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FashInvest: The Lack of Innovation in B2B Technology Is Hurting Business

By: Ronen Lazar

The push for new technology adoption among retailers has been a mixed bag.

On one hand, new consumer-facing technology has been readily embraced by retailers, with many companies boasting innovative e-commerce sites, new mobile applications, fresh advertising campaigns for on-trend apps like Instagram and Snapchat, interactive websites and more recently, in-store technology, like Ralph Lauren’s new interactive mirror.

These new tools are focused on projecting a modern and stylish image for the company while addressing the ever-growing expectations of its customers and how they shop online, on mobile and in-store.

However, these new image-makers come with a big price tag and can quickly become out-of-date or fall out of favor, leading to continual investment in updates and redesigns, like Uber’s new application design.

It is a constant war to keep up with what is trendy.

Plus, most retailers have trouble completing a comprehensive cost-benefit analysis due to the many non-numerical factors that often impact decisions and outcomes. Arguably, this can lead to blind decision-making when it comes to front-end innovation.

And since company image and customer satisfaction are critical parts of a retailer’s recipe for success, they are likely to continue to pour money into updating consumer-facing tech.

In stark contrast, retailers continue to ignore their internal backend technology that has seen limited innovation in decades. The under-invested systems often include a company’s fulfillment platform and order management system as well as payment, inventory management, customer relationship management, enterprise resource planning point of sale systems.

These mission-critical “legacy” systems typically form the foundation of the company’s operations — without them, there would be no inventory to sell, no merchandise to ship, no customers to service, and no way to accept payment.

Essentially, business would come to a halt if any of these systems crash, as evidenced by the same-day crash of the NYSE and United Airlines, both of whose shutdowns were due to internal technical problems involving communication between computer systems.

James Record, a professor of aviation at Dowling College, pinpointed the root cause of the United problem.

“This incident reflects the fact that much of the airline industry’s computer and technology programs are old and have been cobbled together,” he said.

Thus, it seems counter-intuitive that these vital systems and software are not current and have been mostly ignored.

Often, the excuse is a lack of cash, but the reality is that some of the capital that could mitigate this significant risk, is being directed towards e-commerce and mobile technologies, which are PR magnets.

The arguments for why internal B2B technology is ignored are often based on the fear of change and the unknown ways that new technology would alter business process — even when a positive outcome is highly likely.

It is clear that this backend technology can be harder to understand than adding Apple Pay to a mobile e-commerce site or one-step payment feature on an e-commerce site or installing a new digital store mirror, as there are many systems that must connect behind the scenes to enable a simple process or function that often does not have a visible and direct customer benefit.

But make no mistake that as a well running business, it is necessary to create great customer experiences.

New technology additionally challenges the status quo not just for the way work is done, but also for the level of management and oversight within the company. Some of these methods and processes have been around for decades and are still performed with little or no automation, despite the same companies making large investments in the latest consumer-facing technology.

A new technology system also requires energy and effort to implement, in terms of both data transfer and the retraining of employees. Older software that is still in place may not connect seamlessly to the new technology, requiring troubleshooting and slowing the system integration.

Almost half of the B2B companies polled in Forrester’s Thought Leadership Paper, “Building The B2B Omni-Channel Commerce Platform of the Future,” found that integrating with back-end systems was the largest obstacle in deploying new technology. Such a long and troublesome conversion to new software can cause distrust in technology for those who are complacent with the historical way of doing business.

So why then should companies go to the trouble to upgrade or replace their internal systems?

It comes down to having a solid foundation and full visibility, both in systems and in workflow processes, to support a growing business and all of the intricacies that come with it, especially as retail models continue to evolve.

“Don’t wait for problems to occur,” advises David Dodd, CIO and vice president of IT at Stevens Institute of Technology in Hoboken, N.J.

This is especially true as the consumer-facing tech investments aim to drive more customers online and into stores. The sales and returns by these multi-channel customers will continue to increase in complexity and is likely to accelerate the gap of functionality and stability of legacy systems.

It’s not just about catching a customer’s eye and capturing credit card and personal information — it’s increasingly becoming as critical to deliver on the higher level of expectations promised by the brand and its website, store, and mobile application. Failure to deliver leads directly to lost customers, damaged reputation, and in some instances can put a company out of business, especially given that today’s consumers have so many shopping options.

The most successful and innovative businesses today are starting to agree that the backend systems have to be as robust, if not more so, than the front-end technology.

This is most evident in wholesale sales, whether at full-price or off-price.

Brands making offers to buyers are held accountable for the management and distribution of their goods, just as buyers are responsible for payment. Both parties have to limit the time and manual labor required for these processes in order to deliver and exceed expectations.

It is now becoming imperative to have full visibility of the entire sales process and any negotiations that have occurred. This is not possible without robust backend workflow systems in place.

In short, staying modern isn’t just about having the latest and greatest e-commerce interface or the most visually appealing mobile app.

It is quickly becoming about adopting and implementing new technology to the whole body of the business, so that it can be healthy and stable to support future growth, technology and trends.

Ronen Lazar is the co-founder and CEO of INTURN. The NYC-based fashion retail technology helps retailers sell and purchase off-price inventory.

**This article was originally posted on FashInvest on September 26th, 2016.