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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)
© IDC Visit us at IDC.com and follow us on Twitter: @IDC 7
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
© IDC Visit us at IDC.com and follow us on Twitter: @IDC 8
High Price of Failure
Source: Crain’s Chicago, June 2013
© IDC Visit us at IDC.com and follow us on Twitter: @IDC 9
The 3rd Platform Will Change the Skills for 95% of IT Roles Over the Next 3-5 years…
…especially IT Management & Executives roles
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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
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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)
Source: IDC's 2013 Global IT and Communications Surveyn=218
© IDC Retail Insights Visit us at IDC-ri.com 12
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
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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
Source: IDC's 2013 Global IT and Communications Surveyn=218
© IDC Visit us at IDC.com and follow us on Twitter: @IDC 14
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
Source: IDC's 2013 Global IT and Communications Surveyn=218
© IDC Visit us at IDC.com and follow us on Twitter: @IDC 15
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%
© IDC Visit us at IDC.com and follow us on Twitter: @IDC 17
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!
© IDC Retail Insights Visit us at IDC-ri.com 18
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
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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
© IDC Visit us at IDC.com and follow us on Twitter: @IDC 22
23
Questions?
Leslie Hand
@lesliehand
Join us for conversations in our IDC Retail Insights Community