Leading experts share their advice on how to build and integrate an IT foundation to support omnichannel.
IT has a tendency to attract investment and focus that is disproportionate to its importance in the grander scheme of many projects. Part of this is because tech vendors do a bang-up job with their marketing. And part of it is wishful thinking that investment in IT will be a silver bullet solution.
But requisite time and resources must of course also be allocated to the likes of strategy, processes and the people involved. And so it is with an omnichannel project. However, in the case of omnichannel, there is little doubt that the IT infrastructure is absolutely fundamental.
Omnichannel retailers must ensure that all channels are supported and integrated with eachother to ensure that a customer’s experience with the brand is consistent and seamless. And trying to get a series of point solutions to tie together in a coherent channel strategy will make a challenging problem into a near-impossibility. Therefore, when it comes to an omnichannel project, it’s not just about getting the right pieces in place, but also about ensuring that they knit together.
“If you want to do omnichannel then you can’t be living in a world of siloes,” says Paul Heathcote, senior manager at Deloitte Digital. “That’s where you need a high level of maturity in terms of your underlying tech architecture and your content or commerce operations as well. You really need to be dealing with an integrated platform rather than lots of different siloes for things like content and logging in. There's no way without those things being integrated in some way that you could deliver an omnichannel experience because none of those channels would know who I was and identity's really important.
“So you’re starting to get into a world where if you want to be omnichannel then that has to be supported by a common platform across all of those channels. And this is why it's so hard for companies to do because that's not the reality that most organisations find themselves in, especially larger organisations because they have legacy stuff that's built up over time. It’s hard enough for them to deliver content to multiple channels separately in a siloed way let alone consistently.”
So how can businesses build a framework that meets customer demands quickly and consistently at every touchpoint? What technologies do the need, and how can they integrate them? MyCustomer.com spoke with experts for their advice.
Design a services architecture on a core commerce backbone
“When beginners are enabling additional channels for their business, often they end up creating different silos to support different channels, simply because their existing infrastructure and technical environment is not set up to support these new channels,” says Gagan Mehra, chief evangelist at Terracota. “You end up having a different set of technical products being used for the mobile platform, a different set for social, and a different set for the web platform. And that doesn’t really work and doesn’t really scale. It increases the operational cost and you need more resources to run the whole thing and there is an inconsistency between what you see on one channel versus what you see on another.”
The solution according to Mehra is to design a services architecture, which supports the likes of customer, product, pricing and promotion, and build it on top of a commerce backbone, which supports everything from applications that display different prices to the systems that enable interactions with customers and partners.
“The right thing to do is to build that commerce platform that can be extended to support any channel and any new channel in the future,” he explains. But he warns: “To extend an existing commerce application to become this platform usually requires a lot of customisation to the existing set-up unless the company is already using a platform that is service-enabled. Unless you are a company like Amazon or Netflix, using leading-edge technology, you usually don’t have a platform that is enabled for it.”
Standardise interfaces across channels
Omnichannel retailers can simplify their processes by building modular reusable services. This standardisation not only also reduces errors but also helps to deliver a seamless consistent experience. Mehra says: “With product pricing, for instance, you not only want product pricing to be consistent, you want to avoid accessing your back-end systems again and again, loading the systems with multiple calls. So you need to build that service once and use it across all the different channels you support. Promotions is another example – you want a single way to set up promotions and distil those promotions across every channel. So it is important to focus on building those modular reusable services.”
Build a master data set to create consistency across touchpoints
It is common for customers to find that a business is offering a good at different prices on the web and in-store, something that can frustrate consumers. This is often because the retailer is using two different data sources to display pricing on the different touchpoints. To ensure consistency, businesses must derive the data from one master data set – a single source of truth.
Mehra notes: “Several times I have spoken to customers who have an SAP back-end for product descriptions, but they are different from what is used on the website, and the mobile application is not set up to use longer descriptions, so there are inconsistent product descriptions across different channels, but without realising that customers might be searching for the same product on a mobile device and may pick up the phone and call the contact centre, which is using the SAP back-end to place an order. And that won’t really work!”
Consolidate reporting and performance management technology
“Businesses need a single report that demonstrates performance across all the different channels so that you can see what channels are working for you, and how successful promotions are on specific channels. Brands are most likely using A/B testing to use different promotions on different channels, or different product images on different channels. You want to get a report that shows what is being successful so it is important to consolidate all these metrics into a single dashboard to understand what is working.”
For this to be possible, multiple channel data must be consolidated into a single repository that can be drilled down into. This also supports customer path analysis, so that the brand can understand how customers approach the buying process across different channels.
Mehra continues: “How they end up buying a product is very important because if you understand that, you can push the right set of products to the customer, you can recommend them the right promotions and say ‘hey we understand you’re interested in this product’ and if they use the mobile device more often, for instance, you can show them the promotion on the mobile device first.”
Ensure that there is adequate investment in the back-end infrastructure
“Usually large organisations invest millions of dollars in setting up their back-end infrastructure, and usually enabling their infrastructure to support omnichannel is not something straightforward. But without making that investment to enhance your back-end infrastructure it will not be successful, because you may be able to have a commerce platform that will support all your channels on the front-end but if the back end is not set up to work with all those different channels then it won’t work.”
Furthermore, because the back-end system will be using more channels, it will be getting more traffic, so it must be able to scale and keep up the performance requirements of the business. The issue of scalability means that organisations should consider the Cloud to host their back-end infrastructure.
While businesses have historically started their journey looking at front-end technologies such as mobile, in-store tech and kiosks, organisations need this to take place under a different framework according to Ivano Ortis, managing director of Accenture. This framework should include an intelligence foundation that is instrumental for delivering a seamless experience and personalised interaction (requiring analytics tools, demand forecasting capabilities and integrated merchandising planning) and solutions that can enable flexible fulfilment and returns management.
Ortis summarises the structure to support this as such.
“You require an ‘omnichannel management platform’, which upgrades ERP - an important requirement - and also adds more capabilities around content management, order optimisation and a number of foundational aspects to help the retailer develop and execute the seamless customer experience.”
He continues: “On top of the platform you need an intelligence foundation. This is where traditional business intelligence tools operate in sync with demand forecasting – predictive intelligence tools. Built under the same foundation are a set of customer-specific analytics, which can be supply chain specific analytics or merchandise specific analytics. In the past, retailers were creating purpose-built or function-specific demand forecasting system, depending on the specific needs – so for instance you have a way to forecast demand for driving replenishment decisions, and maybe a different tool and set of processes for forecasting demand to fulfil your marketing objectives. This creates a set of highly specialised tools but they are very siloed. In omnichannel you need to create a converged environment – not just an integrated environment – where you pool all the IT interfaces that complicate the life of the CIO. So transforming and reshaping the architecture with this intelligence foundation is place becomes instrumental.”
And then underneath the platform and the intelligence foundation, Ortis says there should be four pillars, with a software system and a set of technologies within each of them. These are: a commerce pillar (“a commerce engine that delivers against the expectation of the customer that their journey is seamless and flexible, starting on one channel and continuing on any other channel and hopefully transacting and completing on any channel of choice”); a marketing pillar (“Specific focus on digital marketing is required to serve all channels across merchandise categories, and also link back to your supply chain capabilities”); and omnichannel fulfilment and integrated merchandising pillars (“They create a seamless environment, delivering the customer the perception that the retailer is always in stock. This needs to orchestrate the different sources of products, the different stocks you have on the shelf, in the back room of your store and the distribution centres that serve the ecommerce channel for instance, all to the advantage of the customer so that the products are always in stock and of course the retailer in terms of the ability to sell more.”)
See the following diagram as a demonstration of the structure that Ortis recommends:
Where to start
However, it is inevitable that businesses won’t be starting this process from scratch. In many cases organisations will have legacy POS, while their ecommerce and mobile applications will be more recently implemented. For larger businesses things are further complicated by having operations in multiple countries, and having many different types of merchandise items.
Ortis acknowledges that a roadmap approach to replatforming IT, delivering the omnichannel platform over time, is going to be the most common approach. But where do you start?
“Where to start depends on the business case assessment, but basically the initial step is about looking at the areas that provide the biggest business improvement potential for you as an organisation,” says Ortis. “But you should also look at ways to reduce costs, and not just in IT, but also in operational ways like energy reduction, IT support costs and other sources of expense. If you use the savings generating from cost containment actions to fund this omnichannel productivity platform, you are in a good spot.
“Once that is in place, it is the same as rolling out any other complex IT project – you need a number of phases and milestones where you deliver a set of foundations and then extend the platform reach and integration, serving different parts of the business. And the good news is that you can create the ability to support this because investment in omnichannel will mean you grow revenue as you reach more channels and more omnichannel customers, and this in turn creates a business case that justifies an investment programme in things like mobile commerce of social commerce capabilities.”
About Neil Davey
Neil Davey is the managing editor of MyCustomer. An experienced business journalist and editor, Neil has worked on a variety of newspapers, magazines and websites over the past 15 years, including Internet Works, CXO magazine and Business Management. He joined Sift Media in 2007.