Retail technology goes back to its roots

IT directors from the big retail organisations are leaving their jobs and resurfacing at e-commerce companies. Is it just for the...

IT directors from the big retail organisations are leaving their jobs and resurfacing at e-commerce companies. Is it just for the money or is there more to it, asks Mike Winch

The last year has certainly seen a spate of major changes in the IT departments of the country's largest retailers. Names including Ian O'Reilly at Tesco, Ushir Bhatt at e-Kingfisher, David Rosalski at Somerfield and myself at Safeway, are all making the move from brick-and-mortar retail to the virtual world of e-commerce - either into a dotcom start-up, or as in my case, into an e-commerce services company.

But do these moves represent a final coming of age of the dotcom industry as the corporate heavyweights move in? Or are these corporate heads of IT just getting itchy feet and longing for new challenges? To an extent, both answers are true.

From my own experience I look back with relish at my 17 years as group IT director at Safeway and think of it as a truly revolutionary period for the retail industry.

The last decade was a period of great technical innovation for retailers. During this time we have seen the widespread deployment of electronic point of sale systems, the introduction of supply chain and merchandising systems that have created great operational efficiencies for retailers, and the advent of customer-facing systems such as loyalty cards.

This all made retailing a challenging and dynamic environment in which to work and one that was forever creating new inroads in technology innovation.

Now, the scene is changing once again, and with the explosion of the Internet, corporate IT departments are increasingly being influenced by a growing number of highly innovative Internet services companies, and are becoming more dependent on solutions from these companies to maintain competitive edge. For a start, this means that the traditional, permanently-resourced IT department will probably disappear.

With the rise of application service providers (ASPs), outsourcing has finally come of age and retailers have a compelling reason not to develop and maintain everything in house, even if they could. The rise of multi-channel retailing means that no retailer can really expect to be able to manage the operational requirements created by PCs, Wap phones, digital television and personal scanners - let alone stores and telephones.

Even with the right resources and experience, time is unlikely to be on the retailers' side. Technology has enabled development times to be slashed from years to a matter of months or even weeks. Opportunities for competitive advantage present themselves more frequently these days than before, with the emergence of new channels but the time to grab them has shrunk. Tesco, Kingfisher et al will now become more dependent on a new breed of vendor to help them exploit and maintain this edge. And even where the retailer is using technology to develop new channels and services, they will need strong partners to make everything fit together. Retailers have already discovered that as each new service is added to the business, they are also adding cost, complexity and integration issues. At this level, no retailer can work alone, as evidenced by the number of e-commerce projects being rolled out involving as many as a dozen different vendors.

It is the adrenaline rush caused by these challenges which I think is attracting so many of my fellow IT directors to head up e-commerce businesses. They are striving to bring back the excitement, creativity and energy that they once brought to their former employers.

However, it takes a certain type of person to make the move and they have to have an open mind. Only those with long experience of retailing will be able to develop solutions that actually fit the business and generate profit - rather than simply additional cost. In my mind, running a large IT shop is not the way forward for me - the Internet will give rise to so many different types of organisation which will have a dramatic effect on the way that solutions are planned, developed, rolled out and managed.

As I came to regret the loss of creativity at Safeway, I decided to move to a specialist e-business solutions company. The big technology vendors will still influence the way solutions are implemented, just as with my own company's association with IBM, but it is the smaller companies that are more dynamic and can react quicker to change.

For instance, I saw that there was wider potential for the Easi-Order personal shopping PDA that was developed at Safeway and am now licensing the device to the market through Crimsonwing. This is an exciting time for retailing and I know that my former colleagues in big retail IT departments are happy to be back where they belong, innovating and making things happen.

Mike Winch is former group IT director of Safeway and is now chairman of e-commerce services company Crimsonwing.

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