Merged Channel Is Good, But Keep IT Units Channel-Centric

Written by Evan Schuman
September 25th, 2008

Merged channel is all the rage—as it should be—but one key analyst is arguing that retailers must merge their channels, not their IT groups.

The problem is that most IT functions in-store are behind-the-scenes. To put a finer point on it, argues Nikki Baird of Retail Systems Research, is that in-store IT is not usually creating things that are customer-facing. There are certainly exceptions (self-checkout, digital shopping assistants, kiosks, etc.), but the rule still holds.

With E-Commerce, on the other hand, just about everything is customer-facing. This matters because retailers like to prioritize IT projects based on traditional ROI spreadsheet metrics, which rarely apply to new ideas for customer interactions.

Baird argues that an IT group dedicated to the E-Commerce unit would likely have its own budget, at the discretion of the E-Commerce department head. If IT is centralized and shared across all channels—which would be the egalitarian merged channel way—it’s not going to work. It will be engrossed in a never-ending "budgetary process and committee meetings where the group will need to do a business case and prove ROI" and the E-Commerce need will end up losing to some supply chain improvement or CRM tweak.

"For customer-facing online needs, you don’t know how customers are going to respond. You have to go out and try and see how they react," Baird said. Merged IT and E-Commerce will make retailers "have a bear of a time. They won’t be able to get anything done."


One Comment | Read Merged Channel Is Good, But Keep IT Units Channel-Centric

  1. Ken Says:

    It is matter of company culture and business philosophy. Where in the organization does the corporate CIO report– to the CFO, to the COO, to the CEO? Does the company senior management team make business decisions based on strategic parameters and metrics/targets tied to those parameters/objectives or does it run based primarily on “gut instinct” (i.e. I’ve been in this business 25 years and I anecdotely know what works). Will the head of this IT group within the channel be part of the leadership team of the team running the channel?

    In general, the skill set of the IT team working on a behind-the-scenes technology vs. customer-facing technology is different, however, there are definitely business philosophies as to why you want to have a centralized IT– such as consistent architecture, purchasing power, and the like. Having separately run IT organizations only opens the company up to having a higher cost structure than what is warranted.

    But then again- if the eCommerce channel is kickin’ butt and the other channels are lagging– then they would probably be able to afford to have a separate IT…..


StorefrontBacktalk delivers the latest retail technology news & analysis. Join more than 60,000 retail IT leaders who subscribe to our free weekly email. Sign up today!

Most Recent Comments

Why Did Gonzales Hackers Like European Cards So Much Better?

I am still unclear about the core point here-- why higher value of European cards. Supply and demand, yes, makes sense. But the fact that the cards were chip and pin (EMV) should make them less valuable because that demonstrably reduces the ability to use them fraudulently. Did the author mean that the chip and pin cards could be used in a country where EMV is not implemented--the US--and this mis-match make it easier to us them since the issuing banks may not have as robust anti-fraud controls as non-EMV banks because they assumed EMV would do the fraud prevention for them Read more...
Two possible reasons that I can think of and have seen in the past - 1) Cards issued by European banks when used online cross border don't usually support AVS checks. So, when a European card is used with a billing address that's in the US, an ecom merchant wouldn't necessarily know that the shipping zip code doesn't match the billing code. 2) Also, in offline chip countries the card determines whether or not a transaction is approved, not the issuer. In my experience, European issuers haven't developed the same checks on authorization requests as US issuers. So, these cards might be more valuable because they are more likely to get approved. Read more...
A smart card slot in terminals doesn't mean there is a reader or that the reader is activated. Then, activated reader or not, the U.S. processors don't have apps certified or ready to load into those terminals to accept and process smart card transactions just yet. Don't get your card(t) before the terminal (horse). Read more...
The marketplace does speak. More fraud capacity translates to higher value for the stolen data. Because nearly 100% of all US transactions are authorized online in real time, we have less fraud regardless of whether the card is Magstripe only or chip and PIn. Hence, $10 prices for US cards vs $25 for the European counterparts. Read more...
@David True. The European cards have both an EMV chip AND a mag stripe. Europeans may generally use the chip for their transactions, but the insecure stripe remains vulnerable to skimming, whether it be from a false front on an ATM or a dishonest waiter with a handheld skimmer. If their stripe is skimmed, the track data can still be cloned and used fraudulently in the United States. If European banks only detect fraud from 9-5 GMT, that might explain why American criminals prefer them over American bank issued cards, who have fraud detection in place 24x7. Read more...

Our apologies. Due to legal and security copyright issues, we can't facilitate the printing of Premium Content. If you absolutely need a hard copy, please contact customer service.