Legacy systems in retail: How to overcome, compete and thrive

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This article is brought to you by Retail Technology Review: Legacy systems in retail: How to overcome, compete and thrive.

It is high time retailers modernise their software to optimise their operations and offer end-to-end Customer Experience, writes Lindsay Lucas, CEO, Software Solved.

Customer preferences are continually changing, so retailers need to modernise their applications portfolio to operate at the pace of business and market changes.

For retailers, legacy systems can restrict the growth of the business. To combat this, organisations can reduce IT complexity, increase efficiency, establish a data-driven culture, and improve flexibility across business processes by updating their old systems. 

Modernisation is crucial for end-to-end Customer Experience (CX)

Retailers need to modernise their software to optimise their operations and offer end-to-end CX. Retailers, especially those who began as brick-and-mortar shops, increasingly understand that their current technology environment no longer adequately supports their desired business vision. Despite the best strategic initiatives and promises of CX, many retailers are technologically stuck trying to add modern, configurable, and mobile tools on top of outdated and inflexible software. 

Retailers that continue to maintain very outdated and cumbersome legacy systems tend to be more risk-averse and typically under-invest in new technologies relative to their peers in other industries.  The “do nothing” alternative is often the path of least resistance. 

Advanced data analytics enables agile decision-making 

If the pandemic accelerated retail digital innovation and transformation, then continued fluctuating demand, driven by rapidly escalating costs, is now pushing retailers to make savings and drive efficiencies. But, in the rush to take on the latest technologies to handle increased digitalisation, some outdated systems that slow processes and productivity down could easily get overlooked. 

The impact of overstocking to mitigate COVID-19 supply chain shortages, for example, required effective working capital and inventory management that tested supply chain accuracy and visibility levels. However, retailers were using consumer data in their forecasting and planning while still relying on Excel spreadsheets and macros. Identifying the most valuable or cost-sensitive customers to fine-tune pricing and promotions requires advanced data analytics for more agile decision-making. 

So, while the ability to adapt digitally separated the pandemic’s retail winners from its losers, it will be those retailers who are free of legacy system constraints that will likely weather the current economic storms better. Legacy modernisation represents an opportunity to deliver benefits that can actually enable the business to do more with less. If the business is relying on outdated technology to run critical day-to-day operations, then it will pay to harness the value of legacy modernisation. 

Go back to basics

Going back to basics to understand the impact of legacy systems now can pay huge dividends. If a retailer is using systems that run key operational processes contingent on manual customisation and management, then modernising these systems can remove any risky points of failure that could end up costing the business money. Rehosting, re-platforming, rearchitecting or replacing such systems to realise cost savings can also remove barriers to innovation and free up IT budgets to reinvest elsewhere. 

If existing IT systems aren’t able to integrate with, or deliver value against, new digital solutions, upgrading them can ensure the best business fit and value, as well as agility and security. This often manifests itself through difficulty in accessing data on which to base key strategic decisions, such as new store openings and locations, for example. Legacy modernisation is also essential from an IT perspective when it comes to cost, complexity and risk. Considering the average organisation spends 70-80% of its IT budget on just ‘keeping the lights on’, it will pay for businesses to revisit systems that haven’t been touched, modified or overhauled in years. 

Third-party support

Third-party support from custom data and software specialist is key to a successful legacy system transformation. Third-party specialists can help the retail sector to understand if they need to rearchitect, rebuild or replace existing systems with newer systems, that closely match business needs and improve CX. 

The involvement of a third-party with proven expertise in evaluating and then implementing the right solutions for the retail sector can solve the legacy systems challenge and help build a future proofed digital ecosystem. Third-party providers can help businesses to choose the approach that will have the highest effect and value to both customers and retailers alike by mapping out options in terms of their effect on technology, architecture, functionality, cost and risk.

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