Mobility Drives Retail IT Investments to $43.9B
The TBR report, titled “Retail SourceIT Report,” is the first in a planned annual research program. It is also the first in a series of similar research reports covering other industries.
- Large North American retailer IT budgets will increase 5% ($2.1 billion) to $43.9 billion in 2013. Of this, $30.7 billion is the component devoted to software, professional IT services and hardware. The rest falls into the salaries and overhead component.
- External forces driving the investment are: increased consumer confidence, e-commerce growth, smartphone penetration and tablet use.
- Internal forces that need to be addressed are: struggling profit recovery, inefficient systems to manage end-to-end value chain, aging packaged or in-house software, increased competition, and a sense of needing to capitalize on renewed opportunities.
- Retailer responses to these forces are: expanding business capability via IT investment, focus on e-commerce and mobile projects, identify emerging consumer behaviors and trends via analytics, and optimize IT systems to enable efficient inventory and logistics.
- Largest IT budget items are: 24% infrastructure ($7.4 billion), 14% professional services ($4.3 billion), 13% business applications ($3.9 billion), 11% software technology ($3.5 billion) and 11% systems management ($3.5 billion).
- The following are the average project budgets driven by line-of-business departments in four key areas. Note that all tie into mobility and POS in one or more ways: retail POS $380,000, e-commerce/mobile commerce $790,000, inventory management $1.8 million, and BI and analytics $2.2 million.
- The following are the average project budgets driven by IT in four key areas: HR and WFM plus supplier relationship management $2.6 million, transportation managemcent $2.8 million, data mining $4.3 million, and ERP $4.9.