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Organizational structures the retail industry

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Organizational structures in the retail industry tend to be the result of decades of organic or acquisition-based growth. This article builds on the Organize methodology of the Cloud Adoption Framework to understand how some companies in the retail industry have reorganized for new technologies. For more information, see Manage organizational alignment.

Cloud strategy team and retail decision makers

As with any other industry, a cloud strategy team is critical to long-term business success. The members of this team represent business needs throughout your cloud adoption. For more information, see Cloud strategy functions.

Be sure to include the following roles or proxies for each role in recurring meetings of the cloud strategy team:

Business decision maker roles

Desired outcomes

Customer experience manager

Deliver seamless, personalized experiences across all channels

Chief marketing officer

Optimize advertising, marketing campaigns, channels, and purchase behavior with insights

VP of human resources

Ensure remote access and collaboration

Chief financial officer

Maintain optimal inventory levels

Business operations

Make better forecasting decisions

Head of supply chain

Reduce loss by tracking assets throughout the logistics journey

Increase agility and responsiveness across the supply chain

Increase safety and security of goods and shipments

Customer experience manager

Optimize energy efficiency and cost savings

Chief marketing officer

Reduce labor needs with automation

Facilitate contact-less shopping and fulfillment

Comply with social distancing

Set up new fulfillment nodes with micro fulfillment centers

Use location-based personalized advertising

When aligning your cloud strategy team, it's important to understand the desired outcomes for each of the various roles. By mapping these desired outcomes to your cloud adoption strategy, you can ensure these roles are adequately represented and can provide feedback to guide and support your cloud adoption plans.

Common growth patterns for retailers

Companies in the retail industry tend to follow one of three growth patterns:

  • Brick and mortar organization with an organically grown e-commerce presence
  • Rapid-growth startups with most or all of their revenue coming from online growth
  • Brick and mortar organization that acquired one or more startups

The organizational structures that result from these growth patterns have a direct impact on a company's ability to mature in the cloud. To organize around cloud strategies and cloud plans, it's important to understand your current organization. Compare and contrast between your current organization and the organization required to reach the cloud maturity described below. For more information, see Cloud maturity model for retail.

Diagram of the stages of digital retail cloud maturity

The following sections will help compare your current and future state objectives. Use it to provide a customized course of action to reach your goals.

Traditional IT, central IT, and centralized operations

When the foundation of a retail company is a brick and mortar business, the technology organization likely formed around specific goals. Such goals might include keep the lights on and keep products moving. Traditional retail organizations tend to focus on facility management and supply chain technologies. The technology organization tends to emphasize security, stability, and operations over innovation. Technology teams that have grown in this growth model often operate as a central IT organization, with a focus on central operations.

This type of technology team is well suited for the first two stages of the retail cloud maturity model. These stages are siloed retail and connected retail. If your organization needs to go further in that maturity, be sure to read the next section about cloud center of excellence (CCoE) and enterprise operations.

Central I T team

Traditional central IT teams value consistency and strive to minimize risk, change, or experimentation. This operating model can be replicating in the cloud. To replicate this operating model, study the "start small and expand" approach to Azure landing zones. For more information, see Azure landing zones for the retail industry. For more information about developing change control practices in the cloud, see:

To prepare for central IT and central operations in Azure, evaluate how the current organization structure aligns to the central IT organizational structure pictured above. New virtual teams or adjustments to the organization may be useful to deliver your current operations approaches in Azure. Specifically, early cloud adoption projects should focus on building cloud governance and cloud platform functions to extend your central IT model. Those teams also need to define a plan for extending or modernizing operations tools to support your overall operating model. For more information, see:

Cloud center of excellence and enterprise operations

As retail organizations expand into more mature phases of the retail cloud maturity model, central IT models could become an inhibitor to innovation for some organizations. It's possible for central IT to evolve and support more mature models. However, reorganization is common for modern retailers.

Retail consumers are increasingly fickle. Retail competitors respond with rapid innovation to stay relevant. Rapid innovation requires systems and processes that can channel, not block, rapid change. For more information, see Cloud center of excellence.

Rapid growth startups often begin with this fast pace of change. They have processes to channel the change. Brick and mortar organizations that fully embrace and integrate a startup acquisition often have some of those controls in place. In either case, innovation tends to have an equal or greater priority, compared to stability found in more traditional organizations.

These organizations empower workload owners to make more decisions. They focus on establishing guardrails to protect the company against poor decisions. This approach is a shift in perspective for traditional central IT operations teams.

This type of technology team organization is well suited to achieve the latter two stages of the retail cloud maturity model. These stages are analytics-driven retail and intelligent retail. We refer to these organizations as cloud center of excellence (CCoE) teams. Those teams tend to align best with enterprise operations.

Diagram showing a cloud center of excellence team.

CCoE teams tend to value innovation and delegated responsibility. To replicate this operating model in the cloud, the CCoE team enables advanced cloud capabilities:

  • Enable zero trust security
  • Separate duties
  • Centralize monitoring and visibility
  • Create policies to force adherence to compliance, security, and operations guardrails

Those advanced controls can most easily be deployed using the enterprise-scale architecture and implementation options of Azure landing zones. For more information, see:

To prepare for CCoE and enterprise operations in Azure, evaluate how the current organization structure aligns to the CCoE organizational structure pictured above. New virtual teams or adjustments to the organization may be useful to deliver this advanced operations approach in Azure. Specifically, early cloud adoption projects should focus on building the CCoE functions to modernize existing central IT models. Those teams may also need to define a plan for replacing existing operations tools used to support any central IT processes.

Next steps

This basic understanding of organizational structures and critical roles in the retail organization provides information to prepare your cloud adoption strategy.