ibm retail | boost integration, roi & innovation with soa

Download IBM Retail | Boost integration, ROI & innovation with SOA

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Retailers today face the challenge of keeping up with the pace and complexity of the marketplace dynamics. Learn why a powerful technology model – service-oriented architecture (SOA) – is capturing the attention of both business and IT executives and how you can leverage SOA to improve collaboration, build new capabilities and drive innovation at every point in the value chain.


  • 1. IBM Global Business Services IBM Institute for Business Value Application Innovation Services Retail Rethinking retailing with SOA New levels of flexibility, agility and cost-efficiency
  • 2. IBM Institute for Business Value IBM Global Business Services, through the IBM Institute for Business Value, develops fact-based strategic insights for senior executives around critical public and private sector issues. This executive brief is based on an in-depth study by the Institutes research team. It is part of an ongoing commitment by IBM Global Business Services to provide analysis and viewpoints that help companies realize business value. You may contact the authors or send an e-mail to for more information.
  • 3. Rethinking retailing with SOA New levels of flexibility, agility and cost-efficiency By Vish Ganapathy, Melody Badgett and Jay DiMare Todays retail institutions obtain products from multiple sources across the globe. Getting the right quantity of these items on the right shelves to meet consumer demand involves a complex set of processes and extensive collaboration among retailers, suppliers and manufacturers. Yet in an industry that depends on innovation, many retailers wage constant and costly struggles to keep up with change. Its no wonder that a powerful technology model service-oriented architecture (SOA) is capturing the attention of both business and IT executives. Introduction apparel and grocery, are mature and slow- Retailers have always had to grapple with growing, and fighting to protect market share change in their customers needs and pref- as consumer choices expand exponentially. erences, in the product assortments offered This has created a huge shift: Retailers can from season to season, in their sourcing no longer afford to focus on the two traditional relationships and supply chain capabilities, dimensions of product and store. Competitive and in their strategies for creating differen- differentiation now requires com-panies to tiation. Today, the pace and complexity of understand who is in the store and why. the industry is such that it can be exceed- Who takes into account details such as an ingly difficult to keep up with marketplace individuals lifestyle, needs, interests, expecta- dynamics, much less capitalize on them. At tions, shopping behaviors and preferences. the same time, the penalties for those who fail Why focuses on understanding the shopping to do so can be severe. occasion and value drivers. By deepening their customer insight, retailers can develop The challenges retailers currently face a integrated, proactive strate-gies for addressing difficult new economic environment, increasing everything from cross-channel integration and competition , information transparency and private-label development, to global sourcing heightened expectations from diverse, more and import logistics, localized assortments informed customers define the retail playing and markdown optimization. field. Most major retail segments, such as 1 Rethinking retailing with SOA
  • 4. Todays retailers source products from all By making IT systems flexible and reus- corners of the globe. Typically, a number of able, SOA can help support critical business manufacturers, suppliers and distributors are capabilities aimed at boosting revenue and involved in the process creating the need to improving customer satisfaction. SOA can seamlessly integrate information and applica- also aid in increasing the accuracy and accel- tions across internal and external networks. erating the delivery of realtime information, The IT systems a company relies on to support unifying disparate systems, and exposing its business must keep pace. While this might services to link vendors, suppliers, shippers, seem like a daunting task, it doesnt have to channels and stores. Additionally, SOA permits be. Service-oriented architecture (SOA) can an organization to reduce disruption and risks help retail organizations simplify complexities to its existing IT systems and improve key and resolve incompatibilities that may inhibit performance metrics including return on data integrity, information integration and investment for IT expenditures and reaping partner collaboration. more value from IT solutions. What is SOA? In the following sections, we will describe Service-oriented architecture (SOA) involves three typical retail industry scenarios, and breaking an application down into common, how SOA can help overcome some common reusable services that can be used by other challenges. Specifically, we will look at how applications, both internal and external, in an SOAs remarkable flexibility can help retail organization independent of the applications and organizations: computing platforms on which the business and Optimizevendor-managedprograms its partners rely. Using this approach, enterprises can assemble and reassemble these open, Tightencostcontrolsinglobalsourcing standards-based services to extend and improve Improveinventoryandordervisibility. collaboration among existing applications, build new capabilities, and drive innovation at every point in the value chain. 22 IBM Global Business Services IBM Global Business Services
  • 5. Rethinking retailing with SOA New levels of flexibility, agility and cost-efficiency Optimizing vendor-managed The new book is released, the speaking inventory programs engagements are held, but the projections While vendor-managed inventory programs remain projections. Despite rave reviews for have taken hold throughout the retail world, the book, sell-outs for every speaking engage- success demands high levels of integration ment and increased sales reported by other among suppliers, vendors and their corre- competitive retailers, revenues from the promo- sponding applications. Without seamless tion never get off the ground. Customers are integration, incongruities across partners IT furious to find no inventory of the authors systems can create information backlogs, older books. Stores are overwhelmed with rain which typically translate into longer lead times, check requests. As it enters the January sales larger safety stocks, persistent demand-supply doldrums, the company is left with unsold imbalances, and drops in profitability not to stacks of the new book. mention less customer satisfaction. Lets look Why did the promotion sputter and die? Quite at this problem in the context of a specific simply, there was a failure to communicate and scenario. coordinate. Even the most careful promotional The business challenge planning, demand forecasting and program Consider the hypothetical case of a retailer execution will be for naught if a retailers that handles its in-store book business sup-pliers cant see deeply enough into the through a vendor-managed in-ventory (VMI) process to support it with the right supply program. The retailers marketing team is and replenishment strategies and execu- elated to hear that one of the most popular tions. Likewise, if a supplier cant immediately authors will soon release a new book soon. monitor store and war


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