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New Concerns As Retail Tech Spending Spills Outside The IT Budget

02 Jul 2014

New Concerns As Retail Tech Spending Spills Outside The IT Budget

IHL Group just released a new report, entitled Black Ops IT Spend: When IT Spend Starts Being Paid Outside of the CIO, which highlights another new growing trend in the retail industry.

Of the nearly $60 billion North American retailers will spend on IT this year, $11.6 billion -- nearly 20% -- will come from budgets outside the purview of the CIO, according to this latest study. What’s more, IHL research also shows that the budget for the CMO represents between 15-30% of the annual sales of the enterprise vs. 0.8-2.2% for the CIO.

This is certainly a big shift in the industry dynamics and I can tell you that, from our perspective, we are definitely seeing the effects in our business as a solutions, services and integration partner. As technology investments spread to other areas of the company, IT is increasingly finding themselves in more of an enablement and execution role, while the spending is being decided by executives outside of IT.

However, IHL’s research points out that having departments other than IT holding the reigns on technology investments can have significant impacts on the retail enterprisesome of which have the potential to cause serious disconnect in operational efficiency, such as:

  • Strains upon the CIO-Vendor relationship;
  • Uncertainty around budgeting efforts; and
  • Overall lack of clarity in terms of responsibility for support and maintenance.

The last of these, in particular, raises a huge red flag from my standpoint and also underscores the very reason why we’re such big proponents of vendor consolidation -- especially in today’s next gen store where there is a slew of customer touch points contributing to an enhanced shopping experience.

By consolidating vendors and customizing services, retailers we’ve worked spend less time, money, and resources determining things like,

  • Who is responsible for which asset?
  • Which repair services are offered for the barcode scanners, mobile tablets, etc.—are they covered under warranty? If not, which vendor is responsible for repair?
  • Do we know exactly what is wrong, or do we need someone to come take a look at it first?

How? Because we have helped them design a maintenance and repair service model that’s right for their store. With this model, they have one point of contact that can combine a variety of services for them; this not only helps retailers improve store uptime, but secure market-readiness and customer loyalty along the way.

So, we want to know: Has this big shift in IT spending affected your business? If so, in what way? Join our LinkedIn group, Retail tekSPERTS and weigh in! We’re always online, so if you’d rather just stay up-to-date on the latest developments in retail/hospitality technology, you can always connect with us on Facebook.