grocery IT organizations must support and maintain, including the operating and networking systems, database management systems, security, office productivity, e-mail, and backup and recovery services. The work to support these systems and services grows rapidly as new solutions bring different types of operating systems, protocols, data management systems, and more into the technology environment. Even more tools are required to connect systems, maintain data integrity, monitor performance, and protect against intrusion. Grocers working to keep their IT costs under control while implementing advanced capabilities will need to select tools that use technologies that are already par t of their infrastructure.
 

ALLOCATING TECHNOLOGY INVESTMENTS
 

While the appeal of new and sophisticated technologies can make it tempting to invest heavily in them, grocers must balance that desire with the need to maintain adequate funding of the foundation technologies that support the key retail business functions. Though each case is different, technology investment allocation is generally determined by category.
 

Always, potential investments in sophisticated and emerging technologies should be evaluated within the context of the significant organizational commitments to change processes and improve skills they so often require. The rapid and continuous evolution of technology can be confusing but, can dramatically enhance a grocer’s operations—and bottom line. The key is planning and managing for clear business value as part of every dollar spent.

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