How to accelerate retail digital transformation by connecting silos
Author: Melanie Marchant, Head of Digital Consulting, Natasha Lalwani, Principal Consultant and Liz Wray, Principal Enterprise Architect, Zühlke
Ever felt like you’re trying to understand your customer by looking through a keyhole? Ever built a new system only to find out another department had that data all along? If you’ve answered yes to either of these questions, you’ve got silos!
Silos typically stem from internal misalignment of goals and priorities. This is what we have learned from discussing the topic with retail business leaders at a recent Retail Hive conference coupled with experiences from our past projects. Despite this misalignment, company’s internal funding processes often permit teams to independently implement diverse solutions to address their specific needs, adding to the problem.
Structural issues may further exacerbate the problem. When different departments operate in isolation, applications and data tend to follow suit, resulting in standalone systems with overlapping functionality. Unfortunately, these solutions are introduced without due consideration for their impact on the overall customer experience or the broader strategic goals that could be achieved by combining data and operational methods.
This lack of collaboration, while understandable, leads to the formation of business and data silos—disconnected repositories of information. This places unnecessary limits on the value of your data. Informational isolation can even breed distrust, as teams fight to preserve their own data and limit interdepartmental transparency.
Instead, you need to break down silos and accelerate retail digital transformation by fostering collaboration and synergy across the entire organisation. In this article, we’ll discuss how you can do that.
Top 4 challenges retail leaders face due to silos
You may be unsure whether your organisation is struggling with connecting silos. In that case, take a look at the four challenges below—they may be indicative of your retail company’s opportunity to digitally transform its operations.
1. Limited view of customers
If your data is held across siloed applications, it’s likely to be captured inconsistently and interpreted differently, leading to poor data quality.
As a result, your organisation is likely to struggle obtaining a unified view of its customers. That can present a major problem, as it means you will be unable to cater effectively to the needs of consumers and forge a strong, lasting connection with them.
2. Disjointed customer experience
Customers do not care if your organisation is made up of several siloed business units, each with its own set of applications. Instead, they see you as a single entity and expect every touchpoint they have with your brand to consider all their previous interactions.
Failure to construct a comprehensive 360-degree view can create friction across the purchasing journey, leading to a disjointed and inconsistent customer experience and lost revenue.
3. Unnecessary costs
When your company has multiple applications with the same or overlapping functionality, and two or more of these apps are used to control or create the same type of information, a data duplication problem emerges. The result is an avoidable increase in storage and compute costs.
But that’s just the tip of the iceberg. Besides monetary damage, you’ll likely also have to deal with:
- Inconsistent business rules and data definitions
- Poor interconnectivity (because systems are unable to ‘talk’ to each other)
- Increased complexity and risk in building and modifying solutions
- Processing delays
All these issues translate into further expenses as the organisation wastes resources in dealing with all of them.
4. Security risks
Data silos aren’t just inconvenient and expensive. They can also pose a serious problem when it comes to managing data security.
Data being held in numerous siloed systems of varying age and technical debt poses a security risk. This is primarily due to the higher probability that data security protocols are inconsistently applied across departments. Naturally, this can leave your company vulnerable to cybersecurity threats, from damaging data leaks to data breaches.
Breaking down existing silos and connecting your data means it can be consistently stored and accessed. This makes it easier to quickly identify irregular traffic patterns and flag behaviour that might indicate a security issue.
So, how should retailers tackle these challenges?
We believe that the answer lies in connecting, not breaking silos. A multi-disciplinary approach with a shared vision is crucial for retailers to gain a holistic view of their business, improve decision-making, and enhance overall efficiency.
In times of crisis, silos may be tackled rapidly, but how can we replicate this behaviour in non-crisis times, enabling businesses to proactively respond to ever changing market conditions? Let’s take a look.
Key steps to boosting retail digital transformation by connecting silos
As our team helped several clients tackle organisational and data silos, we have identified five key steps retailers can take to begin this process and accelerate digital transformation efforts.
1. Establish a common vision and objectives
First, leadership must create a common vision, establish key objectives, articulate the challenges associated with realising those objectives, and employ a cross-disciplinary approach to reaching them.
This not only ensures that resources are invested into initiatives that will drive the desired change, but also helps employees develop empathy and understanding of what other departments need so that they can collaborate more effectively.
2. Review and document data flows
Next, it’s time to review and document how data is created, transformed, and consumed within the organisation. Look across applications, users, business units, external parties, functions, processes, channels, and sub-brands.
Get a clear view of the primary sources of data, understand where data is entered manually, and identify all the relevant internal stakeholders. That way, you’ll gain clarity around the current status quo and be able to chart a course of improvement towards your vision.
3. Outline your current data architecture
Once you’ve reviewed the data flows inside the company, you should create an overarching view of the existing data architecture and governance processes.
Clarify who the data owners are, assess the quality of your metadata, and highlight where inefficiencies, gaps, and synergies exist. Evaluate and outline how the data you have could be used to drive better understanding of your customers and your organisation.
4. Clarify your ecosystem strategy
A retail ecosystem can be thought of as vast, interconnected community of consumers, retailers, and partners. It enables contributing partners to collaborate, benefitting their businesses and customers.
Ecosystems rely on data exchange not only across the key external contributors, but also across internal functions, including sales, marketing, logistics, and customer service. So, aim to develop an ecosystem strategy that supports your company vision for working with partners and consider what changes you will need to make to your underlying architecture to unlock the potential benefits.
When implemented effectively, an ecosystem strategy helps obtain a 360-degree view of customers and operations. Besides that, it facilitates data-driven decision making, provides access to a wider base of potential customers and products, and supports the delivery of personalised customer experiences as well as the ability to respond rapidly to changing market conditions.
5. Conduct business change readiness assessment
Finally, don’t forget to perform a business change readiness assessment based on the key factors that will impact your ability to break down silos. Typically, these factors are:
- Culture
- Psychological readiness
- Team risk tolerance
- IT infrastructure
- Employee skills and availability
- Change capacity
Once the assessment is finished, develop and implement a plan to improve company readiness prior to making the actual changes. At this point, identifying advocates to communicate the required changes across the organisation will be key.
