Green Grass and Brittle Bones – Preparing for Omni-Channel
March 15, 2017 7:52 am
Paul Della Maggiora
The concept of “Omni-channel” promises ubiquitous engagement with your consumers regardless of how they buy, how they pay, or where they shop. Unfortunately, adding an app or introducing a new service seems innocuous until you discover that the tip of the iceberg hides quite a bit of complexity and cost when trying to interact with all of your aging systems that drive your business today.
The question I get most often when working with our customers is: How can I get to Omni-channel and beyond in a cost effective way, without having to fork lift and pay ridiculous professional services and consulting fees? The answer is not as complex, nor expensive, as it first seems.
The secret lies in breaking the big problem into smaller, manageable parts. We've learned this through years of partnering with some of the most influential retailers worldwide who crossed the chasm early and worked with us to develop a repeatable model.
The requirement, for example, might be ”I want to have my own app that consumers can use to:"
- Manage their shopping list
- Sign up and manage their loyalty with us
- Receive targeted and relevant offers
- Shop, scan, and checkout from their phone
- Return things and refer to past purchases
When you start looking into all of the existing systems that this app has to interact with, especially when the systems are older and from different vendors, you realize that the various required integrations and date exchange are quite brittle. Something as simple sounding like 'click and collect' actually requires surprisingly complex interactions across your entire supply chain to be able to ensure a shirt is in the store and ready to be picked up at 4:00.
If you are a chief marketing officer, for example, you may notice your IT group seems to take forever to get back to you with what you consider a small change. When they return to you with a prohibitively expensive quote, it's probably because of those brittle bones. The work probably requires touching a number of existing older systems that amps up the complexity considerably.
With software, complexity equals risk: risk for new bugs, risk for outages, risk for unnatural ways your consumers interact with your brand. That’s why every change seems to end up with an astronomical price tag and unreasonably lengthy timeline, and your frustration mounts as you witness online and smaller retailers gingerly poking at your customer base.
Fortunately, we've put together some guidelines that will help you end this cycle once and for all, and it's not too dissimilar from most twelve-step programs. The first step? Admit you have an unmanageable problem.
You can fix this challenge, and frankly, must if you plan to remain competitive. The benefits are realized almost immediately as you begin to redirect your annual spend from keeping brittle systems alive, to adding new, innovative customer engagements in record time. You can finally start 'failing fast' and rolling out whole new ways to engage that blur the experience amongst online, in app, or in store.
Borrowing shamelessly from the OSI seven-layer networking model, we've been showing retailers how to modernize their systems once and for all, and enable any new form of commerce by redirecting how they traditionally spend their IT budgets. The benefits can easily be seen when you begin seeing clear paths to stronger margins and higher revenues.
I call it the 'seven layer omni-commerce model'. The magic happens by isolating systems interactions into discrete layers. Example: passing a transaction or query from layer 7 (application layer), down to layer 1 (data layer), and then responding back up the stack from layer 1 through layer 7. For any given layer, you only have to worry about interactions with the layer above and below.
Here's the 7 layer omnicommerce-channel model:
- Data: consolidation and exposition of all data sources
- Inventory: consolidation and exposition of Inventory, purchasing, order management, fulfillment, and accounting sources
- Transaction: transactions and payments
- Infrastructure: consolidation for Omni-channel infrastructure, management, merchandising, fulfillment
- Identity: consolidation and introduction of ubiquitous customer identity, behaviors, activities, offers, and promotions
- Presentation: Exposition and mediation of omni-channel services, security, recognition, and discovery for touch point consumption
- Application: Introduction of touch points, customer-facing applications, and insight
Let's look at how this model obliterates the current laborious cycle of trying to innovate on older systems. As CMO at a grocery and convenience store chain, you ask your IT partners to give you an app that offers customers half off a hot dog when paying for gas in-app. Today, that app has to touch so many of your existing systems directly: price, customer identity, loyalty offer, payment, interaction at the pump and inside at the register and grill. You probably have dozens of systems this app would interact with, and it might truly take millions of dollars to build it with your current systems due to the complex web of interactions and dependencies.
While your first reaction may be 'highway robbery!', this is probably the true cost when solving your request with traditional thinking and traditional systems. All of your individual systems were introduced at different times, generally were centered on your in-store points of sale, and probably pre-dated the iPhone. It's like trying to get to the moon with a rowboat, oars, a lantern, and fishing rod.
The beauty of this seven layer model is that the app (layer 7 - application), only needs to know how to talk to the next layer down (layer 6 - presentation), and thus is impervious to however each layer below talks to the other layers. Whether you want an app, a new point of sale, click and collect, or whatever else you can dream up for your customers, this approach ensures that whatever the interaction, your customers and associates have access to all of the same data and services regardless.
NCR has introduced a simple tool to quickly assess your existing setup and determine just how brittle its bones may be. We call it 'How Green is Your Grass' – it provides a benchmarking tool that asks a short list of questions, after which you'll receive a free personalized report on which layers are healthy and ready to go, and which may present challenges and added cost if left in current state.
Check it out, and let us know if you were surprised at how much closer to the omni-commerce reality you were than you thought.
We'll talk more about the layers and how to move cost effectively to this model in subsequent posts. Give us feedback on whether you found this post helpful.