63% of retailers do not provide completely connected user experiences, new MuleSoft study reveals

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This article is brought to you by Retail Technology Review: 63% of retailers do not provide completely connected user experiences, new MuleSoft study reveals.

MuleSoft, the integration and API platform solutions provider, has reported that 63% of retail organisations struggle to provide completely connected user experiences across all channels.

MuleSoft’s 2022 Connectivity Benchmark Report shows that this comes at a time when almost three-quarters (72%) of retailers’ customer interactions are now digital. Yet, as digitalisation accelerates, organisations could lose on average $6.4 million ($6,403,846) in revenue if they fail to successfully complete digital transformation initiatives.

To grow in today's competitive environment, retailers need to deliver connected digital experiences — for both customers and employees.

“Retailer’s efforts to create seamless connected experiences continue to be impeded by data being stored across multiple siloed systems,” said Emely Patra, Regional Vice President, EMEA Customer Success Strategy and Architecture, MuleSoft. “The research highlights the need for retailers to unlock and harness their data more effectively. By integrating a growing number of apps and data sources, retailers can automate their business, create seamless digital experiences that consumers expect, and ultimately drive growth.”

Based on a global survey of 1,050 CIOs and IT decision makers (of which 143 came from the retail sector), the 2022 Connectivity Benchmark Report highlights the challenges and opportunities for organisations as they look to unlock their data to create and automate seamless experiences:

Customers expect seamless user experiences

Applications lie at the centre of digital transformation and efforts to enhance the user experience. On average, retailers are using 1,001 individual applications (compared to 896 a year ago). Yet, only 27% of these applications are integrated on average, indicating there is still an enormous opportunity to improve connected user experiences in the retail sector. MuleSoft’s report indicates that:

  • Creating connected user experiences has become increasingly difficult: Just under half (47%) of retailers said they find it difficult to integrate user experiences. This is up from 40% a year ago, showing there is increasing complexity for retailers to meet their customers' digital needs.
  • Overcoming security and governance challenges is a hurdle: Security and governance (56%) was cited as the biggest challenge to integrating user experiences, ahead of outdated IT infrastructure (46%) and an inability to keep up with ever-changing processes, tools, and systems (42%).
  • Integrating user experience delivers business benefits: Of the retail organisations that have integrated user experiences, just under half said it improved return on investment (47%). Other benefits realised included better visibility into operations (44%), increased customer engagement (48%) and faster project delivery (44%).

Integration challenges hinder digital experiences and initiatives

Data silos remain a significant barrier to creating integrated user experiences, with the number of retailers citing silos as a challenge (92%). The report shows:

  • Integration headaches: The biggest challenges to digital transformation are  risk management, compliance and/or legal implications (42%), lack of skill sets and experience within existing IT team (38%) and hiring and retaining the IT team (37%). 86% of respondents said integration challenges continue to slow digital transformation initiatives.
  • Too much is being spent on custom integration: In their efforts to integrate apps and data from across the enterprise, retail organisations appear to be focusing more resources in the wrong areas, such as custom integration. As a result, they are increasing their technical debt. On average, organisations spent $3.46 million* on custom integration labour in the past 12 months, a 2% increase from last year ($3.4 million). 
  • IT budgets are up, but so is demand: 90% of retailers said IT budgets have increased year-on-year (compared to 83% last year). At the same time, the number of projects IT is asked to deliver increased by 41% on average, a big jump from 31% a year ago. Despite the extra budget, IT is finding it difficult to meet the demands of the business. On average, more than half (51%) of projects weren’t delivered on time over the past 12 months.

Retailers turn to APIs to drive digital transformation and revenue

Despite these integration challenges, the vast majority (96%) of retailers use APIs. By using APIs to connect data and applications, retailers can digitally transform in a more sustainable manner and accelerate business success. The report indicates:

  • A top down integration and API strategy: Most (94%) retailers now have a clear integration and API strategy. Just under a quarter (22%) said leaders now demand that all projects abide by a company-wide API integration strategy, up from just 13% a year ago.
  • Reuse is on the rise: Retailers are increasingly creating and using reusable IT assets and APIs to create new experiences and accelerate projects, rather than building from scratch each time. On average, 46% of retailers’ internal software assets and components are available for developers to reuse — an increase from 42% a year ago. Nearly half (48%) of organisations said IT is actively reusing these components, versus 44% in the 2021 report.
  • Empowerment of business users: Enabling non-technical users to harness low-code tools to drive their own automation and digital transformation projects can take huge pressure off IT teams. 60% of retailers now have a ‘very mature’ or ‘mature’ strategy to empower these users to integrate apps and data sources powered by APIs (compared to 36% last year).
  • APIs drive revenue: 50% of retailers said they have experienced revenue growth as a direct result of leveraging APIs (compared to 34% a year ago). 

“Digital agility is essential to successful transformation, allowing organisations to drive innovation at scale, deliver new initiatives faster, and create the experiences that customers want,” said Kurt Anderson, managing director and API transformation leader, Deloitte Consulting LLP. “A modern strategy that combines integration, API management, and automation is central to achieving digital agility. It enables organisations to easily connect and integrate their data, applications, and devices to create new digital capabilities and drive transformation projects.”

The 2022 Connectivity Benchmark Report is created in collaboration with Deloitte Digital, who together with Mulesoft, can help IT organisations across industries meet the continuously evolving demand to connect data and create transformation opportunities for the business.

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