The curse of disjointed systems

Many retail organisations see nothing wrong in using a complicated web of different systems to manage their business. There is even a popular term — ‘Best of Breed’ — which describes such a strategy, giving it a kind of legitimacy. As a result, such retailers end up with separate Point of Sale, Merchandising, Warehouse, Customer Database, Forecasting, and Financial systems, supported by various spreadsheets and heavily dependent on human intervention to keep the systems working together.

Considering that such systems often use different hardware and operating system platforms, it is easy to see why so many retailers need large Information Technology departments. The benefits of the individual system components being ‘Best of Breed’ evaporate quickly once the integration issues and the on-going interface costs are taken into account. Various studies claim that over 40% of IT budgets in retail are spent on running interfaces between systems.

The bad news is that matters are about to get worse for retailers who rely on such disjointed systems. A new trend is emerging in Information Technology that is likely to penalise those retailers who have failed to adopt a single, integrated solution to manage their enterprises. It is known as 'real-time' business or as the 'now-economy'. It is all about speeding up information flow and about being able to continually monitor your business, to react quickly as conditions change. A good analogy is that of a giant display that reflects in real time all the important facts about your enterprise. Without such virtually instant information, many retailers miss out on significant opportunities. For apparel retailers it is even worse. For example, given that the first two weeks of a new product usually determine its destiny, unless the retailers can monitor the sales as they happen and act accordingly, the lack of timely information can kill the business.

Many retail organisations are now taking a critical look at their systems and asking the obvious questions: How could my systems be better integrated to work in ‘real-time’? How could I link my systems so information can flow through them practically instantaneously? Could common data formats help? How could they be standardised? Is such a common ‘information channel’ possible? Could it be automated?

There can be no better common ‘information channel’ than a single, shared database within an enterprise. However, this can only be achieved by installing a single, integrated package or by developing an integrated system in-house. Any attempt to put together two or more systems will lead to fragmentation, data duplication, and incompatibilities, removing the chance of ever achieving ‘real-time’. This is why the option of slapping together ‘Best of Breed’ systems is no longer viable and is strategically wrong. Why create islands of information, knowing that sooner or later the organisation will be painstakingly trying to link them together?

What does it all mean for retail executives? It is actually quite simple: if you ever want to be able to ‘drive’ your company using a ‘digital dashboard’, you must diligently work towards a single system managing your entire enterprise. Do not allow projects that aim at replacing only a part of your systems. Do not introduce a new Point of Sale or Customer Relationship Management system, unless they come as parts of a larger, strategic system that your organisation is willing to adopt in the future. This is the only way to achieve full integration with no extra up-front and on-going cost.

Retail Directions is one of the few companies worldwide that provides a single system to manage the entire retail enterprise, including Point of Sale.