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Investment decisions: Facilitate a meeting of the minds

By: Ritika Puri

 

IT has evolved from a cost center to strategic change agent in almost every retail business. Both CIOs and CFOs recognize a need to transition to the new style of business, in which systems are optimized for scalability, IoT-aware infrastructure, and shifting customer demands.

 

Over the long term, IT investments will yield efficiencies, ROI, and performance gains. In the short term, however, investments may appear to be a cost sink. As a result, budget-conscious CFOs may be hesitant to commit to investments.

 

One of the biggest challenges that organizations face is figuring out how to get started. Here are three ways that CIOs can move the needle and help CFOs make investment decisions.

 

Meeting of the minds1. Emphasize the efficiency gains

The New Style of Business delivers on the promise of on-demand information. With faster communication, retail brands can serve their customers' needs more efficiently.

 

With mobile payments, for example, store associates can reach customers in the moment, eradicate wait times in checkout lines, and direct conversations toward transactions. According to one forecast, mobile payment solutions are expected to grow by 60 percent in 2015. At the heart of this growth is a demand for greater efficiency.

 

In the eyes of an enterprise CFO, these value propositions are a no-brainer. Even with an upfront investment in new systems and training programs for store associates, the incremental revenue gains are predictable and quantifiable.

 

2. Start with focused tests

Rather than deploying programs in full, CIOs can start with smaller tests on a subset of stores and IT systems. These focused initiatives will uncover potential pain points, challenges, and areas in need of improvement.

 

For example, Tesco launched a new scanning technology that helps customers keep a running total of costs. Rather than deploying this technology in full, Tesco ran a series of small experiments within its largest stores. After collecting initial customer feedback and data, the grocery giant began a multiyear process to launch this program in full.

 

This experimentation process alleviated Tesco's fear that thefts would rise with the implementation of new technology. The experiments identified potential vulnerabilities, which allowed Tesco to respond by developing a new set of security tags.

 

By following an approach like Tesco's, CFOs can be confident that their companies are making the best investment decisions at the lowest levels of risk and cost.

 

3. Craft tangible ROI stories

One of the biggest challenges that retailers face is the ability to synchronize brick-and-mortar experiences with digitally driven data. By eradicating these silos, companies are better positioned to deliver tailored customer experiences.

 

Kohl's, for example, was able to generate incremental sales of $80.00 per customer with the introduction of its mobile wallet feature. This ROI metric is compelling in the sense that it makes the open-ended goal of customer loyalty more immediate and tangible.

 

Omnichannel shopping experiences position stores to reach customers faster, with more tailored messaging and mechanisms for efficient transactions—a value proposition that no CFO can resist.

 

Final thoughts

Start small and keep risks low. By focusing on efficiencies and launching small tests, CIOs will be well positioned to forecast the effects of these investment decisions on sales. For CFOs, vigilant and methodical planning is the optimal course of action that precedes financial decision making. Others, however, are comfortable taking risks. Is it possible to have it both ways? Can enterprise IT groups combine methodical decision making with risk taking?

 

 

About the author

Ritika PuriRitika Puri

 

Ritika is a corporate intrapreneur turned startup founder and writer. She enjoys helping companies build stronger customer relationships and bring products to market faster through her company, Storyhackers.

About the author

Connect with Ritika:

 Follow me on Twitter ritika_puri

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