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With consumers putting the brakes on spending, it would be logical to conclude that the nation’s top retailers are cutting back on their IT investments this year.
In fact, IT spending in retail is down slightly through the first half of 2009, according to market research. But it’s not all black and white.
While retailers are paring their spending and postponing nice-to-have but unessential projects, they’re continuing to invest headlong into deploying ERP modules and other technologies intended to optimize business operations, according to Cathy Hotka, principal of Cathy Hotka & Associates, LLC, a Washington, D.C.-based retail relationship marketing firm.
Hotka, former vice president of IT at the National Retail Federation, brings retail IT leaders together frequently and keeps her finger on the pulse of what’s happening in the industry. So while few retailers are currently deploying full-blown ERP suites at the moment, many companies are rolling out financial modules such as HR and payroll systems where they’re looking for quick returns, says Hotka.
To some degree, time and attendance apps are popular right now as retailers are looking to ensure that they have the right number of salespeople behind store counters at the right times, says Hotka.
ROI is also top-of-mind for retail CIOs as they examine ERP investments, says Hotka. Retailers are generally looking to install “vanilla” software applications that require little if any customization in order to make the software faster and cheaper to install, says Hotka.
CIOs are under pressure from CFOs and CEOs to invest in IT/business projects with quick ROI -- six months or less if possible, she adds. “Their marching orders are very clear – that projects are going to be manageable, no one’s going to have to go into emergency mode (on a problematic implementation) and expectations are set up front as to when a project is going to be stamped as complete,” says Hotka.
Still, it’s all part of a longer-term ERP strategy for many retail CIOs. Many IT leaders are starting with the deployment of a single ERP module to see how effectively it works for the company and then look to install additional software from the same vendor once the spending climate improves, says Hotka.
Retailers are also investing more aggressively in customer-facing systems that are intended to help them learn more about customer behavior and spending patterns, says Hotka. For instance, she points to one client, a dollar store chain, which recently applied an optimization system which helped it to discover that customers who purchase Coca-Cola turn out to be its most profitable patrons. Armed with that information, the retailer began positioning higher-priced merchandise near the Coke display to help it move more of those more profitable items, she says.
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