Through a special arrangement, what follows is an excerpt of a current article from Grocery Headquarters magazine, presented here for discussion.
During any crisis, fiscal or otherwise, there is a natural tendency in business to slash budgets and pull in your horns. The real danger is burying your head in the sand when it comes to IT spending which, for some, may be the best growth strategy out there.
Yet, in conversations with retailers and vendors both inside and outside the supermarket industry, I keep hearing the phrase "you'd be surprised" when talk turns to how many companies are still wrestling with old legacy systems and outdated software. This is not the stuff that helps support new IT infrastructures and technologies such as wireless networks, RFID tagging and tracking, in-store kiosks, smart cards, lighting and energy management systems or new POS equipment.
However, I think the question now is not whether you spend the money or even how much, but where to get the best return on the investment for your particular operation.
For example, recent recalls have prompted tremendous interest in traceability. But are you really capable of tracking product quickly through your supply chain? The Produce Marketing Association is spearheading a move called the Produce Tracing Initiative (PTI) that will use Global Trade Identification Numbers (GTIN) on all shipments. The goal is industrywide global electronic traceability by 2012 -- first through a human readable number, then barcodes and, ultimately, RFID tags. At the very least, PTI will require companies to capture and store additional data. This means database changes and updated warehouse management systems.
Aside from recalls, rising fuel and commodity costs and a slowdown in consumer purchasing mean that better inventory and space management systems are a business imperative, not an option. And, can current systems support more sophisticated loyalty marketing programs or payment systems that will soon include digital media like mobile phones?
IT is even going green as more companies make the connection between energy consumption and computing needs. Basically, the more servers you have, the greater the need for energy to run and cool them down. Interestingly, Gartner Research has said that by the end of next year environmental sustainability will be one of the top buying criteria for one-third of all IT organizations.
Then, there's the laundry list of other daily IT functions that I haven't yet addressed. Among them: Labor scheduling; back-office management; pharmacy systems and price verification, not to mention equipment such as deli ordering kiosks and self-service checkouts.
This is not about buying technology simply for the sake of technology. I'm talking about practical and cost effective expenditures that will feed long-term innovations not short-term hype -- things that will improve the shopping experience for your customers and keep the business vibrant and growing.
Discussion Questions: Do you also find retailers clinging to old legacy systems and outdated software? What's driving this hesitancy to invest? Where should retailers put their IT spending these days?