Whitepaper: Agile Commerce: An Introduction for Retailers. Prepared by: Barry Hogan

Transcription

1 Whitepaper: Agile Commerce: An Introduction for Retailers Prepared by: Barry Hogan Deliver a successful Omni Channel Strategy by focusing on optimising people, processes and technology to service your customers across all touch points.

2 Table of Contents What is Agile Commerce?... 2 Why is Agile Commerce Important?... 4 What does Agile Commerce look like from the trenches?... 7 Conclusion About Version

3 What is Agile Commerce? Consumers are becoming more connected to the internet every day. Whether they are using their smartphones to find discount codes on twitter, using their smart TV to watch digital films that they purchased free using their supermarket reward points scheme, buying a discounted screwdriver set via a retailers daily deal , using a Subscribe & Save service to buy their consumable goods or switching to a local vegetable box delivery service purchased and managed through the web. Users are both engaging with brands and buying products in new and unexpected ways whilst spreading their purchase journey across all available touch points. Gone are the days where you could rely on a customer engaging through a single channel. The Internet of Things has already turned Phones and TVs into internet connected app stores; soon fridges, heating systems, cars, watches, radios, printers, glasses and anything else you can imagine, will become app store platforms, each fighting for the time and attention of customers and each a viable touch point to include in an Omni channel strategy. Figure 2 - Twitter distributed promo codes Retailers are constantly stuck with the dilemma: do you follow the leaders in the field and risk losing market share to those who were first to invest or do you invest in a user journey that does not deliver the ROI that was expected. Building good consumer facing digital services is hard. Plus nobody wants to be caught in a three year project to buy, build and deliver a platform or channel that may be obsolete before it goes live. So what do you build first? Where are your customers engaging? What will deliver the most ROI? Version 1 Whitepaper Page 2

4 Agile Commerce is a set of processes and principles that can be used to help a retailer answer these questions. Agile Commerce has its roots in Agile software development and Lean manufacturing, both de facto processes in their respective industries. Agile can be summed up by the principles of the Agile Manifesto. However, Agile is often most recognised as a project management tool where the focus is on developing an organisation and process to deliver value incrementally and consistently. Omni Channel Retail is focused on delivering a seamless shopping experience across all channels. Forrester has tried to differentiate Agile Commerce from Omni Channel by making them competing strategies; however Version 1 considers Agile Commerce and Omni Channel to be complimentary strategies. Whereas Omni Channel outlines the vision of what a retailer wants to build, Agile Commerce is the delivery engine that is used to build an Omni Channel retail experience. Lean Manufacturing (Lean) is focused on the creation of value and considers anything else as wasteful, thus a target for elimination. The Lean principles can be applied to both the process that builds the product and the product itself. An approach to commerce that enables businesses to optimise their people, processes and technology to server customers across all touch points. Martin Gill - Forrester - 27/11/12 While some organisations have been practicing Agile Commerce principles for some time, it was Forrester who recently coined the term to identify those retail organisations that where reaching out to their customers on all relevant touch points using a metrics driven, customer orientated approach. Agile Commerce is big with the online pure play retailers and has also become popular with more traditional retail organisations The one thing that all these organisations have in common is that they are constantly innovating whilst continuing to deliver growth and new business models for their consumers. Version 1 Whitepaper Page 3

5 Why is Agile Commerce Important? Implementing Change Businesses change slowly, but customers change quickly Sir Terry Leahy, Teradata Conference, 2011 Retail is about trying things: constantly adapting, nudging and improving parts of the store. Richard Hammond, Smart Retail, 2011 The traditional retail business model is consistently being challenged by new organisations that do not have the incumbent processes that prevent them from innovating. As a result, retailers are struggling to find their feet in a digital world whilst new models and supply chains are eroding their customer base and profit margins. The online pure plays have built their business models and processes following the same philosophies that they used to build the software that gave them their competitive advantage. As a result, they have a core philosophy to embrace change which is enabling them to continue to deliver and innovate in a constantly volatile environment. What is dangerous is not to evolve. Jeff Bezos The IT procurement, implementation and management processes used to buy, deliver and run a till system are designed to reduce risk by tightly controlling change. These processes are entirely appropriate for solutions that are very well understood and provide a utility that changes very little during the lifetime of the service; however they tend to create an environment that is opposed to change and thus start to fall down when they are used to build, deliver and run a consumer facing digital service where there is a high degree of uncertainty and an ever changing technology landscape. Figure 6 Traditional Buy, Deliver and Run model Version 1 Whitepaper Page 4

6 Learn Data Ideas Measure Build Deliver Idea I believe that an abandoned basket will deliver a 15% conversation rate Build Develop a simple abandoned basket service Deliver Push the abandoned basket to 10% of your existing customers (early adopters) Measure Measure the conversion rate Data Review the data Learn Share the data and validate idea Repeat If successful repeat the process and optimise or pivot and try something new Figure 7 Agile Commerce Model Organisations that operate in this environment need to adopt a different mind-set that enables them to constantly iterate against user feedback and metrics, continuously evolving their service to meet the needs of the consumer. The iterative process at the heart of Agile Commerce is focused around delivering ideas early and then validating their success. Eliminating waste Jim Johnson of the Standish Group identified that the biggest waste in the software industry was building features that users never used. With the fragmentation of the customer user journey it has become increasingly difficult to get a cohesive understanding of how online activity drives sales, especially when considered across channel. By using the techniques identified in Lean manufacturing, organisations can develop their digital services iteratively, delivering only those user journeys that deliver value to the customer, therefore eliminating waste and delivering a higher return on investment. Something we haven t talked about, but that is super important in our culture, is the focus on defect reduction and execution. It s one of the reasons that we have been successful for customers. That is something I had to learn about Well, by learn I mean I literally learned a bunch of techniques, like Six Sigma and Lean manufacturing and other incredibly useful approaches Jeff Bezos Harvard Business Review, 2007 The fourth rule of Lean is that any improvement must be made in accordance with the scientific method. Therefore all changes have to have a measurable impact, thus Lean thinking uses metrics as the key driver for change. Version 1 Whitepaper Page 5

7 What gets measured gets done Peter Drucker, Management by Objectives The only way to know that a change has had an impact to the value proposition is to measure it. It is only through continuously iterating, measuring and optimising can digital services evolve into mature platforms consistently delivering ROI and enabling the business to innovate and engage customers across all relevant touch points today and in the future. Version 1 Whitepaper Page 6

8 Business Design Engineering Build Operations Run Agile Commerce: An Introduction for Retailers What does Agile Commerce look like from the trenches? Team SOA architectures are recognised as the foundation for a scalable and maintainable service. Any organization that designs a system (defined broadly) will produce a design whose structure is a copy of the organization's communication structure. Conway s Law A successful SOA architecture can be achieved by breaking the traditional linear and pillared approach to software development and implementing cross functional teams that represent the services required to build an Omni channel platform. Operations Business Engineering Figure 8 - Traditional Team Structure Figure 9 Agile Team Structure Each cross functional team would be responsible for building, delivering and running their service and should be composed of all the technical and business personal required to fulfil the full Software Development Lifecycle (SDLC). If your team can t be fed on two pizzas, then cut people Jeff Bezos Teams should remain small, autonomous and decentralised to free them to innovate and implement change without the fear of derailing the larger ship. Version 1 Whitepaper Page 7

9 Process The most common agile development process used is called Scrum. Scrum breaks down the traditional V model of a waterfall project into time boxed iterations called sprints. 24 hrs 30 days Product Backlog Sprint Backlog Sprint Working increment of the software The vision for the platform is broken down into discreet user stories that represent a user s needs and are catalogued in a prioritised product backlog. The product backlog should be easily accessible and is often represented on a wall using post-it notes for each story. Good user stories are written from the customer s perspective and include the what and why. To make sure that you are tracking ROI every story should include a metric against which success can be measured: User Story: As a customer I want to be notified when regular breakfast cereals that I purchase are included in a special offer so that I can manage my budget effectively and get the best deal possible Metric: Measure click through rates for personalised s based on a customer s previous purchase history. At the beginning of each sprint the next set of prioritised stories are selected by the team and they commit to delivering those by the end of the time boxed sprint. The key to a successful agile delivery process is to keep the in process work as small as possible, therefore when adopting Scrum as the agile methodology it is important to keep the sprint as short as possible. Version 1 recommends that sprints should be no longer than one week in duration. Agile teams should use the same continuous improvement processes used to optimise their digital service on their delivery process. Thus a mature agile team should be able to measure the time between idea to delivery to validation in days, not weeks, months or years. Once an agile team reaches maturity alternative agile methodologies such as Kanban should be considered to replace Scrum, as Kanban provides greater flexibility in workflow as the need for fixed time boxes is removed. Version 1 Whitepaper Page 8

10 Delivery Focused Agile teams have a strong customer focus that is hinged on software delivery. As a result there are a number of agile mantras that can often be heard within an agile team. Release early & release often Going live is the start, not the end! Agile teams look to deliver working software to a live production environment early and often. It is not uncommon to see agile teams delivering working software daily. This can only be accomplished when the whole team is focused on keeping software production ready at all times. This focus results in an engineering environment where automation is used to continuously build and validate the platforms suitability for a production release. The target would be to have a fully autonomous delivery process that integrates, tests and deploys the changes automatically into a staging environment so that the business can make the call for when they want the software changes deployed. It is important to note that releasing to live or go live are terms that should be associated with the business deciding that they are ready to start promoting the service, rather than a technical milestone of delivery and should therefore be decoupled. Version 1 Whitepaper Page 9

11 Conclusion Agile Commerce is a philosophy that combines the best of Agile Software development and Lean Manufacturing principles to enable a retailer to build a delivery engine that puts the customer first and delivers value iteratively, based on real numbers. Version 1 advocates the adoption of Agile Commerce philosophies to enable digital services that engage customers and support entrepreneurial retailers while at the same time keeping a measured view on ROI and IT spend. Next Steps For retailers considering the Agile Commerce route, the actionable next steps would be to define an overall vision and start to build a comprehensive product backlog. If existing ecommerce websites, apps and services are deployed, Version 1 would recommend that the TOGAF Architectural Development Method (ADM) is used to establish the vision, baseline and target architectures required and to define a roadmap for incorporating the necessary changes to people, process and technology required to deliver a viable Agile Commerce environment. In line with the philosophies outlined in this whitepaper, Version 1 would recommend that the agile principles are used iterate through the TOGAF ADM and apply lean thinking to evaluate, define and implement change to the organisation. Version 1 Whitepaper Page 10

12 About Version 1 Established in 1996, Version 1 is a trusted technology partner to major domestic and international customers across all industry sectors in Ireland and the UK. Version 1 has accumulated in-depth expertise in the Retail Sector and helps leading commercial retailers to deliver solutions which achieve competitive advantage in this highly competitive and constantly shifting market. Version 1 operates enhanced partnerships with Oracle, Microsoft and Amazon and has achieved unrivalled breadth and depth of competency in all three. Our 400 strong team, based in offices in Dublin, Cork, Belfast and London, are focused on proving that IT can deliver real benefits to our customers businesses. Version 1 Whitepaper Page 11

13 Version 1 Version 1 Ireland Head Office UK Head Office Millennium House 45 Moorfields Millennium Walkway Moorgate Dublin 1, Ireland London EC2Y 9AE Version 1 Whitepaper Page