Retail IT in 2012 — Sourcing Professionals Take Note! (Part 2)

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.

Two weeks ago, I shared five IT spending mistakes retailers should avoid in 2012. But, with IT spending on the rise, you can bet there are several more pitfalls that will challenge retailers to keep their budgets in line and their initiatives on track. Here are four more:

  • Buying blind. With strategic IT driving retail revenues more than ever before, it's time to make sure all blinders are off in technology and telecom sourcing. Blind assumptions like (1) a bundled offer is the best deal, (2) professional services fees are just, and (3) your incumbent is the best are three fast tracks to IT overspending. Demand justification for pricing and discounts, and challenge the status quo. You'll be surprised at the savings you can find, and the stronger pricing and term commitments you'll receive from vendors.
  • Using a single vendor for storage. Retailers will continue to see an increase in the need for storage thanks to mobile retailing, stricter compliance mandates and customer analytics. With that in mind, retailers should curb storage cost increases by leveraging multiple vendors. By using more than one vendor, you can increase price competition and service levels.
  • Failure to audit wireless usage. Handheld devices will replace many traditional PoS terminals in 2012, thereby driving up wireless costs. Be prepared to audit your wireless usage regularly to uncover insightful usage patterns, hidden fees and invoicing errors. If you can't do it, bring in a third-party resource. The investment will pay for itself almost immediately.
  • Agreeing to annual telecom revenue commitments. Telecom vendors love to lock retailers into annual revenue commitments, which penalize you for unplanned fluctuations in usage and spending. Know that you don't have to agree to these terms, which can cost you greatly in the event you spend less than anticipated with your provider.

- Jeff Muscarella, EVP of IT, NPI

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