Just like those back-to-school catalogs that you dropped on consumer doorsteps in July, Forrester's latest Business Technographics® Benchmark Study served as an early reminder that it's time to start planning and budgeting for 2005. The study asked execs for a sneak peek at the directions of their IT budgets for next year. Check out these common retail IT spending themes to see how your plans compare to your peers'.
Overall spending is on the rise. As in most industries, the vast majority of execs are planning for spending that is on par or higher than in 2004. And those retailers that are increasing their IT budgets are doing so by an average of almost 20% -- well above the average of 12% for all companies.
Budget increases for new projects. Retailers said that an average of 38% of their overall IT spending goes toward new initiatives -- 25% more than the average company. And because less money is already earmarked for existing projects, retailers have more cash available for new projects.
Centralized IT and business leaders are the primary purchase decision-makers. The shift toward centralized IT has slowed among most enterprises, but it is alive and well in the retail industry. A whopping 82% of retailers have a centralized IT organization. What's more, IT purchases must not only satisfy a retailer's IT department but also the business department. Seventy-three percent of retailers have senior business leaders to oversee and prioritize IT investments.
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To help make those purchase decisions a tad easier, we've also published a flurry of Forrester Wave™ research that evaluates the leading vendors in several hot retail IT markets:
1. First up is my colleague Noha Tohamy's shootout of the top retail price optimization solutions. This research evaluates solutions that optimize prices across the entire product life cycle from vendors like DemandTec, Khimetrics, Retek, i2, and Manugistics.
2. Those of you who have been doing your RFID summer reading should check out my recent evaluation of RFID middleware platforms -- software that intelligently incorporates RFID data into applicable business processes. We put 13 vendors, including SAP, Manhattan Associates, OATSystems, IBM, and Oracle, to the test and made the call on which are best for early pilots and scalable deployments.
3. Retailers with offshore strategies -- or considering offshore strategies -- should read John C. McCarthy's showdown of the top three onshore (Accenture, EDS, and IBM) and offshore (Infosys, TCS, and Wipro) vendors across 60 different low-cost global delivery model (GDM) criteria.
4. Lastly, a must-read for marketing and IT gurus is Bob Chatham's evaluation of how Web analytics vendors serve large B2C sites of retailers like Best Buy, Gap, and Wal-Mart. The study used extensive interviews with users and vendor management teams to evaluate 14 top vendors including WebSideStory, Coremetrics, and Omniture.
Before I sign off, I would like to say a quick thank you to Kate Delhagen, who has been the author of Retail First Look since it debuted in December 2002. After several years at Forrester, Kate has taken an amazing opportunity to jump back into the frontlines of retail at a large company in her hometown of Portland, Ore. She will be missed immensely, but her energy and passion for the retail industry lives on at Forrester. Carrie A. Johnson (senior analyst, Retail) and I will tag-team on writing Retail First Look to spotlight a balance of front-end and back-end retail strategy and technology research.
As the research director for Forrester's retail, CPG, auto, and travel research, I am very interested in your feedback on our research. Do you have topics to recommend, data you would like to have, or technologies you want assessed? Drop me a line at sharynleaver@forrester.com.
Sharyn Leaver
VP and Research Director
Consumer Markets
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