Last week, a well-known analyst firm warned companies to start now to cut back on IT spending in the face of was looks like rocky economic times. While it’s certainly understandable that companies might respond in that fashion, recent RSR research suggests that a more measured approach might be in order, for these reasons:

 

First, capital is cheap at the moment. 

 

Secondly, our recent research, Our research has consistently shown that retail winners tend to pull ahead of the competition during times of economic incertainty, while others go on the defensive.

 

Third, technology is not the solution, but the enabler. We should all know this by now, and retailers certainly seem to understand that “it’s the process, stupid” (paraphrasing the first Clinton’s 1992 presidential campaign mantra). Information technology speeds up business processes and makes them scalable. If the business redesigns a process to eliminate handoffs and streamline the path between start and finish, then the thoughtful application of information technology makes that process go much faster and enables the business to scale it up and accelerate value delivery. For example a soon-to-be released analysis on multi-channel retailing suggests that retailers are at a point where the appropriate use of new technologies to enable their business processes actually lowers their operational costs, not raises them (and, the cost of money helps this!).

 

A fourth reason is that the IT organizations in many companies, and in retail companies particularly, have spent the last several years in deep “cost control” mode, which was the result of overspending in the “dot-com” era. In an earlier Retail Paradox weekly article, Restoration Hardware CIO Jim Brownell stated, “In the Y2K and dot-com period, we more-or-less drove the bus, and the truth is, we spent way too much money. So our penance for that was to be pushed back into the organization, and be a cost management organization reporting to CFO’s – IT took a back seat.” The above mentioned analyst firm’s advice presupposes a certain lack of fiscal discipline-  which shouldn’t be the case after so many years of “penance”.

 

In RSR’s inaugural retailer webinar, entitled “Creating Certainty in Uncertain Times: 10 Ways Retail Winners Survive and Thrive”, we referenced a forthcoming study on business challenges and opportunities related to retailers’ multi-channel offerings. Responses from over 100 retailers primarily in the U.S. and EMEA in February indicated that while retailers have improved the cost structure that supports multi-channel operations and have turned those efficiencies into delivering more profitable customers in the last two years, improving operational efficiencies remains a high priority for all retailers. In fact, when we asked retailers what the biggest organizational inhibitors are to offering an integrated multi-channel offering to consumers, retailers cited … technology! Retailers continue to manually synchronize their “stove piped” channel-specific systems, and this adds cost and inhibits the ability to respond quickly to changes in the marketplace.

 

Multi-channel retailing has become inextricably intertwined with consumers’ sense of what a retailer’s brand value is relative to their lifestyle needs. Our 2008 survey respondents clearly understand this. Although the need to “improve operational execution across all channels” is important to most respondents of our survey, the need to “create a single brand identity across all channels” was cited as the single most important opportunity.  When we asked retailers, “What are the top organizational inhibitors that currently present a barrier to your company becoming an efficient multi-channel retailer?”, their responses make it clear that their legacy technologies are a stubborn inhibitor to progress, and one that they seek to address in order to meet consumers’ expectations that all channels to work together to enable a seamless experience.

 

 The multi-channel example is indicative of the bigger issue, and that is that winners accelerate business value delivery while laggards hunker down.  RSR doesn’t recommend that retailers miss the opportunity to be winners in uncertain times. As we said in our webinar, “hope is not a strategy”. Instead, if the past is prologue, winners will focus on pragmatic “today” technology decisions that:

 

 

RSR research shows that specific “Quick Hit Choices” include: