Retail System Selection

As retailers and consumer brands evolve their capabilities to address a very changed consumer and global environment, it often becomes clear that changes are required to support future-state business needs. Outside of business process improvements and/or organizational design enhancements, these changes could entail the selection and implementation of one or more new systems.

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Whether it is to replace antiquated, ineffective legacy systems, support new ways of delivering the omnichannel customer experience, or improve overall business efficiencies, selecting the proper technology must be done using an objective, business-focused approach.

What is a retail system selection project?

A retail system selection project includes the identification, evaluation, recommendation, and selection of technology applications to meet desired business needs. Typically, Parker Avery’s selection projects focus on the selection of software, but in a broader sense, system selection could also include hardware, middleware, and other ancillary technologies.

There are several decision factors to be considered when selecting a new system:

  • Business requirements
  • Technology platform, including data access
  • Business case/return on investment (ROI)
  • Vendor culture, partnership, support, and future roadmap

It is important to employ a proven process that includes a healthy balance for these key decision factors, with no bias towards any solution. An objective, guided approach ensures all participants and stakeholders fully understand the final recommendation and can explain to their peers and management how an objective decision was made.

Performing a retail system selection project in a structured manner ensures there are no questions after the fact and that there is clear documentation of why a particular vendor or system was selected. It is important to note that the tools identified in this article provide the foundation to make an objective decision, but the system ultimately selected is based on the client’s perspectives and grading.

What are the key activities in a system selection project?

There are several key activities necessary to successfully pick the right system that will support business requirements as well as fit within a company’s technology roadmap. The duration of each activity and the need for associate participation will vary based on the company’s needs and the overall project functional and technical scope.

Outlined below are the steps The Parker Avery Group takes for our system selection projects:

  • Organize project and understand current state

Finalize the project plan, scope, resources, and governance structure (e.g., steering committee, selection committee); identify resources and conduct stakeholder interviews; confirm emerging business strategies; define the process and criteria to decide among the available system alternatives; when appropriate, conduct internal demos with leading providers to determine the shortlist candidates

  • Establish change program

Perform a stakeholder readiness analysis; build the necessary change management strategy and communication plan for both the system selection phase and solution implementation phase

  • Design high-level processes

Define high-level processes based on knowledge of the client’s current state, desired future state capabilities, and Parker Avery perspectives on industry-leading practices

  • Develop business and technical requirements

Synthesize current state, industry-leading practices, and defined future processes to develop overall business capability requirements; capture key technical requirements

  • Prep for selection activities

Develop RFI/RFP (request for information or request for proposal) and send to prospective vendors; create demo scripts and gather client data examples to share with vendors; create a quantitative scoring system to evaluate systems for business fit; conduct vendor Q&A prep sessions

  • Evaluate and select software

Conduct solution demonstrations; conduct vendor reference calls; identify the recommended software solution and review findings with stakeholders

  • Define business case and create implementation roadmap

Generate benefit components and investment elements to understand return on investment (ROI); finalize implementation roadmap that delivers desired business benefits and is paced by resource capacity and the organization’s ability to absorb change

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What key considerations are involved in selecting a new system?

In addition to following an objective approach as outlined above, there are several tenets to successfully selecting technology that will most optimally suit a company’s business needs.

  • Realistic timelines based on resources and competing priorities
  • Adequate change management and encouraging the team to have an open mind
  • Company leadership buy-in on the need for a new system as well as the benefits offered by improved capabilities (both quantitative and qualitative)
  • Fair instructions provided to all vendors and time for vendor Q&A prior to demonstrations
  • A single point of contact for questions and other information
  • Objectivity during the RFI/RFP and demonstration evaluation activities

We mentioned conducting internal high-level demos and discussions early in the process to identify candidates for the short list. Either internally or with the help of consultants like Parker Avery, there is often knowledge about many of the major technology vendors in a given functional area. To validate this knowledge and any initial assumptions, we recommend conducting preliminary meetings on how a given solution will solve a company’s unique and/or complex scenarios or requirements so that neither the client nor the vendor wastes time in an effort that will be fruitless.

It is important to remember that a system that scores well in the application functionality category (i.e., alignment with business requirements) may not be the system selected. For example, in several Parker Avery system selection projects, we have observed vendors scoring well on functional requirements, but the client teams ultimately deciding that the culture of the companies did not align. Many times we witness the vendor team not fully understanding the client’s business needs and not taking advantage of asking questions in advance of the system demonstrations (despite ample opportunities to do so). This leads to the system scoring lower on overall satisfaction with the ongoing support of the client’s business needs.

As an important part of the prep activities, we recommend conducting vendor prep calls in advance of the demos to be sure vendor candidates understand the demonstration script(s), scorecard, client data, time expectations, etc. These prep sessions are focused on ensuring other relevant prep work is communicated to all vendors and that they fully understand the client’s business needs, as well as how the demos will be orchestrated.

In some cases, an important decision factor is the vendor’s willingness to configure the system for the client’s unique needs. However, this single-tenant approach comes with incremental costs—and it is not offered by all vendors. Indeed, multi-tenant SaaS solutions are becoming more prevalent. With this common-functionality approach, it is important to understand upfront that the organization must adopt the solution’s embedded processes.

Further, the four high-level decision factors are typically prioritized and weighted by the business. This helps ensure the most important factors are appropriately part of the final decision.

What common mistakes or challenges occur when performing a system selection?

  • Insufficient time allocated

It is important to allocate sufficient time to each of the system selection steps outlined above and not short-change – or worse – skip any of these activities.  The amount of time spent on each activity will vary depending on the scope of the functional areas included in the initiative.  Ample time is also required for internal review and approval of the future state design and requirements.

  • Inconsistent business team participation

It is critical that members of the business team are dedicated to the duration of the system selection project, particularly during the process design, requirements definition, and demonstration phases. We coach our clients to make sure the impacted business stakeholders are actively involved in these steps to ensure the system that is ultimately selected meets their desired future state.

  • Team member bias

We often run into team member bias due to preconceived ideas of what capabilities or solutions can appropriately fulfill the business needs. We also find there can be subjective perspectives based on:

  • Poor past experiences with solutions, often caused by improper implementations or a lack of well-defined business needs
  • Unfamiliarity with recent technology innovations, whether it is new players with a fresh look at current business trends or a revamping of “older” solutions by tried-and-true providers to meet shifting business demands
  • “Word on the street” rumors and innuendoes for either of the above two reasons
  • Prior exposure to vendors which does not reflect the current solution landscape
  • The perceived cost of the solution prior to any pricing negotiations
  • Partnerships already established within a corporate ecosystem

To combat this bias, we urge a standard, objective approach, as outlined earlier. Following such an approach will drive the system selection based on improving capabilities to support a business strategy.

  • Requirements driven by IT

During the requirements phase, technical requirements are documented to ensure successful alignment of the new system with future desired IT architecture as well as integration with existing systems.  However, the system must absolutely support the business requirements as a key driver of the decision process.

  • Lack of clarity on business requirements

While the requirements definition, review, and approval phase are indeed tedious and time-consuming, it is critical to have the business requirements clearly spelled out and agreed upon by business stakeholders so when the system candidates are evaluated, there is no misunderstanding from the business on what they want. Further, business requirements are not equally critical; therefore, we recommend prioritization of requirements to more closely assess the alignment of solution options with future business capabilities.

  • Replicating the existing environment

During the design phases, some companies are challenged with changing existing ways of operating.  The “that’s the way we’ve always done it” mentality must be broken to move the business towards desired future-state capabilities.  Changing this mindset early in the system selection process not only drives better business requirements but also greatly helps with buy-in and change management efforts.  Businesses that are stuck in their existing (often highly manual and inefficient) processes end up defining requirements and selecting a system that simply replicates what is done currently. Or worse, they spend millions on a new system that they don’t trust and end up creating workarounds that revert the business back to antiquated ways of operating.

To avoid this scenario and drive decisions that result selecting in the best system to support desired future-state capabilities, we recommend employing outside experts with deep knowledge of industry-leading practices, as well as a solid understanding of how to incorporate and sustain new ways of operating into a retailer’s business. Industry-focused consulting firms like The Parker Avery Group possess both leading practice knowledge and strong change management expertise to help guide companies to embrace the “art of the possible.”

  • Varying system functional components

Not all vendors define their solutions in the same way. During the system selection process, it is important to confirm what specifically is included in each module, what would be considered additional modules, and what is claimed to be out of scope.  This ties into the next challenge of different pricing structures.

  • Different pricing structures

Technology vendors often structure their pricing models differently, which creates challenges in deriving an apples-to-apples comparison for the business case and ROI. Even prior to vendor negotiations, it is important to ask very specific questions about what is included and excluded in the varying pricing structures.

What resources should be involved in a retail system selection project?

We firmly believe that retail system selection projects should be driven by the business users to drive business strategies and outcomes. Indeed, there are exceptions such as selection projects focused on middleware as well as purely technical solutions that promote processing efficiencies or lower IT support costs. However, the system selection projects in which Parker Avery is typically involved are focused on retail and consumer goods business areas.

All such projects require a project sponsor from the business, and companies must commit ample time from resources on both the business and IT teams to participate in interviews, workshops, software reviews, demonstrations, and other project activities.

We also highly recommend employing outside experts with strong experience in retail system selection activities as well as deep knowledge of industry-leading practices and the vendor solutions available. Bringing in consultants with deep retail and consumer goods industry experience and proven methodologies will help avoid reinventing the wheel and/or relying on varying experiences and personal opinions of available systems and application vendors. Further, an objective consultant can manage the overall project, diffuse company politics, set realistic expectations, as well as act as a buffer and liaison between the business resources and the vendors involved in the process.

Parker Avery’s experts perform system selection projects across all retail and consumer goods functional domains: core merchandising, forecasting, planning, allocation, replenishment, order management, product lifecycle management (PLM), supply chain, and more. Our consulting team has deep subject matter expertise in these key retail business areas and strong, current knowledge of the retail application landscape. We not only maintain clear objectivity among the system alternatives but can typically streamline the project timeframe by customizing our proven system selection tools and templates to our client’s environment and needs.

We welcome you to start a conversation about how The Parker Avery Group can help your company successfully select and implement new solutions to drive your strategic business outcomes.

Authors

Dave Birdsall, Senior Manager

Dave Birdsall
Senior Manager

Heidi Csencsits, Senior Manager

Heidi Csencsits
Senior Manager

The Parker Avery Group is a leading retail and consumer goods consulting firm that specializes in transforming organizations and optimizing operational execution through the development of competitive strategies, business process design, deep analytics expertise, change management leadership, and implementation of solutions that enable key capabilities.

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