IoT could transform retail, but how? Part 2

In Part 1 of this blog, we looked at how the Internet of Things can transform retail experiences for retailers and shoppers alike.

Route to IoT enablement – challenges and how to avoid them

Retailers work each day to provide that customized, unique yet consistent shopping experience to their customers. Enabling this omnichannel experience across online, mobile and in-store has kept many CIOs awake for many quarters now. As they settle over that challenge, comes IoT enabled sensors and devices and hundreds of startups that are looking to disrupt retailing all over again. Retailers understand the potential of the flood of IoT related technologies and devices, and are looking at three levers to enable these in their channels and day-to-day operations.

1.       Integration

2.       Insights

3.       Governance

1. Integration of teams, processes, and systems

Retail Strategy, Marketing, Channels, Operations and IT will need to collaborate heavily to conceptualize the applications of smart devices into the company’s retail and supply chain operations. Business processes starting with demand management, branding & marketing, procurement, merchandizing and store operations will need to be redefined to stimulate IoT enabled capabilities within them. However, the toughest challenge would be to align on which among the numerous ‘smart’ device choices to prioritize. Alignment with business strategy will need to be guiding factor for this prioritization.

Tight integration between IT systems of PLM, loyalty, sales, merchandising, pricing/promotions, and fulfillment to ensure the defined processes execute smoothly, will be the next frontier. This will need substantial time and effort given the various new devices and technologies that will enter the IT Architecture. IT Infrastructure teams will need to ensure all communication and networking protocols (WIFI/Broadband, NFC, Bluetooth, mobile) are working effectively and enabling seamless flow of information and business data through the network of sensors, devices, servers, and applications.

2. Insights derived from the 1000s of devices will need to drive future decisions

True transformation of a retailer’s prospects will depend on their ability to react to the real-time inputs received various smart sensors and devices in the field and in the stores. Converting data to insights is an ungainly habit that will be difficult to grow into.

Even mature insights driven businesses have little experience in dealing with event-based raw data streams and specialized algorithms that can deal with time series data. Connecting these streams of data meaningfully to enterprise applications for meaningful analysis and downstream reporting will require equal measures of business subject-matter-expertise, application awareness and strong analytics capabilities.

As corporations enhance their ability to decipher business critical insights from the enormous amounts of data that these devices will generate, the use cases will become more focused on business benefits of improved customer engagement, sales uplift and improved margins.

3. Governance of organizational constituents that implement and support the IoT ecosystem

Introducing IoT and related business capabilities within a retail environment demands innovation of business models, intense influx of new technologies and new program to define and implement these. A best practice has been to institute cross functional teams relevant to the business and application most impacted and define a project charter that begins with the key strategic business objectives (increase revenue, improve engagement or improve margins) and ending with a detailed, end-state architectural technology map.

Success of these initiatives depend on a tight governance mechanism that ensure tight alignment between business, IT and product or service delivery partners. A program with frequent touchpoints on potential value generated and any challenges in meeting set timelines or objectives. Not all initiatives will succeed and so it’s important to design to fail-fast, so as to safeguard from investing too much in trials and pilots.

Another critical element of the IoT implementation would be to assess the need for new skills, capabilities to support these new devices, identifying new partners to help support these environments and planning for adequate time for adoption of these new technologies and processes.

The result is to build an end-to-end networked IoT ecosystem with your enterprise of customers, suppliers, assets and extended business network.