Back office IT supports retail success

Retail technologists like to refer to “keeping the lights on” to maintain business as usual. But IT systems also stretch far into the back office, underpinning those systems every business relies on to trade

Retailers are typically focused on the customer and providing them with the optimal ‘brand’ experience in a multichannel environment. But now, to execute on that, this year’s Retail Technology ‘Back Office’ feature (page 13) has found retailers are looking to create agile IT systems behind the scenes too, to meet rapidly evolving consumer expectations.

Peter Chadha, founder and chief executive of independent strategic technology advisers DrPete Inc., said: “Next, for instance, are advertising style on the web, click, order and delivery the next day through clever logistics. This can only be effectively delivered through clever integrated solutions from procurement and an e-commerce site linked to merchandising systems, supply chain management, automated warehousing, JIT [just-in-time] logistics, finance, brand awareness and marketing. It is actually less about the technology concept, but more about allowing best-of-breed technologies to coexist and integrate seamlessly, through dynamic middleware adapters.”

Back office is retail backbone

Anwen Robinson, UK managing director of UNIT4 Business Software, took up the case. “Many may disregard back-office solutions as being the domain of the finance and IT teams alone,” she said. “In our experience back-office solutions have evolved significantly in recent times and now offer seamless integration with the front end. Robinson even went so far as to suggest that retail back-office systems and the information they generate are increasingly seen as the heartbeat of a successful retail outlet or chain.

“Typically front and back-office retail solutions were standalone with little integration between them,” she added. “However times are changing and, when back and front office are fully integrated, all stakeholders within a retail business have access to a single version of finance, operational and wider business management information, commonly referred to as ‘one version of the truth’. Data from all parts of the business, including sales trading data from EPoS [electronic point-of-sale] systems, can be automatically consolidated quickly, reliably and comprehensively into a unified view.” 

While traditionally horizontal business systems like human resources and finance may have been confined to the back office in the past, most retail IT experts agreed that the information they hold can increasingly help to optimise customer facing and front-office operations. “Not only can retailers see at a glance trading successes, performance against target, effect on P&L [profit and loss], but also a unified system enables retailers to drill into data for more detail, even down to SKU [stock-keeping unit] and transaction level if required,” argued Robinson. “They can also help to identify, investigate and resolve any issues, discrepancies or shortfalls more quickly and accurately, which can only be of benefit at store and/or organisational levels.”

Managing enterprise performance

Dave Francis, director of enterprise performance management (EPM) systems vendor Axiom UK, agreed that as the UK continues to recover from economic uncertainty over the next twelve months, many retailers will face a range of business challenges related to a glaring lack of real insight into their customer buying behaviours. As well as consolidating and integration existing information systems, Francis advocated the use of new, efficient ways to plan and monitor performance in response to “fluctuating levels of consumer confidence and loyalty, increasing supplier costs and greater pressures to deliver multichannel buying experiences”.

He added: “EPM streamlines revenue planning by modelling at shopfloor, product and SKU levels, controlling sales planning and inventory management. Retailers adopting this technology will more easily meet projected bottom-line margins by including feedback from their store and product-line managers in rolling forecasts, gaining a true understanding of what’s really creating or eroding their profits in demanding markets.”

As the examples in the rest of this feature demonstrate, the consolidation or integration of existing traditional back-office IT systems and new ones, like EPM, is increasingly helping retailers to manage all areas of performance, including strategy development, budgeting and forecasting, reporting, and profitability measurement more effectively.

This story first ran as the introduction to the 'Back Office' feature of the November/December 2013 issue of Retail Technology magazine. Click here to subscribe to the print edition or register for the free e-version.