IT Intervention: Shortcutting the Backlog to Enable Retail’s Digital Future

Retail is unique in many ways, but one challenge it shares with most every type of business today is the drag that legacy software is putting on its forward momentum. Legacy solutions are often inflexible, costly to manage, increase risk, and require difficult-to-maintain integrations. Most impactfully, they mean less compelling work for an IT staff that’s increasingly difficult to attract and retain, and they limit the retailer’s ability to adapt and innovate. Retailers are well aware of the pain. Legacy systems (44%) were ranked the top challenge in RIS’ “2022 Annual Retail Technology Study.” Related IT challenges — application integration and consolidating databases — were also in the top five. Yet, while today’s retail IT budgets are healthy — 57% of the study’s respondents reported an increase in tech expenditures from 2021 to 2022 — IT departments face a long list of demands on those resources beyond modernization. Retailers were also asked to rank their top tech-driven strategies for the next 18 months, and many of the top responses are all about adding functionality to move the business forward, such as expanding unified commerce (25%) and developing personalized marketing capabilities (23%). At the bottom of the list are the investments required to break out of the legacy software logjam — increasing cloud services/platforms/infrastructure (17%) and advancing digital transformation (15%). Many analysts agree that unless businesses prioritize the modernization of legacy platforms, IT departments will keep falling further and further behind on their to-do lists. Gartner’s “CIO Agenda 2021” found 76% of CIOs report an increased demand for new digital products and services, but that almost a third of software projects are delayed by six months. According to the analysts at Parker Avery, “In the ever-changing and growing world of omnichannel, e-commerce, multiple fulfillment options and the velocity of enhanced customer expectations, many retailers can no longer continue to efficiently operate on their existing systems and remain competitive — or even viable.” While legacy systems are holding retailers back, they are also running core functions of the business. Retailers need digital transformation tools and strategies that enable them to modernize their applications intelligently, but also quickly. High Times for Low-code Low-code application development is emerging as an important tool in retailers’ arsenals. According to Gartner, traditional software development — in which IT collects user needs, goes off and writes, tests and refines code, and then throws it back over the wall to users — is falling away. Instead, they say, application development is shifting to application assembly and integration in a collaborative effort between developers and users. “The technological and organizational silos of application development, automation, integration, and governance will become obsolete,” says Milind Govekar, distinguished vice president at Gartner. “This will drive the rise of low-code application platforms (LCAPs) and citizen development.” Low-code is a method for developing applications that relies on a visual, model-driven, drag-and-drop interfaces. Teams can tap libraries of templates and pre-existing bits of code, such as connectors and widgets, or even reuse pieces of their own code, to make it even faster and more convenient. This makes it easy for developers and end users to collaborate on app development, bringing speed and agility to the process while lightening the load on IT. That in turn enables retailers to accelerate their digital transformation and modernize their IT environments, so they can be agile in innovating around business needs. Retailers also use low-code to keep their ERPs “clean” so they remain easy to modernize, pulling all the ERP customizations they have developed over time into a separate application. Another common objective is to achieve a single version of the truth across disparate legacy applications and leveraging that as they develop new functionality for internal and customer-facing applications. For example, a retailer may want to create a mobile store associate app capable of pulling real-time, accurate inventory across locations along with customer and product data so the associate can secure an order for a customer. Low-code can enable the retailer to quickly create an app that sources that data from siloed data stores. Here’s how retailers can determine the sweet spots for low-code in critical app modernization initiatives and begin leveraging them in their digital transformations. #1: Start With Now Understanding the current state of the IT environment is step one in devising the most effective modernization strategy. Identifying what systems are currently in place, and their pros and cons, as well as what skills and tools currently exist in-house, are essential to making decisions about shifting course. Starbucks turned to low- and no-code app development to work through its own backlog of projects, enabling the brand to efficiently address its most pressing needs much faster than previous approaches, according to VentureBeat. “We need opportunities to [scale] quickly … You’ll never find enough data scientists,” Starbucks chief digital and analytics officer Jonathan Francis said at a recent conference. “We’re all competing for the same resources — we have limited budgets. So you [have to start] think[ing] about local solutions.” #2: Map From Goals to Plans It’s important to look past the IT to-do list when it comes to choosing how to map out an app modernization plan. A best practice is to start with strategy: what are the goals and objectives for the business? Knowing what’s most important helps prioritize projects and then determine where low-code or other approaches are most appropriate. Retailers are using low-code platforms to replace, enhance, or supplement core legacy systems and applications. With goals and the current state of IT in mind, retailers can make build-or-buy evaluations, depending on whether most of their needs for a given set of requirements can be met by an off-the-shelf solution or would benefit from modernization. Then they can identify and rank potential application areas ripe for low-code development and build business cases for each application that address the need, solution, and the value to be gained. Some organizations chart their potential projects on a four-quadrant matrix with value on one axis and complexity on the other, to prioritize low-code project order. When PVH Europe, parent company to brands such as Calvin Klein and Tommy Hilfiger, looked to make changes to support their strategy around sustainability and efficiency, they wanted to avoid customizing their SAP ERP. They also wanted to automate some business processes, but felt those changes did not deliver sufficient business value to justify custom code. PVH leveraged a low-code development platform to improve to ability to manage and track a range of enterprise applications, including marketing budgets, project calendars, customer service, and workforce management. #3: Gather Low-Code Tools and Skills Shifting to low-code is more than just acquiring a low-code development platform. Adopting a new approach to app development is a cultural shift as much as it is a technical one. Retailers need to develop new ways of working to ensure IT and business users can collaborate for rapid development of new functionality. Sustained evangelism from IT leadership is often essential to making this transition successful. Aligning incentives with shared goals is another best practice to encourage cross-functional teams to work together. Low-code application development platforms are typically designed to be intuitive, but most “citizen developers” and experienced coders can benefit from courses, often available online from platform providers, to maximize the benefits of the tools—and learn to work together. DevOps talent will need bring their security and governance knowledge to the table to ensure the integrity of the code. A shortage of labor also hampers progress for some retailers (33%) who say that testing teams are overwhelmed with demand. Over a quarter (27%) also mention long testing cycles slowing down update releases. “These platforms — while offering cost saving, time and error reduction, and other improvement opportunities — still require some level of technical expertise to scale, maintain, integrate, and govern,” according to Harvard Business Review. #4: Start, Structure, and Scale Low-Code Work Early pilots remain the best way to prove that this new approach to app development will be successful and to fine-tune processes for bringing low-code into the organization. Regular revisits to the project plan formed at the outset helps ensure low-code projects stay tightly aligned with evolving business needs. Some of the most common initial areas of focus for low-code development projects among retailers address merchandising and supply chain strategy and support, such as vendor onboarding, product lifecycle management, production planning, open-to-buy, store associate enablement, and returns management. Later projects are often enterprise wide. Pampered Chef, for example, prioritized a digital engagement platform to enable virtual home parties as COVID took hold, seeking a way to fully control the environment in a way they could not through social media channels. Using low-code enabled the cooking products firm to move from ideation, to testing, to proving out the concept, to scaling up the platform, in less than a year, according to InformationWeek. As retailers gain experience with low-code, business practices tend to evolve. After first relying on a partner to help build low-code applications, for example, PVH trained their internal team on low-code, and then started enabling their business departments to build applications on their own for smaller projects that do not warrant IT involvement. Analysts advise retailers to adopt a modernization strategy that ensures their core enabling technology can keep up with, rather than restrain, the flexibility needed to adapt to a constantly changing marketplace. According to Deloitte, “Retailers that move forward with a modernization and cloud migration initiative will likely be better positioned to adapt in the near term and thrive in the long term. And that can deliver compelling returns on investment and position retailers to seize opportunities to boost growth, define new business models, and lead the market."

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