With its sights on streamlined processes and exponential growth, the Latin American online fashion retailer is embracing new technology architectures, IT mindsets and innovation models. CTO Cristiano Hyppolito outlines the ambition.Across the world, the dynamics of fashion retail are being disrupted by the efficiencies and appeal of internet-only stores. But while they may have been most visible in Europe and North America (the US’s Zappos, ASOS in the UK and Zalando of Germany are prime examples) the model has rapidly gained momentum in emerging markets too in recent years.Founded in 2011 and now part of Global Fashion Group, the emerging markets-focused ecommerce cluster, Dafiti has grown into Latin America’s largest online fashion and lifestyle retailer. It offers the region’s largest online portfolio of high-street brands across its home country of Brazil as well as in Argentina, Colombia and Chile.From the user experience of its websites and its automated distribution centers to its delivery channels and customer service operations, being at “the forefront of technology innovation” fuels much of that success — and saw Dafiti join Fast Company magazine’s ‘50 Most Innovative Companies in the World’ list in 2016. Leading that drive is group chief technology officer Cristiano Hyppolito, who joined the business in mid-2018 with a remit to enhance operational excellence and the user experience of its 5 million active customers through the application of advanced technologies such as big data analytics, machine learning and artificial intelligence.But, in doing so, he also wants to change the role and business perception of IT, as well as the innovation model. “My strategy is to leave behind the old idea of an IT department delivering commodity technologies to the business, and to transform it into an enabler for exponential growth. The journey is to position the technology function so it focuses on business outcomes,” Hyppolito says.He is also looking to a greater reliance on external expertise. “The goal is to evolve our business by creating an [innovation] ecosystem that is not limited to internal technology capacity,” he adds. “That’s key to further removing friction from the operation.”Waves of evolutionHyppolito’s 24-month plan is divided into different waves of activity. One is the reshaping of the IT capability at Dafiti around microservices and cloud, which means a commitment to multi-vendor cloud. “I don't like the idea of being locked in to just one provider,” he says, predicting that, in the future, he will be able to trade cloud provision based on the best service available for the lowest price, not unlike a commodities exchange. And he predicts that cloud systems will utilize AI and machine learning for automatic management. “So if a cloud crashes, services would be automatically rebalanced and clients wouldn’t experience any impact,” he suggests.By transforming Dafiti’s IT architecture, Hyppolito wants to create a model as flexible as that being applied in financial services around open banking, where data can flow securely and easily between different entities. This means all new functionality that is created internally or sourced from suppliers will be pluggable into the company’s systems via a universal API gateway.By “integrating everything”, Hyppolito expects to get to a point where innovations are introduced to the company without the need for internal engineering to make them work, he says.
But it is not all about plug and play. Hyppolito is impressed by some of the “innovation platforms” that are emerging, such as SAP’s Leonardo which delivers software and microservices for customers to leverage technologies like the IoT, machine learning, blockchain, big data analytics, and Salesforce.com’s Einstein, an AI cloud service that can be incorporated into any app through an API (application programming interface).
But he does not think such platforms yet encapsulate the kind of retail sector domain expertise needed to deliver the business results he’s after. “So we can use these platforms to a certain extent, but if we want real depth we need to create our own intelligence, our own machine learning and AI — or consume what is best from elsewhere.”
With that in mind, Hyppolito is creating an innovation framework through which Dafiti can engage with specialist startups. Having spent time in Silicon Valley, he recognizes some of the dos and don’ts of working with startups.
“If you get a startup to work inside a traditional large company, you kill that venture within a couple of months with bureaucracy. Our framework will avoid that by acting as a sort of referee, to get the internal team and the startup to understand each other and make things happen.”
With the framework in place, Hyppolito and his team intend to make Dafiti’s ambitions widely known in retail startup circles and they’re confident that Dafiti has a lot to offer such new ventures. “Our deal is to accelerate these startups by using our critical mass [Dafiti currently offers more than 2,000 brands to an active customer base of 5 million], ultimately supporting their growth plans," Hyppolito says.
That will progressively extend the remit for fostering innovation from the IT department to innovation partners. The benefits will be “the disappearance of the usual corporate technology development bottlenecks and the shift of technology executives’ focus from order-taking to business objectives,” says Hyppolito.
As he emphasizes, changing mindsets is one of the main challenges of Dafiti’s digital transformation — and that requires management buy-in. “The company must be ready for change, too. This is a business journey rather than a technology project. It is about changing models of how people think and behave — and new ways of working. We will lose a few battles, so we must have the backing from the senior management to carry it through.”