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Solving the Technology Mystery

CIOs are stuck in a balancing act that is far from envious. Besides evaluating the potential of emerging and existing technology solutions, CIOs must also learn which applications will best support their chain's business goals.

In search of some practical solutions to these taxing issues, retail information technology (IT) executives turned out for the third annual Global POS & Store Operations Summit. The conference, sponsored by Chain Store Age and Retail Technology Quarterly, was held Sept. 13-15 in Las Vegas.

The program, dubbed "Where Technology and Operations Merge," attracted more than 200 attendees, including 120 retail IT executives. This marked a 35% jump in attendance over last year. More specifically, there was a 42% increase in retailers present at the show. The 2007 conference will be Oct. 3-5 at the Red Rock Resort, Las Vegas. It has been renamed the Technology & Operations Store Summit (TOPSS).

Loosening the Purse Strings Enticing new technologies continue to hit the marketplace, yet chains' razor-thin IT budgets keep CIOs from being swayed by the newest "gee-whiz" solution. "Retail technology spending still hovers between 1.5% and 2% [of total revenue]," Greg Buzek, president of IHL Consulting, Franklin, Tenn., said during "Should Your IT Spending Go Up?," a panel discussion that kicked off the conference.

Since retailers do not have the deep pockets found in high-budget industries such as insurance and finance, retail chains are more careful in their IT spending decisions. Yet, their caution does not dissuade their interest in implementing more innovative solutions. In fact, chains are becoming increasingly confident in their spending, thanks to the dropping cost of solutions.

However, companies still want to deploy solutions that will actually augment their business. "While CIOs are more willing to spend, they will not invest in technology unless it adds value to the company," Brian Kilcourse, president, Retail Systems Alert Group, said during the panel.

And the best way to assess the best IT additions, according to the panelists, is to conduct an enterprise-level systems assessment. This comprehensive evaluation must include solutions in corporate, at store level and in the warehouse. Further, panelists reminded retailers that this assessment should be considered the foundation necessary to integrate and optimize systems. The process establishes a framework that can help the chain deliver a superior shopping experience.

"There needs to be as little friction as possible between business processes," Kilcourse explained. "It is important to determine how to use information to deliver more value to shoppers and within the business. Technology can help businesses achieve this faster."

Yet, there are still roadblocks to achieving this enterprisewide harmony. The biggest challenge is developing the best plan to break down operating silos.

"Ten years ago, there were clearly many more silos. As long as retailers had a vision into the supply chain they were happy," reminisced Buzek. "Today, however, any business process that has an impact on merchandise must have input to product movement. The only way to achieve this is to break down the silos between business operations."

Retailers that can achieve this status are also in a stronger position to add more information-rich, customer-facing solutions, including plasma screens, self-service kiosks, even RPID (radio frequency identification). With so many options available, chains must not lose sight of the golden ring. "It is not the technology that is exciting," the third panelist, Jeff Roster, senior analyst, Gartner Group, added during the session. "What is exciting is how these solutions can be used to enable business processes and build revenue."