Pity the Retail IT Pioneer

Written by Evan Schuman
September 3rd, 2004

Historically, the two most difficult technology decisions involve migration. Put simply: when to get into a technology/platform and when to get out.

A senior Best Buy executive this week gave a much needed reminder that while exit/entrance issues get all the headlines, it’s the detail-ridden implementation/execution issues that usually decide success or failure.

There’s no mystery why getting into an unproven technology requires careful thought, but unless the technology is homegrown, the retail industry is rarely the first to the plate. Even Wal-Mart’s aggressive stance on RFID happened after others segments?such as the military?fairly well established that it was safe terrain.

Exiting at the right time is also well-understood, although that requires more guts. To transition off of a functional technology while it’s still working is scary. Witness the number of retail POS systems that are more than 20 years old. But the risk there is to be the last retailer left holding obsolete technology and equipment. Had you gotten out one year earlier, you could have perhaps sold a lot of it to even slower companies and purchased enough spare parts to make an orderly transition on your timetable. Once the vendor withdraws and you’re one of the last holdouts, you pretty much have to transition immediately and write off your equipment (or ditch it for pennies at eBay) and pay whatever the new vendors have the nerve to charge. The fear of being the last retail IT exec with obsolete systems is a true motivator.

But that’s pretty much well-understood. What Bob Willett, executive vice president of operations for Best Buy, discussed was the risk and potential delights to be had when decididng the exact method to transition in and deploy.

Willett’s points surrounded the Fortune 100 retailer’s announcement that was making a very solid and public commitment to RFID. No surprise there. But Willett’s candor about the road again was intriguing.

Best Buy?along with everyone else in retail?understands that RFID is going to happen and that it’s going to take years before item-level tagging happens. But what should retailers do with RFID? he asked.

What’s going to make the difference in RFID implementations is not going to be speed. Indeed, one could make the statistical argument that the first retailer to fully deploy will more than likely accomplish little beyond making the mistakes for others to avoid. That’s not to say that being the last is desirable, either.

As has been said in this column before, retail IT execs have seen more technology changes in the last two years than they had seen in the last 15 or more years.

While exciting, this wireless biometric laser-guided explosion is a very tricky landscape. There are unproven technologies?such as IBM systems that try to literally sniff and scan fruits to identify them. There are somewhat proven efforts?such as biometrics. We then have mostly proven options, such as Linux. And even strongly proven areas, such as CRM, self-checkout and RFID.

But even the “strongly proven” technologies have the potential to be goldmines or disasters, depending on the wisdom of the IT crystal ball.

Will tagging approaches change midstream? Will the changes to barcode (a key part of that very slow transition) globally require different approaches? Will privacy laws impact CRM programs, either limiting them or possibly regulating them? Will unemployment levels change the desirability of various workforce redeployment efforts?

Best Buy’s Willett said he wants his company to take their implementation slowly and to make the initial supplier demands relatively easy and unsophisticated. Is that an example of good partner relations or of an executive keeping his options open?

In 1775, Patrick Henry is reported to have told the Virginia convention: “I have but one lamp by which my feet are guided, and that is the lamp of experience. I know no way of judging of the future but by the past.”

That’s the problem with retail technology. You absolutely cannot rely heavily on past behavior to project future needs. In military and political circles, that thinking is called “gearing up to win the last battle instead of the next one.”

That is a very tall order. Many of these systems take so long to deploy?from concept to full customer use?that retail IT execs must project consumer and B2B needs four or five years out. But consumers and business execs are far too fickle for that. Even if IT execs could read the minds of every current and future prospect, that would still be only half the battle because most customers don’t truly know what they want today and they certainly have no clue what they are going to want five years in the future.

That means that IT managers today must be imaginative and figure out what people are going to want to do in the future. And then force the technologies to support that vision, rather than allowing technology features to dictate strategy.

Maybe there’s a lot to be said for slow and steady deployments. If nothing else, it makes the calendar distance between decision and deployment a little less far apart.


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