According to the 19th annual 2009 RIS Retail Technology Trends Study, IT budgets won't likely be slashed in 2009 but retailers "will definitely reassess, redirect, reallocate and remove costs as much as possible."
Writing the executive summary in the report, Jeff Roster, VP IMS Retail at Gartner Research, which analyzed the findings, cited three key reasons why he doesn't see IT budgets decreasing dramatically in 2009. First, he said "customer-centricity is still the dominant strategy today in retailing. In all but the smallest retail formats this requires technology enablement to successfully carry out."
Second, PCI compliance has become a major focus across retail and "requires ongoing investments in consulting, hardware and software." Finally, Mr. Roster noted that predominance of "first-generation e-commerce platforms still exists across all tiers and subsectors, which requires significant upgrading or replacement."
Looking at major themes culled from the survey of more than 80 individuals with responsibility for IT budgets, Mr. Roster said Customer Satisfaction and Experience had occupied the top slot on the list of key strategies for the last few years. He called that "a very positive sign that even in these economic times these high-level strategies remain on the front burner."
He also noted that while cost reductions "are sweeping across organizations," IT is in a better position than most other departments since many cost-cutting initiatives are technology-enabled.
Mr. Roster also expects that "multi-channel initiatives will get significant attention over the next three years, which represents an ongoing transformation that shows no signs of slowing down even in a challenging economy."
Asked what obstacles stand in the way of improving efficiency, capital constraints not surprisingly led the way, cited by 69 percent of respondents. Other leading obstacles included "spaghetti" application architecture (cited by 44 percent), insufficient skills or people resources (38 percent) and legacy hardware or software isn't being replaced at corporate (34 percent).
Regarding what IT initiatives retailers were planning to start in 2009, Mr. Roster lamented that "nothing" was the most common answer he had received over the last six months from his blog and twitter efforts. But the survey found some more optimistic plans.
"The new initiatives can be summed up in two words: customers and data," wrote Mr. Roster. "A fair number of retailers are still wrestling with long-term POS and kiosk projects, which focus on improving customer service and satisfaction. And a larger block of retailers is wrestling with concerns surrounding data: How to find it, speed it up, and make it available to wider audiences within the organization."
Discussion Question: Are you similarly bullish that retail IT budgets will hold up in the downturn? What areas do you particularly see IT budgets supporting? What areas do you wish more IT budgets were funding?