Survey shows retailers increase IT spending

Eva C. Komandjaja The Jakarta Post Jakarta

Retail companies around the world with annual revenues of more than US$100 million, including four companies in Indonesia, spent 2.1 percent of their total sales on information technology (IT), higher than last year's total of 1.7 percent, according to the 2003 Retail CIO Survey.

The survey, conducted by IBM Business Consulting Service in association with Executive Technology magazine, shows that the increase in IT spending is driven by an increased focus on business initiatives such as outsourcing, revamping of Point-Of- Sale (POS) systems and improved enterprise reporting and analysis.

These initiatives are expected to deliver benefits, such as improved customer responsiveness, greater productivity, cost reduction and increased enterprise flexibility.

ASEAN/South Asia Consumer Packaged Goods and Retail chief Patrick Medley said on Monday that retailers globally were focused on improving business results through IT investment and were increasingly aligning technology investments with their business strategy.

This is represented by the findings that indicates 59 percent of the retailers' main reason for increasing IT spending is enhancing employee productivity and improving customer satisfaction. Thirty percent of the companies surveyed are from the Asia-Pacific region, with the remainder located in North America and Europe.

Seventy-nine percent of the Asia-Pacific retailers have prioritized executive reporting and analytics, while Data Warehousing is a corporate priority, according to 75 percent of the retailers in the region.

Nearly 40 percent of retailers are expecting to allocate at least 20 percent or more of their IT budgets on outsourced projects in the next three to five years. The survey indicates that the motivation behind IT outsourcing is to reduce operating costs as it was chosen by 37 percent of the respondents.

However, the retailers are still focused on solving fundamental challenges, such as the lack of IT integration and outdated POS systems.

Today's retail environment, with its increasingly competitive intensity, unforgiving financial pressures and unpredictable threats, requires retailers to fuse IT with business strategies to compete effectively and survive.