It wasn’t that long ago that I would hear retail CEOs say, “The less I hear from IT the better — that means they are doing their jobs.”

For a long while, this was the prevailing opinion. Then a few retailers with visionary leadership began to use IT to their advantage as they distanced themselves from competitors.

After successive years watching IT-savvy competitors financially outperform the industry as a whole, more retailers are pursuing competitive advantage through the strategic use of IT. Some are further along than others and, for them, the ability to leverage information to make better, faster and more profitable decisions has created such a strong operating advantage that it can seem almost unfair as other retailers struggle to catch up.

Merchandising and planning teams at these progressive companies realized that the information living inside their technology systems could make or break their businesses. The retail enterprise conducts millions of transactions every day; each one can swing profit margin by a few pennies either way. To ensure these pennies add up correctly, retailers arm merchants with timely, localized data.

Destroy the wall
With the right data, retailers can target unique value opportunities in specific markets and identify the algorithms and supplier constraints necessary to capture those opportunities. Thus, a national retailer seeking to turn a product into a profit-driver through pricing and promotion can gain insight into how customers will respond in specific locations: Strategies that work wonders in Madison, Wis., might draw only disinterested yawns in Miami and vice versa.

There is work to be done before bringing these systems into play, however. First and foremost, the wall between business and IT has to be destroyed — especially in the boardroom. The CEO, CMO and chief merchant need the CIO — and the CIO needs them. In the most progressive companies, these are strong partnerships. Collaboration to bring information to bear on tough business decisions allows executive leadership teams to embrace IT-enabled insights and make informed strategic and tactical decisions.

The convergence of IT and business also extends beyond the enterprise. Retailers need their technology providers to understand exactly what metrics they are obliged to deliver to shareholders. The vendor’s main focus should be on finding specific opportunities to improve the retailer’s performance metrics. Vendors must be partners and help the retailer target value opportunities and prioritize IT investments that will deliver both immediate value and long-term competitive advantage. The most strategic retail executive teams insist on this dynamic with their IT partners.

It is fair to expect external partners to help manage implementation and organizational change and work side by side to measure results and target the next value opportunities. Vendors should share ownership of success on the balance sheet, which has as much to do with change management as with systems implementation.

Create the ideal dynamic
The ideal dynamic among business, IT and outside partners has benefited leading retailers tremendously over the past two years. Many U.S. merchants built aggressive growth plans based on historical success; those whose IT projects were tied to the specific delivery of business metrics were able to recalibrate as the economy changed and continue to pursue their projects with understood benefits.

On the other hand, retailers whose projects were just expense line items began canceling projects, citing the poor economy. Who do you think will deliver better results in the short term and be ready for profitable expansion as the economy recovers?

Competitive advantage results from a partnership of business and IT leaders. The best teams are comprised of business leaders who insist that data from IT systems influences strategic decisions and IT leaders who are comfortable in the boardroom. Outside partners also must bring value to both sides of the team, demonstrating an understanding of business and technology opportunities.

Create a true partnership between business and IT inside and outside your enterprise, and you, too, will obtain an unfair competitive advantage. What could be a fairer outcome?