StORES Magazine - September 2007 - (Page B6) 2007 Retail IT Budgeting Study Dial-up and satellite investment fall in favor of DSL and T1 connectivity According to the AMR Research Report, “The 21st Century Store Tech Trends Survey,” retailers anticipate that 76 percent of their store-centric applications will be centrally managed by the end of this year. While retailers are still reluctant to move core POS software off of store servers, we see newer versions of software applications such as workforce and task management, customer loyalty, inventory and order management conducive to central management. This strategy allows retailers to manage their businesses holistically and provide a seamless crosschannel relationship with customers. As a result, retailers increasingly require robust and fail-safe connectivity for the data sharing required between home office and widely distributed store locations. Retailers in the study are flattening their operational budgets for telecommunications and networking in 2007 as they complete transitions to next-generation broadband connectivity. Voice communications or combined voice and data services account for 65 percent of telecom and networking budgets. Companies continue a mass exodus from dial-up connections and fractional T1 lines, particularly as the economics of DSL make it an increasingly attractive option. FIGURE 5: WAN connectivity budget breakdown 2006 2007 22% 6 7 1 35 24 5 18% 7 7 1 23 29 15 Other Satellite T1 Cable DSL Fractional Dial-up Retailers grow outsourcing while still investing in internal IT staff Retailers invest to retain internal staff while also leveraging outsourced labor in areas such as legacy software support, application development and hardware maintenance. With a planned 11 percent budget increase for IT bonuses, retailers continue a trend of moving toward objectives-based incentives, linking IT staff benefits more closely to project success. Additionally, budgets for salaries and benefits increased 3 percent and 7 percent, respectively, and training budgets increased by 17 percent. These investments are a must with the tight technology specialist market that the industry is experiencing. FIGURE 6: Retail IT labor expenses 2006 2007 $7,947 $6,767 Total expensed outside (non-employee) labor and consultants IT-related travel expenses Training costs for IT employees IT bonuses Benefits for internal IT employees Salaries for internal IT employees B6 STORES / SEPTEMBER 2007 374 207 719 3,789 19,080 403 $243 795 4,062 19,737 WWW.STORES.ORG http://WWW.STORES.ORG
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