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”.
Contributed by Kim Sapienza http://www.coresense.com
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