Will New Retail IT Investments Boost Performance?

Spend Matters welcomes another guest post from NPI, a spend management consultancy, focused on delivering savings in the areas of IT, telecom and transportation.

While most of us are enjoying (or sweating through) the hottest part of summer, retail IT departments have their sights set on something much cooler – the holiday shopping season. This year, retail IT will be out front and center in the race for higher holiday sales and profits. According to Gartner's 2012 Retail Tech Trends Study, the number of retailers whose IT budgets have increased by 3-5 percent doubled from 2011, while the number of retailers who say their budgets grew by more than 5 percent has tripled.

Based on these numbers, we can assume that retailers are aggressively pursuing IT projects that will give them an edge in the holiday season, and they want to get as much value as possible for every IT budget dollar. Here are three areas of retail IT rife with overspending and purchasing pitfalls to avoid:

e-Commerce Platform: Today, retailers are under pressure to make large-scale upgrades and new investments in their e-commerce platforms. The reasons why are numerous, including the need for scalability to accommodate peak traffic and meeting customers' demands for mobile shopping and payments. From database upgrades and multichannel selling software to mobile and social media integration, retailers are making large-scale buys. The ability of retailers to secure fair market pricing and terms for these purchases today will have a long-lasting impact on IT budget and performance for the next three to five years.

Wireless & Data Networking: Did you know the average enterprise overspends by 20-50 percent on wireless? With mobile devices and mobile PoS becoming an integral part of retail operations, retailers are highly susceptible. The top culprits are paying consumer rates, not negotiating for incentives, failing to pool minutes and failing to audit usage monthly. Many of the same pitfalls apply to data networking costs. High pricing, vendor lock-in and inadequate planning are common as retailers hastily invest in solutions such as WDM and HA.

Cloud Computing & Hosting: In the rush to capitalize on cloud, many retailers are failing to achieve the best pricing model for their business needs. Furthermore, "gotchas" like annual cost increases and data/service portability constraints have created a perfect storm for vendor lock-in and poor leverage down the road.

- Jeff Muscarella, EVP of IT, NPI

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