Published April 2013

This year I will be examining Operating Models across the retail sector. This first instalment will study how Information Technology has become fundamental to retailers’ operating models. An effective operating model brings organisation’s strategy to life: it reflects business intentions, brings competitive edge, protects from imitation and creates barriers for market entrance.

Today Information Technology is a core capability of every business. IT has revolutionised all aspects of the retail industry and so influenced the way retailers do business. A good example of this is the high street store; while the bricks-and-mortar will not disappear, stores will transform into showrooms and brand destinations with designer collaboration displays, providing holistic and vibrant customer experiences. Technology is swiftly wrapping its arms around this journey: before customers even enter the store – if they enter at all – they have been ‘clicking’ their way through social media platforms, viewing the pre-purchase research through a range of highly valuable tools at their immediate disposal. After the thrill of the shopping spree, conversations and feedback will continue online. It is fair to say that innovation in Information Technology has become a norm in retailers’ everyday business complementing all aspects of the ultimate retail value proposition: convenience, choice, service and price.

However, that is only the tip of the iceberg and retailers need to look below the surface; this might require reinventing IT’s role within the business. Fundamentally this comes down to the operating model. Rather than providing singular IT solutions to individual requirements, IT needs to be weaved tightly into the business. This can be done by establishing strong relationships between the business and IT functions, creating capabilities that respond effectively to the changing business requirements and, ultimately, bring the domain closer to the end customer.

The ideal IT function is a truly service oriented organisation, and an integral part of the business, promoting leadership and contributing to the overall business strategy. Operating model-wise this means establishing processes that encourage end-to-end accountabilities with clear ownership of services and defined outcomes, a well understood organisation design that enables efficient use of several communication channels and building roles that encompass both deep, technical knowledge and superior leadership and project management skills.

In the end, the retailers that succeed in the future will be businesses that are capable of delivering impactful content through multiple channels, engaging customers with personalised initiatives and presence. The backbone of this business is a robust IT capability, driving innovation while delivering a high standard of service to both internal and external customers of IT.