August 27, 2008
BrainTrust Query: Why aren’t retailers playing a bigger part in establishing industry standards?
By Bill Bittner, President, BWH Consulting
I was privileged to attend a recent work session of the Association of Retail Technology Standards (ARTS). ARTS is sponsored by the National Retail Federation and supported through membership fees. It was obvious from these sessions that everyone in attendance felt they were making a contribution. (You try spending eight hours reviewing file specifications line by line.) Most of the attendees were employed by technology companies. The cynics would say they were hoping to steal technology or brainpower from their competitors. I think it was more an acknowledgement that no single technology does it all. The disconcerting thing, however, was the lack of retailer participation.
I constantly hear complaints from retailers about the way technology fails to meet their needs. The inflexibility of applications designed for a “perfect world” completely misses the realities of a retail operation, where things are fast paced and often done by the seat of the pants. Applications must be designed for the real environment of the store and be able to handle the human frailties that abound in the real world.
That’s why the whole software industry is abuzz over Service Oriented Architecture (SOA). The challenge is that these services have to be developed with a vision of the business process model and the services it will contain. In order to avoid overlap between services developed by different organizations and the inability to support interfaces because of missing attributes, service developers must be designing to a common architecture of the business. One of the roles of ARTS is to develop just such an SOA blueprint. If anything, the need for standards is becoming more critical as retailers try to reap the benefits of SOA. SOA should allow a retailer to truly select “best of breed” for their various services and be able to integrate them into a coherent solution.
So why is it that so few retailers attend these sessions? The Director’s feeling is that some organizations join up, get their documentation, then move on. They feel the documentation they receive by joining gives them a good start and that further participation is a waste of time. I don’t know if that is the only reason, but it seems that without the existence of standards organizations and the participation of retailers we are doomed to keep reinventing the wheel.
Discussion Questions: What are the reasons you think there is not more retailer participation in standards organizations? What can the standards organizations do to change the domination of tech organizations at these sessions?
[Author’s commentary] Besides the purely technical aspect of developing standards, there is the personnel factor. Yes, there is the possibility that someone might leave for another organization taking the understanding of processes with them. But there is a unique learning opportunity that comes out of filling a room with people all focusing on a specialized subject. By bringing people focused on retail technology together, organizations like ARTS make it possible for people from individual companies to find answers to complex problems. This is what is missed by the “hit and run” tactic of taking out a membership merely to get a copy of the documentation.
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First, while standards are great, they often appear as various shades of grey. For example, I just met with someone who did some work for a major email platform company who shared that with multiple servers running the “same” software, they all ran differently, even though they were the same model release with the same OS, etc.
Second, technology is hard. Any retailer that has been around for a while is likely using a mix of old and new hardware and software. It’s highly customized to their business model and thus, there is a perception that standardization is theoretically desired but practically untenable. It’s also hard to have a shared benefit level when different merchants are in different stages and situations with their systems.
Last, how many retailers are truly IT-driven as opposed to run by merchants or even CFOs? Costs of changing systems is a huge challenge when there are lots of doors, margins are tight, etc. The way to get retailers on board with this is to show them a business case along with a reasonable dose of anesthesia!
Retailers have to be brought kicking and screaming into the future for one reason–they live in a highly competitive environment in which most “new costs” come straight off the bottom line. An established business finds it hard to innovate unless the economy is great and sales are exceeding expectations. New businesses, that are enjoying the initial growth spurt, often adapt easier due to the fact that they have no legacy systems or are outgrowing the capacity of the systems they initially adopted.
I agree with my colleague’s comments, but I’m thinking a little more consumer-centric. People shop where they shop because it’s comfortable and familiar. Yes, new technology might be great for a retailer’s distribution system but when it is targeted for the consumer, it’s a scary proposition.
Look at the empty self-checkout lines. Shoppers want service to increase, not more computer gadgets. And yes, when my daughter is on her own and has increased buying power, her generation will embrace all the bells and whistles. Maybe that increased demand will get retailers to reach into their pockets. But until then, Baby Boomers rule.
My experience with supermarket IT teams is that they prefer to remain “voodoo departments.” One element missing so far in this discussion is the tendency of many IT managers to remain secretive, promote their own internally-developed legacy systems (allowing them to retain large staffs and large budgets), cultivate relationships with preferred hardware suppliers, and perpetuate the mystery that isolates and elevates their departments. This is power, and it does not benefit from openness. Open standards, open architecture, etc., are usually not welcome here. During my ten years with Fleming, I attended several internal management seminars on the politics of information technology. Members of the IT department were not invited.
I spent a number of years staffing VICS, the Voluntary Inter-Industry Commerce Standards Association. What made VICS work was the camaraderie between very senior executives who wanted to think strategically.
That said, the retail industry does not have a history of proactive work. It’s amazing that the industry doesn’t have a retail-focused security committee, along the lines of the BITS organization run by the banking industry.
I believe there are two reasons for this lack of retailer participation. Firstly, the tech companies are very aggressive with the selling of services, and what retailer wants to be in a room full of companies trying to hit on them.
Secondly, considering the competitive nature of retail, having a selected group of tech companies who come to the retailer, rather than being part of a more open dialogue, is what may make some retailers more comfortable.
I may be wrong, but considering all the trade group participation options and seminar programs that are offered, retailers can and should be very picky about where they spend their time.
A few observations here…. First, we’ve developed an industry culture where retailers don’t pay for anything anymore. It’s expected that manufacturers/vendors give them everything. There are significant exceptions to this rule, but I think overall, this statement is fair.
Second, the top management of retailers, by and large, is more worried about having employees stolen than is the top management of manufacturers and tech vendors. Everyone knows that headhunters attend these meetings, not to mention competition that could be trolling for new talent. By and large, vendors and manufacturers just shrug this off. But many retailers over the years have told me they are ordered to keep a low profile for fear of being recruited.
There’s also an insulting belief by senior management that they can’t trust their employees not to give away proprietary secrets at these conferences.
Also, tied to my first point, many retailers don’t have a budget for travel/seminars for their people. They figure they can get the info by a couple memberships, and vendor visits to them.
Having said that, I’ve met some extremely bright and capable tech people at retailers that are not hindered by such backward thinking by senior management. Not surprisingly, they attend these meetings, participate, and generally their chains kick butt in the marketplace.
Across the industry supply chain, data and technology standards some of the best ideas have been developed by leading edge retailers and then have been shared by suppliers–both suppliers of products and services. This model has evolved as the standards initially benefit suppliers more than retailers as suppliers must confirm to the needs of their customers. Over time, the standards benefit retailers when all their suppliers take on similiar and compatible platforms and the world becomes a smoother place.
Given this short-term benefit to suppliers, it is no surprise the room lacked retailers. If we want retailers to participate we have to show them a benefit on a measurable time horizon so they can justify the human resources investment on these committees. All it usually takes is a couple really smart retailers to join the effort and the industry follows.
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First, while standards are great, they often appear as various shades of grey. For example, I just met with someone who did some work for a major email platform company who shared that with multiple servers running the “same” software, they all ran differently, even though they were the same model release with the same OS, etc.
Second, technology is hard. Any retailer that has been around for a while is likely using a mix of old and new hardware and software. It’s highly customized to their business model and thus, there is a perception that standardization is theoretically desired but practically untenable. It’s also hard to have a shared benefit level when different merchants are in different stages and situations with their systems.
Last, how many retailers are truly IT-driven as opposed to run by merchants or even CFOs? Costs of changing systems is a huge challenge when there are lots of doors, margins are tight, etc. The way to get retailers on board with this is to show them a business case along with a reasonable dose of anesthesia!
Retailers have to be brought kicking and screaming into the future for one reason–they live in a highly competitive environment in which most “new costs” come straight off the bottom line. An established business finds it hard to innovate unless the economy is great and sales are exceeding expectations. New businesses, that are enjoying the initial growth spurt, often adapt easier due to the fact that they have no legacy systems or are outgrowing the capacity of the systems they initially adopted.
I agree with my colleague’s comments, but I’m thinking a little more consumer-centric. People shop where they shop because it’s comfortable and familiar. Yes, new technology might be great for a retailer’s distribution system but when it is targeted for the consumer, it’s a scary proposition.
Look at the empty self-checkout lines. Shoppers want service to increase, not more computer gadgets. And yes, when my daughter is on her own and has increased buying power, her generation will embrace all the bells and whistles. Maybe that increased demand will get retailers to reach into their pockets. But until then, Baby Boomers rule.
My experience with supermarket IT teams is that they prefer to remain “voodoo departments.” One element missing so far in this discussion is the tendency of many IT managers to remain secretive, promote their own internally-developed legacy systems (allowing them to retain large staffs and large budgets), cultivate relationships with preferred hardware suppliers, and perpetuate the mystery that isolates and elevates their departments. This is power, and it does not benefit from openness. Open standards, open architecture, etc., are usually not welcome here. During my ten years with Fleming, I attended several internal management seminars on the politics of information technology. Members of the IT department were not invited.
I spent a number of years staffing VICS, the Voluntary Inter-Industry Commerce Standards Association. What made VICS work was the camaraderie between very senior executives who wanted to think strategically.
That said, the retail industry does not have a history of proactive work. It’s amazing that the industry doesn’t have a retail-focused security committee, along the lines of the BITS organization run by the banking industry.
I believe there are two reasons for this lack of retailer participation. Firstly, the tech companies are very aggressive with the selling of services, and what retailer wants to be in a room full of companies trying to hit on them.
Secondly, considering the competitive nature of retail, having a selected group of tech companies who come to the retailer, rather than being part of a more open dialogue, is what may make some retailers more comfortable.
I may be wrong, but considering all the trade group participation options and seminar programs that are offered, retailers can and should be very picky about where they spend their time.
A few observations here…. First, we’ve developed an industry culture where retailers don’t pay for anything anymore. It’s expected that manufacturers/vendors give them everything. There are significant exceptions to this rule, but I think overall, this statement is fair.
Second, the top management of retailers, by and large, is more worried about having employees stolen than is the top management of manufacturers and tech vendors. Everyone knows that headhunters attend these meetings, not to mention competition that could be trolling for new talent. By and large, vendors and manufacturers just shrug this off. But many retailers over the years have told me they are ordered to keep a low profile for fear of being recruited.
There’s also an insulting belief by senior management that they can’t trust their employees not to give away proprietary secrets at these conferences.
Also, tied to my first point, many retailers don’t have a budget for travel/seminars for their people. They figure they can get the info by a couple memberships, and vendor visits to them.
Having said that, I’ve met some extremely bright and capable tech people at retailers that are not hindered by such backward thinking by senior management. Not surprisingly, they attend these meetings, participate, and generally their chains kick butt in the marketplace.
Across the industry supply chain, data and technology standards some of the best ideas have been developed by leading edge retailers and then have been shared by suppliers–both suppliers of products and services. This model has evolved as the standards initially benefit suppliers more than retailers as suppliers must confirm to the needs of their customers. Over time, the standards benefit retailers when all their suppliers take on similiar and compatible platforms and the world becomes a smoother place.
Given this short-term benefit to suppliers, it is no surprise the room lacked retailers. If we want retailers to participate we have to show them a benefit on a measurable time horizon so they can justify the human resources investment on these committees. All it usually takes is a couple really smart retailers to join the effort and the industry follows.