Retailer revamps IT operating model to compete in the digital age

Client Results Story

Opportunity

A specialty retailer, a market leader with hundreds of brick-and-mortar stores, was looking for growth opportunities. The company's historic growth model—opening new storefronts—had become obsolete. Given that consumers are now seeking an omnichannel experience, the company needed to evolve it's go-to-market approach to "the digital age," and doing so required developing its technology-enabled capabilities. Developing these technology capabilities required a fundamental shift in its existing IT operating model.

To successfully transform their IT to become a strategic asset and partner to the business, the retailer needed to address its:

  • Complex, inflexible and costly legacy systems and custom-developed applications that was constraining agility and speed to market
  • Limited long-term view of strategic and architecture strategy
  • Siloed IT functions
  • Historical mindset of under-investment in foundational technologies
  • Lack of alignment and trust with business

Next Approach

Approach

Bain worked closely with RetailCo to help undergo an overall IT transformation that will help them meet the strategic goals. We:

  • Conducted deep IT and technology diagnostic to identify barriers to achieving full potential
  • Defined and implemented governance and prioritization processes to align IT investments and capacity with business objectives
  • Redesigned IT operating model based on plan/build/run to increase role clarity and speed to market
  • Facilitated design, pilot and implementation of ominichannel initiatives including:
    • In store Wi-Fi for customers and associates
    • Rollout of mobile phones to all store associates for product lookup, availability and mobile POS
  • Defined sourcing strategy, capabilities and organization

Next Recommendations

Recommendations

Bain recommended three major transformation initiatives to enable the digital capabilities of RetailCo:

  • Create an office of the CIO to manage business aspects of IT and the customer relationship, including IT sourcing, IT finance, portfolio management and operational excellence
    • Includes a portfolio management capability and governance process to align and prioritize demand and supply of IT services
  • Redesign the IT organization around an operating model that:
    • More effectively meets the needs of internal customers and aligns function and staff
    • Reduces fragmentation in current infrastructure and operations functions
    • Identifies key decisions and interactions, and defines decision roles and responsibilities
  • Build strategic sourcing capabilities around a clearly defined strategy
    • Support execution through the segmentation and rationalization of vendors
    • Link vendor contracts to deliverables and service levels

Given the complexity and criticality of the transformation, which involved highly interdependent workstreams and required cross-functional participation, Bain worked with RetailCo to establish a transformation office to:

  • Identify leadership and sponsorship for the change process
  • Communicate the transformation plan and progress
  • Assess the plan’s impact on the business
  • Embed the culture and behavior changes necessary to success

Next Results

Results

RetailCo now has the capabilities to be a more effective and efficient digital player, with an IT function positioned to fulfill the business needs this year and beyond:

Strategy enablement:

  • Reduced IT resource gap to deliver critical projects
  • Cut store infrastructure rollout plan in half, reducing costs by $40-70M
  • Developed and communicated new labor sourcing strategy

Solution redesign:

  • Identified and substantially reduced IT risks in the new year's portfolio
  • Identified a better in-store networks solution 

IT org effectiveness:

  • Installed IT org and governance models
  • Identify and capitalize on IT synergies
  • Rationalized portfolio of more than 100 vendors for IT labor and built IT sourcing organization and capabilities from the ground-up—including a sourcing playbook that covers how they source, procure and manage vendors
  • Increased collaboration and internal trust

Cost and complexity containment:

  • Saved more than $100M in hardware procurement
  • Consolidated 80% of labor hours from 10 to three vendors
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