Survey Highlights Plans, Priorities of Retailers' CIOs
Cites a gradual return to pre-recession spending by IT departments
Results of the recently released 2010 Global Retail CIO Survey show that despite the tough economic times, IT remains a strong component of retailer's budgets and that most retailers are planning a gradual return to pre-recessing spending levels.
The survey, conducted by Martec International, interviewed 109 CIOs and IT directors at retailers across nine business areas whose companies had combined sales of $528 billion in a total of more than 62,000 outlets -- approximately 8 percent of the retail market in the Americas and Europe.
First, the good news: Although IT budgets as a percent of sales dipped last year, they're beginning to turn around. For retailers as a whole, IT's budget is 1.3 percent of sales, compared to an average of 1 percent of sales last year. Even food retailers (which are generally more "recession proof" than other retailers) showed budget growth, from 0.9 percent of sales last year to 1.1 percent today. IT budgets are slightly stronger in Europe (1.3 percent of sales) than in America (1.2 percent).
More than half the retailers (53 percent) expect their IT budget percentages to remain stable, though as in the previous year, more than a quarter (26 percent) predict that the budget percentages will rise. Nearly one in five respondents (21 percent) felt their IT budgets would decrease, the same percent as last year. "It seems as if optimism has not increased even though actual IT budgets have been going up," the report said.
Longer-term plans to implement or improve systems are still on track. Most upgrades will focus on "optimizing the use of assets they already have, such as stock, labor, and space. The top three are promotions management (36 percent), automatic replenishment (30 percent), and assortment optimization (29 percnet)," the report pointed out.
The majority of retailers have significant investment plans for new IT applications. High on their list: multi-channel customer relationship management applications (or CRM), at 42 percent of respondents, and customer loyalty programs, at 38 percent, a sign that "retailers are now moving beyond simply cutting costs to stay in business. They are now working to attract more customers and keep existing customers happy, whatever channel they shop in." Applications that don't provide short-term ROI are of little interest. Among that list (despite buzz about the technology) are cloud computing applications, cited by 60 percent of respondents as "least likely to implement."
Topping the list of important application categories: master data management (MDM) applications across the enterprise (29 percent citing its importance) and especially for supplier management (33 percent). The report said that 35 percent of respondents plan to implement enterprise MDM within the next three years.
The survey can be downloaded at www.aldata-solution.com.
James E. Powell is the former editorial director of Enterprise Strategies (esj.com).