Top 5 Challenges Facing Retail CTOs in 2020
Retailers are embracing a range of disruptive technologies that are set to fundamentally change the way they interact with and service their customers.
But what does this mean for the executives running the operations behind the scenes? How are they coping with the pace of change and what are the challenges that will impact their IT strategies in the months ahead?
As we continue working closely with CTOs in leading retail and hospitality brands, we’ve put together some of the topline issues they’ll be wrestling with in 2020:
Legacy management and smashing silos
Mobile, cloud services, big data, analytics, and social media rank highest among the technologies that CTOs see as transforming retail from the way we know it. Yet for many, leveraging these trends is a tricky proposition. How best to maintain availability while adding functionality to existing legacy systems (which may already be creaking at the seams) impacts many of their waking decisions. (Read our Welcome to Hospitality 2020+ white paper here).
In 2020, they’ll continue to seek solutions that help them surround and expand their existing assets using Open APIs and toolkits to integrate wherever they can. They’ll also be looking to free up data flows, connecting business functions in order to break down data silos (e.g. CRM, ERP, Web analytics) and deliver a 360 view of the customer to decision-makers and planners.
Optimizing resources and changing cultures
In too many cases, retail and hospitality IT agendas are hampered by a lack of key resources and business alignment – skills, people, budget, infrastructure.
The focus is often on fueling functional cost savings rather than driving business growth and sourcing innovation. Retail CTOs will need to get out of the back office and lead the innovation agenda if they want to secure the resources they need the dynamic new world of retail.
CTOs must focus their teams on innovating and differentiating the customer experience. Cloud solutions and integrated com
merce platforms will be a major enabler of retail transformation, allowing CTOs to more effectively leverage commodity technology and processes while dedicating valuable internal resources to driving deeper business and customer engagement.
Building better customer UX (without blowing the budget)
As everyone involved in innovation knows, it’s often the invisible assets that are hardest to deliver. There’s now more pressure than ever on CTOs to enable marketing and acquisition teams to attract and engage consumers – either through faster, responsive and more personalized online interactions, or by helping to create more exciting and inspiring experiences in store at the point of sale (POS). CTOs are being positioned to deliver bigger, better, faster, cheaper platforms – and with less liability too.
Protecting data and reputation
Fraud is the challenge that never goes away. The more channels, payment types, and services a retailer offers, the harder CTOs must work to ensure that payment and data chains are locked down. Retail Fraud is running at 30%, with merchants now paying $3 for every dollar lost. Faced with chargebacks, fines, and loss of reputation, the heat is on for CTOs to keep their business, management teams and customers better protected.
It’s not just about implementing more fraud prevention solutions, CTOs must select the right combination and layering of core, identity and fraud transaction solutions to defend against increasingly sophisticated threats. To ease the burden, ever more CTOs will choose to outsource risk, investing in payments as a service (SaaS) platforms to shift liability onto their provider and remove their own infrastructure from scope.
Dealing with compliance and ‘the domino effect’
Managing data comes with a minefield of rules including those that can be state-based (e.g. California’s AB375 consumer privacy act), international (e.g. GDPR data protection regulations), payment-related (e.g. PCI DSS), or for anti-fraud (PSD2’s Secure Customer Authentication (SCA). Additionally, these legislations don’t include POS certifications and card issuer mandates that are required to avoid fees and chargebacks.
So much regulatory change creates a domino effect that triggers time and effort – keeping legacy systems and processes up to date, continuous auditing, reporting, and training – has become a major burden for tech-heavy retailers. Finding new ways to reduce risk and ease the burden, through cloud-outsourcing, payment gateways, encryption, and tokenization is becoming a strategic imperative for CTOs. Even the smallest businesses are now investing in security and compliance specialists to help support them.
Of course, these challenges are just the tip of the iceberg for retail CTOs. According to Gartner, in 2019, retailers’ investment in technology is expected to grow 3.6%, hitting $203.6 billion over the course of the year. In 2020, much of the focus for CTOs will be in bedding in new assets and systems and ensuring they deliver a positive return on investment (which will mean even more scrutiny by their boards).
With as much change in front as behind them, there’s a long road ahead, but with the right technology and payments partners, they can spread the effort and lighten the load.