Last week Tesco announced its first drop in profits in 20 years, alongside a £1bn plan to turn this around. This is the second such investment, the first in 2012, and marks another step along Tesco’s path of digital transformation.
They follow in the footsteps of a host of companies that are heavily investing in their digital strategy. Marks & Spencer, Barclays and famously Burberry have all spent similar amounts.
Stifle that yawn just for a moment, because this is not your usual struggling-high-street-business builds-website-shocker story.
When is a tech company not a tech company?
These companies are engaged in end-to-end transformations that will make technology pervasive at all parts of the business, from internal departments such as human resources, through to the end customer. They are purposely merging the online with the physical to create a seamless modern digital experience.
In the latest print edition of Tech City News I explore what makes a tech company in the modern world. With tech being applied and developed so pervasively within organisations of all stripes, it is a increasingly knotty question (thanks, Alex).
Consider Burberry. They have equipped all their in-store products with RFID tags. When you take an item to try the changing room will play footage of the same item from the latest runway show next to your mirror, and on the other side will be a touch screen suggesting complementary items or alternate sizes.
A sales assistant will be notified on the floor and will bring up anything you request. Equipped with an iPad, he or she can order anything not in stock to be delivered to the store or direct to your work/house, and you pay for items there and then and walk out.
This is not a gimmick. Anyone who works in an organisation of more than 100 people will tell you how hard it is just to get your email on your sodding iPhone. The IT effort, and expertise, to create this experience is huge (as is the price tag, hence all these £1 billion cheques being written). It involves integrating systems across procurement, inventory management, media/marketing and HR (training).
The new fixers
Cisco predicts that $10 trillion (£6 trillion) will be spent on digital transformations over the next decade. That is incremental spend over and above what is already used to keep the server lights blinking and making sure there is someone at the end of a phone to tell you to restart your PC.
Now, fair disclosure, if this sounds a bit like some marketing bullshit, perhaps it’s because it is coming straight from the mouths of consulting firms such as Accenture and Cap Gemini. In the finance world we call this talking your own book; in other words, guess who is going to be at the other end of the line when the latest CEO to see his profits melt away at the hands of some Tech City innovator starts crying down the phone and wants to have a mobile site built?
Those companies are going through something of a transition themselves. Having spent most of the last decade implementing expensive enterprise risk planning software from companies like SAP and Oracle, companies are increasingly finding the cloud an equally effective and much less costly way to achieve similar efficiencies.
Nevertheless, when you are watching the England game tonight live on the bus home, consider how quickly companies are catching up with the revolution that mobile computing, social media and the cloud has wrought. There is no doubt that within a decade the distinction between tech and non-tech businesses will be almost impossible to make. We are all technologists now.