One in five retail businesses are very resistant to technology transformation

Despite customer experience (CX) being cited as a top priority for more than half (51%) of retail businesses, new research from Rackspace Technology reveals that a lack of understanding among business stakeholders is contributing to a culture of fear and resistance to new technology adoption aimed at improving CX.

These are the findings from ‘How applications impact customer experience’, a new report from Rackspace Technology, an end-to-end multicloud technology solutions company. It found that the fear of negatively impacting CX was the most common barrier to technology change cited by IT leaders in retail, with one in six (17%) reporting their organisation is not receptive to new ways of using technology to improve CX.

One contributing factor is that more than one quarter (27%) of retail IT leaders do not believe their non-tech C-suite executives fully understand the bottom-line benefits of applications, with a fifth (19%) reporting their organisation is very or extremely resistant to change regarding technology. Furthermore, even when these barriers to progress are overcome and changes to improve CX are agreed, half (48%) said it can take months or years to reach a consensus before they are implemented.

App modernisation is worth fighting for

Yet, despite the significant challenges that IT leaders must overcome to modernise their applications to improve their CX, the research from Rackspace Technology demonstrated that many still believe it’s worth the investment. Almost three quarters (71%) of retail IT leaders said that applications have a high impact on improving CX, and more than half (57%) would invest in purchasing or replacing an app for this reason.

This is perhaps unsurprising given that retail leaders report that, as a result of delaying modernising applications, more than half of businesses (54%) failed to meet new regulations, two in five (43%) reported reduced levels of customer service, and a quarter (25%) experienced a cost to the ultimate bottom-line due.

Further to these consequences, retail organisations believe business revenue (67%) and employee turnover (50%) will be impacted if they do not modernise legacy applications in the next two to three years.

Working with technology partners to overcome the fears of app modernisation

While the research found that over four in five (82%) of retail businesses are currently modernising less than 50% of their applications, the sector’s IT leaders are optimistic that perspectives are shifting. A large majority (90%) said the appreciation of the value of applications to their business or industry had grown in the past five years.

To help overcome the fear and complexity around application modernisation, two in five (42%) retail businesses are turning to external partners for support.

Mahesh Desai, Chief Relationship Officer, EMEA at Rackspace Technology, comments: “CX really is the holy grail for companies, particularly with the rapid adoption of digital services over the past 12 months. Investing in and improving CX with new technology is now the bare minimum that organisations need to do to keep up with the competition.

“That said, it’s understandable that businesses are cautious. With so much at stake and with so many companies having been burnt before, it’s easy to follow the mantra ‘if it ain’t broke, don’t fix it’. But CX is the customer battleground. So, IT leaders need the support of business stakeholders to make the necessary improvements through investments in new applications and technologies.

“Working with a partner that has a proven track record is a great way for businesses that are concerned about what could go wrong to embark upon this change with confidence and positively achieve the customer experience they aspire to.”

Survey methodology

Conducted by Coleman Parkers Research between March and May 2021, the survey is based on the responses of 1,420 IT decision-makers across manufacturing, digital native/technology, financial services, retail, government/public sector, and healthcare sectors in the Americas, Europe, Asia and the Middle East. The survey questions covered customer experiences, application modernisation and future plans.

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