Follow my lead
Written by Duncan Jefferies
Consumers are a fickle bunch, and current market conditions are just as unpredictable. To satisfy rapidly changing demands and get the edge on their competitors many retailers are now investing in SOA strategies, notes Duncan Jefferies
This investment gives them the flexibility and responsiveness they need, while also cutting back on costs. The catch? SOAs need considerable time and resources to implement fully - they represent a complete restructuring of the organisation's IT infrastructure.
According to Richard Gaetano, chief operating officer at Island Pacific, which is part of IBM's SOA for innovation eco-system, retailers currently spend a lot of time customising or repurchasing software to meet specific business needs across different segments. "I've spent the better part of the last two years
trying to get them to undo that," he says. "It brings an unnecessary drag along
with it - you stay on that old product, or stay on that old version, which means you're not fully leveraging your maintenance costs."
SOAs work by reusing the assets a retailer already has to make business more efficient and cost-effective. Applications that perform business processes on a network are made available as independent services that can be accessed for use without concern about the underlying platform - in other words vendor neutral, platform agnostic services.
This means IT does not have to build or buy application code for every new business requirement. In some instances they may be able to utilise freeware
code, with web service standards such as ARTS XML used to integrate the applications.
"It gives more flexibility in terms of how they react to their need to grow, whether that be geographically, whether it be through expansion into multi-channel, or whether it be through the merger of newly acquired businesses," says Sarah Taylor, senior director for the retail industry at Oracle. "We feel that SOA is a business orientated answer to a big technical problem."
Bringing it together
SOA supports the close integration of the PoS, RFID and other infrastructure systems; for example, by enabling shoppers to verify pricing at on-the-floor scanning terminals. In the past this would require the replication of the Price Look-Up file, whereas SOA allows the scanning terminal to simply access the pricing service through a business interface. The same pricing information can also be used across e-labels on shelves, multi-channel operations, etc.
"The big push these days in multi-channel retailing is to mix the retail planes, with things like order online and collect in store, delivery to home - a blurring of channels in terms of the customer experience," says Steve Thomas, chief technology officer at BT Expedite. "Retailers tend to spend lots and lots of money hooking those systems together."
The closer links between channels that SOA fosters can help give them a single
view of the customer. It can also help facilitate collaboration with suppliers and business partners.
"Establishing a really well defined framework where you're using an enterprise service bus to harness it all - that's where the real benefits are,"
Within such an environment, retailers can operate a mix of legacy systems alongside new solutions without recourse to time-consuming integration efforts. "We'll go to a retailer and they'll take our PoS solution, but they may have their own merchandising system," says Thomas. "There's a whole heap of integration that needs to go on at that point. In the past we've had these very proprietary integration points, but with SOA we're looking to make those integration points cheaper and more cost effective, both internally within our own products, but
also when integrating to other people's systems."
New Look implemented a SOA last year in a bid to increase its flexibility and drive international growth. The retailer aims to support existing and future IT investments through the new business architecture, which was delivered by Oracle. It is also hoping to speed up business performance by re-engineering its buying and merchandising functions. Since moving to a SOA, the accuracy of its 40 million stock keeping units (SKU) records have been significantly improved.
"It helped them really raise their game in terms of the number SKUs that they're managing, and the quantity of purchase orders that they're raising every week because it's such a fast environment that they're working in," says Taylor. "The benefits that they've been seeing are really good in terms of reducing costly errors within their markdown strategy, and they're saving on expenses so margins are improving. But most importantly they're reducing lead times now. SOA is enabling retailers to be faster, which is really key."
An incremental approach to SOA adoption will reduce the risk and complexity inherent in an implementation. As Dr Vuk Trifkovic, senior analyst at Ovum, says: "Adoption is challenging from both technical and organisational aspects. Retailers would be wise to proceed gradually - perhaps by adopting a gradual approach, but with medium and long-term strategy in mind."
As a whole the sector has lagged behind others when it comes to adoption. Taylor says that only a handful of retailers are currently fully implemented. "I think that's because most retailers are completely focused on how to serve the end-customer better, how they improve the products that they're selling - which is slightly different from the compliance constraints of say, the financial services industry."
The principal barriers to SOA adoption remain linked to the organisational change that such a shift requires. "Other reasons also include a poorly thought-out roll-out road map, emphasis on technical features of SOA only, lax or non-existent IT governance processes and a poorly formulated business-case for adoption," Trifkovic adds.
He also claims the convergence between Business Process Management (BPM) and SOA has been more prominent recently. "Some of it has been driven by vendor consolidation, but much of it is influenced by genuine benefits from deploying both in tandem. Ovum clearly believes that both should be treated as separate initiatives, but ones that work far better when working in concert. However, in certain deployment scenarios BPM may just add to the complexity of the already complicated SOA roll-out."
SOA can also smooth out the bumps in a merger or acquisition. "Within your estate you can't necessarily manage four different PoS systems, three different multi-channel solutions. You're going to pick the one that works best for you and you're going to try and merge to get everybody there," says Gaetano. "SOA will actually allow you to do that because you can build the necessary framework."
The recession has forced many retailers to focus on short-term goals rather than multi-million pound enterprise-wide SOA implementations. As Thomas says: "It's probably a three to four year slow burn for a retailer to replace their tangled mess of integration with a full SOA."
Nevertheless, the benefits that New Look and other forward thinking organisations are experiencing have proved its effectiveness. As the economy improves, others will surely follow their lead.