Australian retailers recruiting generals for yesterday's war

Successful online retail requires a deep understanding of the experiences technology can deliver. So why are major Australian retailers looking for executives without the necessary clue?
Written by Stilgherrian , Contributor

Apparently, big organisations are being transformed by this cloudy mobile big-data revolution thing. We know this because every PowerPoint deck in the known universe has been banging on about it since ... well, since the last big transforming revolution thing. Fine. But what are these newly transformed organisations actually meant to look like, especially at the upper levels of management?

Most importantly, who has the digital and technological vision to shape the strategy for a successful online transformation?

CIOs will be doing pretty much what they've always done, Equinix chief information officer Brian Lillie told ZDNet in October, because they've got the holistic view of the organisation's information assets and the potential risks to them. The twist is that now, instead of managing the customisation and integration of massive bespoke IT systems, CIOs will be overseeing the process of patching together a dozen disparate and doubtless rapidly evolving cloud services in an ever-changing dance of APIs.

While Myer extends a tentative 10 percent tentacle of trade out from its reef of cash registers to splash in the shallows, global players are already surging out across the oceans of e-commerce.

Chief user experience officer (CUXO), he called it.

But with more of those IT systems being managed by external suppliers and delivered from the cloud, there's likely to be a push to downgrade the role of chief technology officer (CTO), or maybe get rid of it entirely.

Witness Wednesday's news that Westpac has made its CTO, Jeff Jacobs, redundant. The day-to-day running of technology and the delivery of the technology change agenda, as a bank spokesperson put it, will be the responsibility of a new role, "chief operating officer, technology". The strategic technology decisions will now be made by the CIO, Clive Whincup, in what it's calling the "Innovation & Strategy and Enterprise Architecture" functions.

Westpac's strategy is exactly what Lillie described. At Westpac, it's the CIO who does the vision thing. First, structure the way customers can interact with the bank through data, then design the apps and technical architecture to make it work. Deploying and running that technology is purely an operational matter.

I can't help but think, though, that this organisational structure and the job titles are peculiar to Westpac's current circumstances, and temporary.

Unlike its competitors Commonwealth and NAB, which made big investments in upgrading their core banking systems — a classic CTO responsibility if there ever was one — Westpac chose instead to focus first on customer-facing online systems and mobile apps. With that work now bedded down, Business Insider reported, Jacobs was preparing to leave anyway.

IT strategy has been Whincup's gig for years. With a savvy tech strategist as CIO, there's presumably no need to pay for a duplicate set of skills in a CTO. At least for now. The COO technology position can always be upgraded back to a CTO if and when Westpac needs to up the pace of its revolution.

Such a thing is not unknown. NAB removed its CIO role entirely, then reinstated it less than six months later.

Meanwhile, over in the retail sector, both Myer and David Jones are currently looking for new CEOs. Many of Australia's bricks-and-mortar retailers have found the internet rather challenging — Myer in particular, with its little Christmas oopsie. I'd have thought, therefore, that it would give priority to sorting out its technology strategy. But apparently not.

With a savvy tech strategist as CIO, there's presumably no need to pay for a duplicate set of skills in a CTO. At least for now.

"Myer is seeking a retailer, not necessarily a department store specialist, but someone who understands how to sell, because their main task will be to increase revenue," wrote The Australian's Blair Speedy on Wednesday.

"While online retailing gets plenty of attention, and Myer has forecast internet sales will increase from less than 1 percent to about 10 percent of sales over the next five years, the board is unlikely to be looking for evidence of expertise in that field, where even the most successful players are relative newcomers. In any case, the company is already searching for a permanent boss for its online sales channel ... and any decent retail chief will be at least on nodding terms with the internet."

I see two key problems here.

First, while Myer extends a tentative 10 percent tentacle of trade out from its reef of cash registers to splash in the shallows, global players are already surging out across the oceans of e-commerce — building market share and mind share — without the anchors of real estate or the ballast of old-school retail staff.

Maybe I'm doing Myer a disservice, but it's as if it still sees its business as running shops — with the internet just being another shop — rather than as creating enduring relationships with its customers. It's as if all the conversations about "mobility" and "omni-channel" and "as a service" have passed it by.

Second, being "on nodding terms with the internet" won't cut it. The internet is already a key part of business — even without the rest of the cloudy mobile big-data porridge stirred in. Whether it realises it or not, Myer is already engaged in a global battle in a low-margin industry, pitted against clueful and well-funded opponents — and they've got a head start.

For Myer, the difference between victory and defeat will surely come down to the user experience decisions that shape the retail experiences they can offer, and the technological decisions that determine what it'll cost to deliver those experiences. That requires a far deeper and more nuanced understanding of technology and its potential than knowing whether you like the colour of the navigation menu.

Last week, the Financial Times ran an opinion piece, "Beware techies talking gobbledegook". The headline is misleading: The article really says we should beware of executives who green-light complex IT projects that they don't understand — and blow off millions or billions of dollars as a result.

Exactly. Unlike Myer, banks like Commonwealth and Westpac have, so far, been successful online, precisely because key executives possessed technological wisdom and were bold enough to use it — no tentative tentacles for them.

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