Will Retailers Pay Too Much for Mobile Payments?

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

Juniper Research estimates that by 2015, the mobile payment market's value is projected to increase nearly three times, reaching $670 billion. Some retailers have already jumped on the bandwagon, while others are seriously considering mobile payment capabilities. But before they make the move to invest in mobile payment technologies, here are a few overspending pitfalls to ponder:

  • Professional Services: The implementation of new mobile payment technologies will undoubtedly mean an increase in professional services. This complex category of spend has traditionally been difficult to manage. Without insight into what constitutes a fair price, retailers can expect to overpay when they use external resources to implement new IT initiatives.
  • Data Networking: Mobile payments will lead to increased traffic volumes. You can be sure telecom hardware and service vendors are preparing for this profit opportunity with high pricing and vendor lock-in strategies as retailers hastily invest in solutions such as WDM and HA. IT and sourcing teams should partner to bring in fresh competition and analyze their long-term bandwidth needs for maximum negotiation leverage.
  • Storage: With more sensitive data entering the network, retailers will need to increase storage capacity. However, because most storage purchases are made hastily, vendors have the upper hand. To significantly reduce storage costs, retailers should consider strategically minimizing demand, utilizing more than one vendor, capitalizing on virtualization and addressing costly issues such as data cleansing.

If you're a retailer, we want to know -- are you investing in mobile payment technologies today? Where are you lacking spending visibility in these purchases?

-- Jeff Muscarella, EVP of IT, NPI

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