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Mapping Out a Five-Year IT Strategy

Virtually any retailer larger than a front-porch lemonade stand needs to have a long-term information technology strategy. The need to create faster, more agile and more profitable enterprises is more important now than ever before. One of the most effective building blocks for achieving this critical strategy is a multi-year (generally three- or five-year) IT plan. This type of detailed, enterprise-wide roadmap is essential to getting the retailer’s IT infrastructure—and more importantly, the business as a whole—to a desired end-state of efficiently supporting core business functions that lead to growth and success. However, making the plan is, literally and figuratively, only the beginning. Before deploying advanced applications, retailers may need to address systemic issues such as data “cleanliness” or SKU reconciliation. The good news is that the discipline involved in carrying out a five-year plan creates additional benefits along the way , producing a multi-tier effect throughout the organization. These benefits go well beyond the IT department, boosting a retailer’s business agility along with its IT flexibility.

What’s at Stake for Retailers

Creating and carrying out a long-term strategic information technology plan brings a host of benefits to any organization.

Long-term plans of three to five years bring particular benefits to retailers because, counter intuitively, both technology and business move so rapidly in this industry. Against the backdrop of often dramatic change, having a clear idea of where you are, where you’re headed and how far you’ve come can help put the merits of advanced new technologies in perspective.

In addition to defining direction, a long-term strategic plan, and the processes involved in carrying it out effectively, help keep the entire organization moving toward its business goals—even when facing unexpected challenges, such as the loss of a key supplier or a strong new competitor entering the market. Industry experts believe that a strategic plan can even temper the tendency to overreact to such crises, by keeping people focused both on long-term goals and the small steps needed to achieve those goals.

Without this type of focus, many retailers succumb to a “red alert—all hands on deck” mentality when a challenge arises, abandoning or neglecting important projects in mid-stream. Too often, the result is that both people and companies are consistently reactive rather than proactive—creating conditions that produce even more crises in the future.

In fact, a strong strategic plan creates an environment that makes it easier for retailers to deal with the unexpected. A plan like this is meant to be truly strategic, not tactical. Five-year plans are mostly about capital investments, the big dollar commitments a retailer makes.

Strategic planning also needs to address the underlying IT requirements that make such major initiatives possible.

Key Elements of a Successful Long-Term Plan

For a five-year plan to provide maximum benefits, it needs to combine a big-picture vision with the specific steps needed to realize that vision. Among a roadmap’s most important elements are:

  • A realistic assessment of the current IT infrastructure: More than simply a list of applications, retailers need to know the actual functional capabilities of their legacy systems. For example, can their current systems handle the complexities of omnichannel distribution or support wireless devices? Will they require an upgrade or a complete replacement to do so? Which systems are reaching the end of their lifecycles, for instance relying on a dwindling group of IT professionals for support and maintenance?
  • The business case for IT initiatives: Just as retail CIOs must combine IT knowledge with business acumen, so must any IT initiative serve a demonstrable business purpose. Whether the goal is getting closer to customers or streamlining the supply chain, business needs should determine the destinations for IT.
  • The “due diligence” involved in major IT initiatives: Long-term plans should build in the time required to select the right technology supplier; plan for systems migration or integration; purchase and install the products; deploy them within the retailer’s IT infrastructure; and train employees in their use.
  • Cost and time estimates: These will put “meat” on the bones of a long-term plan, and help to determine optimal resource allocation while the plan is being carried out.
  • Achievement milestones: The large scope of many five-year plans can be intimidating. Making a plan work requires breaking it down into achievable steps; sharing these steps with those who need to carry them out; and then checking to ensure that they have indeed done so.
  • Frequent meetings: Most industry experts recommend that key plan participants meet at least quarterly in order to assess progress, deal with unexpected contingencies and maintain forward momentum. These meetings should be supplemented with annual meetings, preferably off-site and distraction-free, where top executives can make sure the strategic plan remains aligned with the retailer’s competitive situation and its long-term goals.

Strategic Plans Align Organizations to Meet Future Needs

A Q& A with Rob Henneke, EVP, RPE—Retail Process Engineering

Q: What’s your definition of a five-year strategic plan? A strategic plan provides the opportunity to align people, processes, as well as technologies to support a future vision of the business. The strategic planning process is not simply a laundry list of applications to be installed and implemented, but a design process that takes into account stakeholders’ future needs and current-state gaps. Products of the strategic planning processes are the tactical plans, which allow a coordinated and universally understood approach to achieving the strategic plan.

Q: What are some of the gains from having a long-term strategic plan?Creating a consistent message and providing advanced applications are important parts of any strategic plan, but this alone is not enough. The real power of a strategic plan is the ability to understand how the message and applications can be applied and implemented within the organization. The opportunity to align the organizational structure around the future-state processes and applications has the potential to provide substantial cost savings. The strategic planning process also provides the opportunity to build application and support structures for emerging channels and markets.

Q: What are some ongoing benefits of having a long-term plan?
The benefit of a long-term strategic plan is the ability to provide clarity of purpose, organizational focus and direction. This doesn’t necessarily mean that strategic plans are static documents. Strategic plans represent a vision at a point in time and are designed around a set of assumptions. Senior executives have an ongoing responsibility to evaluate and review the underlying assumptions supporting the strategic plan. If the assumptions and business climates have changed dramatically, the plan will need to evolve.

Q: Organizationally, who should be involved in strategic planning?I believe it’s important to note that strategic plans by nature are a long-term commitment of resources, requiring the full support of C-level executives. As for the planning process, a number of options exist for development of a strategic plan. A number of retail organizations have created internal strategic planning departments responsible for exploring future trends as well as developing, presenting and implementing plans. A more traditional route has been the use of consultants to develop the business case and proof concept around the strategic plan. Once the plan is adopted, the consulting organization can either be engaged as part of the implementation, or the organization can manage the process internally.

Q: What should the CIO’s role be?Technology applications continue to play a larger role within any retail organization, which makes the CIO’s support and expertise invaluable. The CIO must be a solutions provider as well as a realistic gatekeeper, providing a clear assessment of the resources and capabilities of any application. The CIO can provide insight into the process changes involved for other functional stakeholders as part of the strategic plan.

Q: Can an outside consultant be helpful, and if so, how?
Consultants can be deployed in a very limited scope or on a broad scale depending on the particular needs and talent that exist within a company. This “a la carte” or plug-and-play approach can provide real value for a client. Consultants typically have the freedom to provide unbiased perspective that individuals within the organization may not have the ability to do.

Tips From Lessons Learned

Greater involvement by line-of-business and senior executives also helps build, and maintain, support for long-term projects.

The other key lesson is that long-term strategic plans are themselves crucial to business agility. A true five-year plan cannot become outdated by the pace of change in the industry, because no retailer is ever truly ‘caught up’ on upgrading its technology stack, the network pipes, IT architecture, application layer, and the process of  sunsetting legacy systems.

Most importantly, a strategic plan should move retailers toward the goal of creating the perfectly agile enterprise, which can implement new things that come down the pike with swift ease. In the real world, creating this perfectly agile enterprise isn’t really achievable.

What’s important is making the journey.