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IT Spending Increases; Focus on Optimizing Processes for Fast ROI

In Uncategorized on February 25, 2010 at 12:35 am

A recent survey conducted by Altada Solution — a leading provider of software solutions for the retail industry — shows that IT budgets appear to be recovering after the initial downturn at the start of last year’s recession, with averages for all retailers at 1.3% of sales compared to 1% last year, while 26% of respondents expect their IT budget to increase; the same figure as last year. The company released findings from the 2nd annual Global Retail CIO Survey, jointly sponsored with IBM.

However, while last year’s survey showed that increase to relate to projects already underway, this year’s interviews revealed more aggressive plans to implement new systems. The survey of 109 retail CIOs and IT Directors in both the Americas and Europe was undertaken in Q4 2009 by retail industry research specialists Martec International.

This year’s Global Retail CIO Survey clearly shows that optimizing the product / place / promotion offer is becoming an increasingly critical element of retail IT spend. More than 50% of retailers will be upgrading, replacing or implementing new systems in areas such as Automated Replenishment (52%), Assortment Optimization (58%), Promotions Optimization (56%), Promotions Management (54%), with a further 46% looking to invest in Demand Forecasting. Master Data Management (MDM) has the highest planned implementation of all applications studied in the survey, both across the Enterprise (35%) and for Supplier Management (28%).

“The top line statistics from this year’s survey, and indeed last year’s, suggest that the retail sector has survived the recession remarkably effectively,” said Allan Davies, CMO, Aldata Solution. “The truth is, though, that while the downturn hasn’t halted retailers’ IT spend, it has certainly changed the way that money is spent. Gone are the days of end-to-end, rip and replace projects, and instead we’re seeing a big focus on process optimization. Retail CIOs are not afraid of investing in new projects, but they need to see a quick return on investment. And by quick, I’m talking about months, not years.”

Customer is King

Systems to attract and keep customers featured prominently in this year’s survey. Multi-channel CRM was ranked as the most important application by respondents, with 42% having yet to implement multi-channel CRM, but with plans to do so within the next three years. Similarly 38% of CIOs surveyed plan to implement Loyalty systems – with customer data linked to buying patterns and behavior – within the next three years. And finally, systems that support the safety of customers were considered the most important application by 47% of respondents.

Sustainability Not a Priority

For the first time, attitudes to sustainability were considered as part of the research. Respondents were asked to score the impact of sustainability on IT spend and strategy on a scale of 1 to 10 (with 10 being the highest). The average emerged as a lukewarm 5.1. Views appeared to be polarized, with 13% considering sustainability to have a negligible impact on IT strategy, while 6% considered it to have a major impact. In terms of which applications retailers feel are having the greatest impact on sustainability, applications for store operations came top of the list. For the future, more retailers believe that multi-channel retailing will have the biggest impact on sustainability.

Related Links: IBISWorld industry reports

Software Publishing Industry in the U.S.

IT Consulting in the U.S.