Consistency ofIT-architecture & business goalsin retail companySergey Gumerov

Initial problems

Launch of fashion department store operations in 1 year

75% revenue generate on-line channel75% CAPEX to the old building reconstruction

Competitiveness bases on Digital Fashion

“ERP” implementation

This

is n

ot

tech

no

logy

. Rea

lly

?

Business Expectation from IT

Huge gap

Management system

Constraints

Main architecture questionWhy?

Retail business

ROIMaximization

Products

Channels

Consumers

Business modelModel-oriented

management

IT-architecture services

Fashion retail technology

Business model

Retail business

Monitoring & Analysis

Planning & optimization

Trade operation enabling

Information model

Cascade development of Management system

Math.model

Retail “channel” parameters

GoalKPI

Classes & Instances

Catalogues

Products

Suppliers Consumers

Processes & projects

Software system

Trade & Stock

LeadsOrders

Information technology equipment & networks

Planning & Optimization

Trade & Stock operations

Monitoring & Analysis

Main retail processes & enabling processes

Business model formalization

KPI model

Function-structure model ProccesesProduct matrix

Supply-Sale channels

Consumer segmentation

Technology program generatesFashion retail technology

Structure of technology program

Technology development & implementation

Arc

hit

ectu

re m

anag

eme

nt

Pro

gram

man

agem

en

t

Information model & catalouges

Software system

Products Channels Consumers

MDM 1C Magento SugarCRM Cognos

Product characteristic

Consumer Characteristic

Fashion-retail technology services

ROI Maximization

Fashion retail technology

Consumer pick-up

Catalogue Store “Look”

Product pick-up

Buying Sales Lead

Channel pick-up

Loses minimisation

IT-architecture services

Information management

Referenced catalogues:Products, Channels,

Consumers, Counterparties

References models:KPI-model (finance), Information

model & algorithms (technology), processes

Facts & documents warehouses

Transactional systems

Visual merchandising

Trade & Stock operationsE-commerce

& CRM

Analytical systems

Planning & budgeting

ModelingAnalytics & reporting

GUI, API to suppliers

GUI, API to consumers

Financial model

Variables

Description (for each channel)

S (t) Sales

X (t) Expenditures

U (t) Expenditures speed

C (t) Cost of goods

v (t) Cost of sales

w (t) Fixed costs

m (t) Margin

k (t) Expenditure to cost of goods ratio

γ (t) Sales to EX ratio

K (t) Efficiency ratio

E = S - UU

C

v

w

m k γK

Улучшение

Канал N

Assortment

Other dimensions

Consumer segment

Channel N

Channel

Location

Optimal turnover level calculationExpenditures – main management function

Best distribution U* for ХХХ-retailer is

Ustore = 0.62 U, Uecomm = 0.38 U

Conclusion 1:Optimal level of EX per

channel2U0 < Uoptimal < 4U0

Conclusion 2:Expenditures could be

re-distributed by optimal level

Whole business

Var Description

A Turnover assets

q Income part coming back to turnover assets

1-q Income part to dividends

ω Turnover speed

μa (ϒ-1)ω

P Initial capex

ι Income tax

μp Capital cost

Optimal expenditure management for goal ROI targeting

S -U

AP

t0 t0+Δt

q(S-U)

E

ΔP

ιE

ΔA

Channel

Example of business plan benchmark& business monitoring

Store

OnLineWhole store

IT system

Operational numbers

Some conclusions

• Aligning business & IT enables by formalized business model, which connects goal KPIs with internal & external business condition parameters through functional-structure decomposition – system modeling as a core of IT & enterprise architecture

• Business model is the basis for – Development, adjustment of integrated plans & its execution monitoring;

– Integrated information system, which accumulate operational & condition parameters to adjust plans to achieve target KPIs.

Plan numbersGoal KPIs

Functional-structure business model