capturing it tss spend in the retail / ecommerce space in 2014 leslie hand, research director, idc...

Capturing IT TSS Spend in the Retail / eCommerce Space in 2014

Leslie Hand, Research Director, IDC Retail InsightsA Webcast Sponsored by Avnet

© IDC Visit us at IDC.com and follow us on Twitter: @IDC 2

Objectives

Retail Drivers 5 Year Omni-channel Retail Roadmap Business Impacts Investment Trends Guidance

No doubt - the customer is omni-channel!

Why? To maximize efficiency! For convenience Because I want what I want when I

want it For faster (& more or less) service –

self determined For price compare/validation To obtain complete and trusted

information To get product recommendations &

personalized offers To be treated as the unique shopper I

am

3

© IDC Retail Insights Visit us at IDC-ri.com 4

Retail Drivers

Political and Economic Social

TechnologyBusiness

• Mixed economic recovery, disparate incomes and wealth

• Recovering consumer confidence

• Intensification of competition from all quarters: Amazon, fulfillment, new entrants

• Pull to globalize business and localize presence and products

• Borderless, anytime-anywhere business

• Accelerating transition to sense-and-respond

• Big data and analytics; shortage of related skills

• Rapid emergence of cloud-based provisioning and services

• Increasing potential with tech mashups

• Varied adoption and mash-up rates of 3rd Platform Pillars

• Changing demographics: millennials, boomers, and cultures

• Ubiquitous mobile and social lifestyles

• Media spending and consumption shift to digital and mobile

• Increasing concern for privacy and security

Jan-13

Feb-13

Mar-13

Apr-13

May-13

Jun-13

Jul-13

Aug-13

Sep-13

Oct-13

Nov-13

Dec-13

70

75

80

85

90

5 Year Omni-Channel Retail Technology Roadmap

Customer Engagement

5 Year Horizon

Speed

Reliability

Resiliency

Engagement

Innovation

Now

Orchestrated Fulfillment

Optimized Fulfillment

DynamicFulfillment

Mobile Enablement

Interactive Store

Immersive Commerce

Data-Driven Marketing

Contextual Marketing

Interactive Marketing

Optimized Assortments

Dynamic Assortments

Localized Assortments

$4B-$8B

$2B-$4B

<$2B

Investment

Processes

Watchwords:RelationshipReciprocityRelevance

Value of Transformation

Workloads GROW!

6

Skyrocketing e- and m-commerce

Data explosion

Virtualized corporate applications

Cloud services

Backup of data from distributed network of sites (stores, datacenters, HQ)

Video and rich media everywhere

Voice over IP systems, where the traffic is time sensitive and requires the appropriate quality of service

Remote system administration

Emerging Internet of Things (IoT)


IT Investment Drivers – Adaptability, Security and Resiliency Rule

Meet compliance requirements

Improve customer acquisition and retention

Increase organization's productivity

Introduce new and/or improved products and services

Improve organization's business processes

Reduce organization's costs

Increase organization's revenue

0% 5% 10% 15% 20% 25% 30% 35% 40% 45%

Resiliency Agility Flexibility Responsiveness Security

Source: IDC's 2013 Global IT and Communications Surveyn=218


High Price of Failure

Source: Crain’s Chicago, June 2013

http://www.chicagobusiness.com/article/20130604/BLOGS11/130609948/the-price-of-failure-data-center-power-outage-cost-sears-2-2m-in-profit


The 3rd Platform Will Change the Skills for 95% of IT Roles Over the Next 3-5 years…

…especially IT Management & Executives roles


High Cost of Staffing 3rd Platform Positions

Application Development

Data Architecture, Management and Storage

Mobile Development

Enterprise Architecture

IT Management and Executives

Security

Business Intelligence & Analytics

0% 5% 10% 15% 20% 25%

Organizations will pay an average premium of 18% to fill these positions

Source: IDC's 2013 IT Staffing Survey - Jun 2013Question: For roles you indicated are “difficult to hire,” what % premium is your organization willing to pay to hire qualified candidates in this role?n=131


Growing Investments on Innovation

2010 2012 2013 planned0

5

10

15

20

25

30

35

40

45

50

Infrastructure systems (e.g., Foundational IT systems. Includes hardware, software & resources including staff associated with them)Essential software (software necessary to run your busi-ness but does not necessarily help achieve new business goals)Innovative (IT investments that move beyond keeping the business running as is; IT investments that help the business to further its busi-ness goals)



IDC Retail Insights Top 10 Predictions for 2014 Digital Transformation Business Transformation Fulfillment

Single Department or Business Unit

Company-wide/ Industry-wide

0-12 12-24 24+

Multiple Departments or Business Units

Time (months) to Mainstream

Org

aniz

atio

nal

Imp

act2

6

5

1

4

9

3

10

8

1-Omni-channel Experience

2-ERP and Merchandising

Transformations3-Immersive Commerce

10-Same day Fulfilment

Prerequisites

6-Hyperpersonalized

promotions

4-Big data & analytics

9-Omni-channel Fulfilment

8 – PLM and Sourcing

4 –Marketing Technology Investment 7- Commerce

Investments7

Bubble Size = complexity / cost to address

Big omni-channel Investments

Big transformation projects


Funding Transformation and Innovation: CapEx vs. OpEx Shifts

CapEx = 39%

OpEx = 61%

2009

CapEx = 43%

OpEx = 57%

2012

CapEx = 42%

OpEx = 58%

2013 (Planned)

Focus: Business efficiency - IT efficiency - Greater innovation



Internal IT Spend Allocations – Software is the big winner

• 2009 = 19.8%• 2012 = 26%

Software Application Development

• 2009 = 32.5%• 2012 = 35%

Hardware and Software Support/Maintenance

• 2009 = 20.5%• 2012 = 18%

System and Networking

Management



Internal IT Budget for Human Resources - % Internal IT

Enterprise Architect

Data warehouse and analytics staff

Data Center support

IT Procurement

IT Strategy

Help desk

Database Administrators

Business Continuity

Telecommunications staff

Application Development and Maintenance

Network monitoring and management

Security

Program Management

0.00 1.00 2.00 3.00 4.00 5.00 6.00 7.00 8.00

Source: IDC's 2013 Global IT and Communications Studyn=218

Example: Enterprise Mobility Comes at a Price

Mobility comes at a price:• Mobile Apps• Mobile Security• Device Management and Support• Infrastructure

16

Plan for Retail IT Staffing Disruption - Example: Mobility

BI & AnalyticsSocial Community Admin

Project Management

IT Sourcing & Procurement

Application Operations

Business Analysis

Social Developers

Data Architecture, Mgmt & Storage

Training & DocumentationNetwork Operations

Service Management

Technical Support

IT Management & Execs

Enterprise Architecture

Help Desk

Mobile Development

Security

App Development

0%

50%

100%


The four pillars will disrupt application development, security and help desk roles

Source: IDC's 2013 IT Staffing Study, Jun 2013. Showing % of respondents who believe the skills will significantly change in the next 3-5 years as a result of mobilityn=131

IT Buying will be Disrupted as well

Top 10 reasons that IT will survive 2020

1. Custom solutions

2. Systems of Record a utility

3. Systems of Engagement a priority

4. Packaged App migration to cloud TBD

5. Legacy Apps and Infrastructure - mature, stable, and scalable

6. Risk/Reward Ratio unfavorable

7. Security concerns

8. Cost control concerns

9. Cultural resistance

10. Business wants more IT not less!


CIOs are not worried about the demise of IT. The real risks are the IT Talent and Innovation gaps!

The CMO and COO is more involved in decision making but the CIO is the custodian of an even broader set of capabilities! 20% of IT Staffing Survey respondents say retail CMO is a key decision maker


Understand the challenges

We've made significant progress over the past 18 months, but the process will never end, the ongoing objectives to keep improving the ease of use, personalization and connectedness of our online experience - Ted Decker, SVP, U.S. Retail Finance, The Home Depot.

A lot of our IT enabling spend is for interconnected retail. So it's a capacity issue and not a dollar governing how much we're going to spend on CapEx. We're running out our strategic plans and our long-term financial plans – we haven't hit the value just yet. - Ted Decker, SVP, U.S. Retail Finance, The Home Depot

Creating Resiliency:Adapting to Feedback from Positive and Negative Events

Documenting best practices and task-specific expertise

Connecting the workforce with critical resources to report on adverse events

and resolve pain points

Simplifying access to successful workflows and practices

Driving process standardization, integration, and consistent policies

to reduce complexity

Recognizing successful outcomes; predicting situations that contribute to profitable customer relationships

Analyzing trends to prevent persistent disruptions and fraud in advance or in real-time

Providing a platform to elevate employee (or task-related) success and creating a learning organization

Gathering resources and expertise to speed corrective actions

Mitigating RiskAdapting or responding to

negative incidents

Enabling RewardIncorporating positive

outcomes into future work

Resiliency: Adapting to changing

circumstances

Enabling

Reward

Minimizing

Risk

23

Questions?

Leslie Hand

[email protected]

@lesliehand

Join us for conversations in our IDC Retail Insights Community

mailto:[email protected]



http://idc-insights-community.com/retail

http://idc-insights-community.com/retail

capturing it tss spend in the retail / ecommerce space in 2014 leslie hand, research director, idc...

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