A Walmart Case Study: How Software Agencies Drive Digital Transformation For Businesses

With the increasing necessity of continuous evolution on the one hand and the rapid growth and formalization of the global outsourcing market on the other; it may not have occurred to you but, there is an invincible and integral entity playing an increasingly crucial role in helping businesses address existing challenges —such as the difficulty in the recruitment of in-house IT talents, and meet evolving business needs. 

These entities transform novel business concepts into tangible solutions and devise technological advancements, and all-encompassing creative problem-solving approaches, models, and practices to organizations’ needs whether informally through outright delegation or formally through talent augmentation. 

If you’re reading this, you must already have an idea of the role IT solutions agencies play in helping businesses achieve business goals so I won’t bore you with dummy details.

But how much do they contribute? To what extent do they play a role and just how many big businesses rely on them if they do? 

To answer these questions and perhaps help you see why your business may need to start outsourcing operations, we need to first explore how America’s largest retailer is transforming its business with an external pseudo-software agency. 

The Walmart Case Study

For years, Walmart’s unrivaled customer research capabilities helped it dominate retailing. Then along came the internet, and Walmart suddenly found itself playing catchup to e-commerce pioneers like Amazon. Back to 2014 the board appointed Doug McMillon as CEO and gave him an imperative: Bring Walmart into the future—without sacrificing its longtime strengths.

Adi Ignatius.

In the mid-2010s when the centuries-old retail giant began to feel the need to prepare for the future, the company pursued two strategies: 

  1. Buy out online retail businesses with potential 
  2. Spurn an independent and separate project to accelerate its digital transformation goal and “incubate, invest in, and work with other startups, venture capitalists, and academics” to innovate business operations and evolve it to meet customers’ needs. 

In a 2017 interview with HBR editor-in-chief—Adi Ignatius I came across while researching this article, CEO, Doug McMillon, highlighted that his imperative when appointed was to bring the retail giant into the future by going digital following the realization that Walmart was playing catchup to other e-commerce pioneers like Amazon.

McMillon noted “Walmart is more than 50 years old, and it was built with a purpose. But the world is changing quickly. When I moved into this role, it seemed clear that the board wanted me to have the mindset that I might be in the job for a while. They said: “The company needs to go through quite a bit of change. So don’t just run it. Don’t just maintain it. Get it prepared for the future.” That’s what we’ve been trying to do.”

As the CEO with the burden of leading the transformation of America’s largest retail store, McMillon was to ensure that all employees, including those on the sales floor, were tech-savvy enough to drive the company’s digital transformation journey and goal of reducing the amount of time management takes to make strategic decisions by leveraging digital technologies. 

 Store No. 8

Walmart Case Study

Walmart leverages external capability to transform its business 

True to this responsibility, McMillon, brought back the use of RFID technology to fix the company’s inventory problem and expanded the inhouse technical innovation lab—WalmartLabs, which was charged with launching the “Store No. 8” project it uses as a test ground to identify innovations in robotics, augmented and virtual reality, artificial intelligence, and machine learning that can be used within its stores. 

Then VP of customer experience engineering at WalmartLabs, Lauren Desegur, in a statement concerning the rationale for the launch of the company’s incubator mentioned that the goal of the project is to “develop [redacted] own proprietary robotics, virtual and augmented reality, machine learning and artificial intelligence technology.”

Noting further, “We’re essentially creating a bridge where we are enhancing the shopping experience through machine learning. We want to make sure there is a seamless experience between what customers do online and what they do in our stores.”

In recent years, the company has started to see the rewards of setting up an independent incubator for ideas, and capacity and using tech advancements such as big data to improve its operations and enhance customers’ shopping experience.

Even though Walmart was founded in 1962, it’s on the cutting edge when it comes to transforming retail operations and customer experience by using machine learning, the Internet of Things (IoT) and Big Data. In recent years, its patent applications, position as the second largest online retailer and investment in retail tech and innovation are just a few reasons they are among the retail leaders evolving to take advantage of tech to build their business and provide better service to their customers.

— Bernard Marr

As an example of this according to tech thought leader—Bernard Marr, during the 2021 Halloween, sales analysts were able to see —through the use of real-time big data analysis in its Data Café data center in its Bentonville, Arkansas headquarters, that although a particular novelty cookie was very popular in most stores, it wasn’t selling at all in two stores. Their system prompted a quick investigation, which revealed that due to a stocking oversight, the cookies hadn’t been put on the shelves in those stores. 

Due to this intervention of the company’s real-time data analysis system which prompted the review of its merchandise sales in specific stores on a single Halloween in 2021, Walmart was able to make millions in what would have been a loss of real-time sales. 

The incubator lab is also behind the company’s push toward the use of AR to enhance customers’ experience in recent times through its new Shop With Friends and Virtual Try-On app features that have both been widely received with terrific acclaim and reviews. 

Technical Debt Is The Biggest Barrier To Digital Transformation For Many Companies

Walmart Labs was originally created following a 60+ person acquisition — as a technical innovation lab, based in the Valley, to build and test new technology for Walmart.com…In 2015, Walmart CEO, Doug McMillion, communicated that Walmart was going to adjust our how. We needed to diligently focus on our omni-channel strategy so that we could give customers a consistent experience, regardless of the channel…Based on this strategy, we’ve expanded Walmart Labs…

— Jeremy King, Ex CTO WalmartLabs

By now, the impact of having access to the capacity to innovate and evolve should be obvious to you. It is how Walmart transformed and continues to transform its business. Store No. 8 serves as the company’s gateway to working with first-in-class outsourced IT talents and thinkers. 

The company has been able to harness the power of external capabilities to experiment with innovative ideas and transform its business model. 

The success of Walmart’s digital transformation journey underscores the critical role that software agencies or custom innovation labs in this case play in driving transformation for businesses. These entities provide the necessary expertise, resources, and strategic insights to help businesses navigate the complexities of digital transformation and stay competitive in today’s digital economy.

Now that Gartner is reporting that the demand for digital transformation and automation is increasing and may no longer be met by just an organization’s IT department, it might be the right time to consider powering your businesses’ transformation journey by leveraging external capabilities and stay ahead of the curve in an increasingly digital world like Walmart did. 

Agencies Are Closely Plugged Into The Global Talent Pool

With that out of the way, it’s not a new idea to use software agencies to source technical expertise to power digital transformations. 

One of the reasons this is so is because agencies are more deeply entrenched in the global talent pool. They have access to a diverse range of skills, experiences, and perspectives from across geographies which is often not the case with most businesses. 

Furthermore, software agencies are also more readily connected to the center of groundbreaking changes pushing the boundary of tech innovation and thinking. 

Moreover, they also often have extensive experience working across various industries and domains and this breadth of experience allows for the breeding of fresh perspectives and ideas crucial in helping businesses stay ahead of the competition and drive meaningful change.

Agencies Free Up In-house Resources For Strategic Goals

Aside from this, companies also use software agencies for projects when it’s time to recalibrate or focus on a more strategic goal.

One such case outside of tech’s domain involves a UK multinational corporation, GSK, which recently overhauled its operating strategy in several countries to a direct distribution model. 

Walmart Case Study

Since software agencies are agile and adaptable, the flexibility they provide is particularly valuable in today’s dynamic business environment, where the ability to respond quickly to changing market conditions is critical for success.

Summary

In conclusion, whether it’s by providing access to a wealth of specialized skills and knowledge, freeing companies to pursue strategic goals, or plugging them into the center of groundbreaking and innovative thinking in tech, software agencies play a crucial role in helping businesses drive digital transformation. 

They provide invaluable support, guidance, and expertise to help businesses navigate the complexities of the constantly evolving business landscape and help them stay competitive and ahead of the competition. 

This Walmart case study highlights the transformative power of digital innovation and the pivotal role that agencies and external innovation hubs play in driving transformation and proves that by partnering with software agencies, businesses can leverage technology to gain a competitive edge, foster growth and a culture of innovation,  and position themselves for long-term success.

As of today, over 68% of companies in the US alone outsource. That number is 48% for the UK and growing fast so there’s no doubt of how many businesses rely on software agencies globally. 

About Alabama Solutions

Finally, I hope that this article serves as a valuable resource for your outsourcing endeavors. 

If you find it helpful, then you’ll more than likely find our Founder’s Guide to Software Outsourcing also helpful. 

Additionally, In case you are in the process of selecting a software agency for your project, we would like for you to reach out to us.

At Alabama, our team is backed by the foremost business leaders in the software industry with over 15 years of experience in the field.

We are recognized as a leader in software development for both the Fintech and e-gaming industries where we recently commissioned Uruguay’s largest e-gaming Platform

Our co-founder and CTO, Eduardo Mello, also a member of the Forbes Business Council —the foremost growth and networking organization for business leaders worldwide, together with our team strive to push the boundaries of technological innovation by delivering state-of-the-art solutions that leverage the latest advancements in the industry and would love to help bring your project to life. 

Reach out to us with the form below. 

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