Survey on Technology Performance Failures Gives Retailers Sticker Shock

By Bharath Gowda

Let's say your company is ahead of the technology curve, employing mobile point-of-sale (POS) systems, customer relationship management software, the latest financial reporting software, e- and m-commerce applications and supply chain tracking. Great! But what sort of exposure are you looking at when the performance of that technology fails to meet organizational or, far worse, customer expectations?

Thanks to a recent survey conducted by Intellitrends on behalf of Compuware that sheds light on how tech performance is impacting business across industries, we have a pretty good idea. The survey looked at four broad segments: manufacturing; healthcare/pharmaceutical; financial services; and retail, which evidenced some unique vulnerabilities.

While the average short-term financial impact across product recalls and sales was low (relative to other industries assessed), two areas of long-term risk cited by respondents from the retail industry were more negatively impacted: loss of brand equity and loss of market share - two sides of the same coin.

As with financial services, information technology in retail is far closer to the end user than in the other industries. In contrast to financial services, however, retail relies in large part on a seasonal workforce and year-round employs a large number of high school and college-aged associates. Boil that down and you've got scenarios where part-time seasonal employees with minimal academic or professional experience are on the other side of the counter creating brand impressions as they wrestle with the POS system, inventory management system and more. Our marketing people repeat the mantra that "every employee is a brand ambassador," a concept that our survey participants from retail certainly seem to grasp.

Bottom line, there's negligible barrier to switching in the vast majority of retail environs. Customers can drive up the street to your competitor or, more likely, pull out their smartphones and relegate your operation to a showroom as they make transactions online right in front of your very eyes. And all indications are that once they leave the store, they're not coming back.

The Wall Street Journal reported in a story on Jan. 16 titled Stores Confront New World of Reduced Shopper Traffic that ShopperTrak data shows double-digit declines in holiday season shopper traffic the last three years running. The cumulative effect is that retailers are seeing half the foot traffic that they saw in 2010. Can retailers really afford to sour the impressions of these precious customers with marginal in-store experiences attributable to technology failures?

What's encouraging was the corollary statistic in our findings regarding the rate of tech fails. Retail was the most stable with 60 percent, indicating that the number of incidents seemed to be staying the same over the previous year. Not a tremendous observation on its own, but more than 30 percent less volatile than banking, healthcare and manufacturing, all of which reported a rate of "staying the same" of 45 percent to 47 percent. More importantly, those three were 28 percent more likely than retail to report that rate of failures were increasing.

Putting myself in the shoes of the business and IT decision makers that I've worked with across all four of these industries, here's how I'd explain that: Retail leaders recognize the unique characteristics of their workforces and the front-line technologies that they rely on and have adopted a more conservative approach to change requests and new deployments.

This mind-set makes even more sense when you look at the median time to resolution of those failures. Retail, likely as a consequence of the distributed nature of its physical facilities and aforementioned workforce characteristics, reported the longest time to resume normal operations. It takes nearly a month before things are back to normal - 29 days vs. the 16 days to full recovery as the fastest industry, financial services, reported.

So those are the issues, but how are retailers to stay in front of them? Here are the top two priorities as I see them:

Application performance must be correlated to the business processes that they support to truly understand impact and prioritize recovery efforts.
Usability and learning curve of "edge" information technology systems - the customer-facing systems and those that sales associates on the floor rely on to power their interactions with consumers - are paramount to empower your sales associates to focus on the customer experience vs. wrestling with IT systems in plain view of your customers.

But in the big picture, these are the table stakes. Success in these areas enables IT to credibly take their seat at the table and provide strategic advantage to the business:

Focus on customer experiences before, during and after the sale.
Don't just collect data, understand how to use it.
Know everything about your inventory - for your sake and your customers.
Be available - everywhere and all the time.

According to the same WSJ story, 5.9 percent of overall retail activity in the third quarter, according to the Commerce Department, went to online sales. Success in these areas will help retailers to avoid surrendering the remaining 94.1 percent.

Bharath Gowda is strategic solutions director at Compuware Technology Performance Services.