Corporate Strategy

7 Costly IT Investment Mistakes CPG CIOs Make

John Edwards
Contributing Writer
john edwards
IT investment mistakes

IT investment mistakes happen, but that's no excuse for poor planning or carelessness. Ensuring that innovation initiatives meet their scheduling, performance, and cost goals is essential to keep your enterprise a step ahead of the competition and your career on track.

Here's a quick look at seven common investing mistakes you'll never want to fall into.

1. Unnecessary complexity

Many routine IT processes are ultimately handled by people, mainly in supply chain and finance, using generic technology tools that weren't designed to meet unique CPG industry needs, says Lindsey Peters, retail and consumer goods industry lead at business management software firm Celonis. She advises simplifying processes, allowing end users to become more nimble and productive.

Peters notes that her organization currently works with a firm that's burdened with three duplicate invoice checking solutions. All three tools operate at different levels — EDI, order, and AP layers. Yet none of the products are specifically geared toward the needs of a CPG company or its vendors. It would make more operational and financial sense to acquire or develop a single, unified solution. "CIOs need to simplify their IT landscape," she says.

Simplification should begin, Peters advises, by examining specific processes. Digging deep into complex software and service deployments can sometimes yield pleasant surprises. Close scrutiny helped Celonis discover thousands of duplicate payments that weren't being caught by their existing system. 

2. Underestimating the challenge of developing a customer-facing technology

This mistake typically emerges during late-stage testing when early user feedback requires hardware and/or software development teams to update, track, and test various bugs and shortcomings, says Kevin Bailey, CEO of product design firm Design 1st.

Failing to create a quality product can be costly in both financial and reputational terms. A sub-par offering can also create delays in production if the hardware needs reconfiguration or the software must be updated, Bailey notes. 

"While you can expect ongoing change management during the first year a consumer product launches, minimizing significant changes or multiple updates is essential," he warns.

3. Failing to understand your product or service's target audience

Whatever technology you're investing in, whether planning or building, understanding the target audience and its wants and needs, is critical to success. A comprehensive understanding of pathways and goals is necessary when addressing either internal or external customers.

"You need to know who they are, what features they want, and the problem your technology will solve," Bailey says. "So do your research first before diving into development," he advises. "It will save you in the long run." 

innovation choice

4. Taking the wrong approach to platform migration

CIOs can approach platform migration in one of two ways: use-case-centric or lift and shift.

With a use-case-centric approach, the CIO and project team specifies use cases to drive all development work, from the initial gathering and negotiation of requirements all the way through creating code. With lift and shift, an exact copy of an application or workload, together with its data store and operating system, is transferred from its current environment to another location, typically the cloud.

Use-cases should be selected in a way that allows the semantic layer to be incrementally built for the most common market archetypes, says Sagar Balan, chief business officer, CPG, at data analytics and AI engineering company Tredence. 

"The migration will have to be designed so cost and architectural considerations are suited for the hyper-scaler world of low compute cost," he advises. 

A lift-and-shift migration strategy moves resources to the cloud without necessarily having to redesign the application to suit the new infrastructure, although the migration process might fail if the organization doesn't accurately map application requirements to the required cloud configuration.

5. Failing to look forward

A digital transformation shouldn't be limited to upgrading the system of record with a newer version. For example, a common misconception is believing that S/4 HANA, a ready-to-run cloud ERP that supports the latest industry best practices, will modernize the enterprise just by itself, Balan says.

Meanwhile, artificial intelligence and machine language technology should be deployed in a reusable and scalable manner.

"Starting the AI roadmap with a MLOps- and FinOps-first approach, rather than in hindsight, is essential for cost-effective, intelligent, and sustainable AI applications," Balan suggests. "Building a system of intelligence with a feedback loop to the system of record is essential to modernize business processes."

6. Overreaching 

Perhaps the biggest mistakes CIOs make is viewing large infrastructure projects as the primary, and sometimes only, way to achieve IT goals. "In the current market, especially in consumer products, that approach may not align with the pace of the business," says Allison Vernerey, VP of product at digital storefront technology provider Zmags.

Vernerey warns that a major infrastructure project carries the risk of consuming far too much time and money without achieving the desired value. "There are times when a full re-platform and migration to a new e-commerce system may be appropriate, but that should be a fairly rare path to take," she says.

Furthermore, by the time a major project has been completed and deployed, business goals and challenges may have changed. Vernerey suggests building a strong alignment with business teams. She notes that working with enterprise teams will help CIOs develop projects with solid business value. 

"These teams may want certain benefits from a full migration, but make sure to prioritize which benefits need to come first, adopt the right technology, and set your teams up to deliver incremental value over time."

7. Getting over your skis

When approaching any new project, be careful not to bite off more than you can chew. "Make sure you can achieve meaningful milestones month after month, and even week after week," Vernerey advises. One should always look for opportunities to improve customer experiences.

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