Retail CIOs Focus On Growth Rather Than Cost-Cutting - InformationWeek
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3/11/2009
05:48 PM
Bob Evans
Bob Evans
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Retail CIOs Focus On Growth Rather Than Cost-Cutting

Retail CIOs are looking to boost revenue via automatic replenishment, demand forecasting, enhanced promotional effectiveness, and Web-based sales channels, a new study says. Plus, 26% expect IT budgets to go up as a percentage of sales, while 51% expect them to hold steady. Cutbacks, schmutbacks!

Retail CIOs are looking to boost revenue via automatic replenishment, demand forecasting, enhanced promotional effectiveness, and Web-based sales channels, a new study says. Plus, 26% expect IT budgets to go up as a percentage of sales, while 51% expect them to hold steady. Cutbacks, schmutbacks!And while the study focused on CIOs in the retail industry, its underlying results are important for CIOs in all markets because they reveal the forward-looking perspective CIOs must keep these days in spite of global economic gloominess. In particular, this excerpt from the study's introduction captures powerfully the wrenching changes and challenges facing all CIOs today, regardless of industry:

"It's important to recognize that today's retail model is, largely, a system built for the realities of an earlier era -- a linear, push-based process where products are manufactured in isolation and put into market en masse from factory to truck to store, for customers who do the majority of their shopping in suburban malls. This approach was well-suited to the needs of manufacturers, retailers, and consumers half a century ago. But today, this system is straining to adapt to global supply chains, new ways and venues for selling -- both physical and virtual -- and a very different kind of consumer. [Today, retailers and manufacturers need a system] "... that can be fed by customer insight at every point in the process -- all the way from design to distribution. It needs to be instrumented, so every item of inventory can be tracked and accounted for. And it needs to be intelligent, so vast amounts of customer data can be analyzed and turned into real data in real time. By building intelligence into our entire retail system, retailers, manufacturers, and suppliers can eliminate inefficiency and waste at every step of the chain -- crucial in the current economic downturn. Even more important, retailers can serve the new breed of empowered consumer, whose needs for high value, individual service, and low prices will only grow."

Sound like some of the challenges you're facing, except with slightly different terminology? More-informed customers, outmoded and limited capabilities throughout the supply chain, and creaky processes incapable of handling the demands of "the new breed of empowered" customers -- these are significant issues for all CIOs.

Via the link above, you can download highlights of the survey, which was jointly sponsored by Aldata Solution and IBM, but here are a few other results I found to be particularly compelling:

• The category of "Data and IT Architecture" provided an interesting twist as the application respondents said was most important -- Enterprise Master Data Management -- wasn't widely implemented among those respondents. So a significant competitive advantage is likely for retailers that can master this complex but powerful capability. Only 53% of respondents have implemented MDM, while 23% said it's coming in the next three years and 24% said they have no plans to go that way.

• 32% of respondents said they're running SOA apps and plan to upgrade them.

• And, in another one of those head-scratching nonfindings that every survey seems to produce: "There is no correlation between satisfaction with systems and the level of IT spend."

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