Technology has transformed the retail industry in remarkable ways. Businesses operate more efficiently, and shoppers enjoy tremendous convenience and choice thanks to the innovation enabled by technology. There is no disputing the contributions of technology to date, and it is clear broadly speaking that technology and AI will continue to transform the retail industry.
Deloitte maintains in its recently published 5th annual State of AI in the Enterprise report that AI has entered the era of value creation where there will be an emphasis on driving outcomes and new opportunities for business. To do so, IT budgets globally are forecast to increase 5.1% in 2023, according to Gartner’s recent CIO and Technology Executive Survey of 2,203 respondents in 81 countries across all major industries.
Looking specifically at retail, economic uncertainty abounds and that means technology investments are drawing increased scrutiny. It is also challenging to determine where technology’s greatest impact will be felt in retail because use cases are so numerous. That means retailers must make accurate decisions about priority areas in order to move forward with confidence that strategic choices about technology investments will deliver on expectations of value creation.
A Time for Transparency
Knowing where to allocate resources for the highest return is a challenge every retailer faces. This is especially true with technology investments because ROI calculations are more challenging than opening or remodeling stores or adding distribution capacity. The benefits derived from technology solutions are harder to validate in advance of implementation or may not materialize after implementation.
Compounding the challenge is the fact that retailers must sort through competing claims about improved performance. Meanwhile, the stakes are incredibly high for retailers to make the right choice because the consequences of decisions will shape the performance of the business for years to come.
It’s why retailers are demanding increased transparency and putting rigorous processes in place to validate solution provider claims about improved performance. However, transparency begins further upstream and involves retailers jointly developing a hypothesis with solution providers about areas where value can be realized, how it will be realized and how it will be measured.
It is key to have alignment and transparency from the beginning so there is agreement on performance objectives. Then transparency extends to the realization of performance goals. Put simply, retailers expect solution providers to not only say what they will do and do what they say but show how they will do it.
The Value of Value Engineering
Retailers want to know their investments in technology will deliver an ROI which is why there is growing demand for transparency as the foundation of traditional value engineering processes. This is especially true in a post-pandemic world filled with increased economic uncertainty. As a result, retailers are applying increased rigor to spending decisions to ensure planned investments deliver promised returns, even as they expect those returns to be realized faster than ever.
This trend was documented in Gartner’s recent CIO survey. The firm noted that there is increased pressure to accelerate time to value and drive top- and bottom-line enterprise growth from digital investments, or what Gartner calls “digital dividends.”
These dividends can be achieved in four key ways, according to Gartner, and at the top of the list was prioritizing the right digital initiatives. That may sound like common sense, but in the past it was easier said than done.
That is no longer the case thanks to value engineering processes rooted in transparency. It is an approach that helps retailers make technology investments with a higher degree of precision and certainty of outcome. This ability to de-risk spending decisions is music to the ears of the C-suite where it is understood technology investments are essential for future success in an uncertain world but greater assurances of ROI are expected.
Learn how a commitment to transparency is key to developing C-suite trust and transforming the value engineering process. Speak with a value engineering expert today.