UK retail IT stays in-house

New research published this week has found that retailers generally have to get more out of their IT systems with no real increase in budget year-on-year.

Detailed studies of the IT infrastructure of 70 large European retailers carried out by retail consultancy, Martec International from across a range of sectors found those in the UK were more likely to be maintaining in-house legacy systems, with the largest IT departments in the region.

The average size of IT departments across all the companies interviewed was 132 people. The UK, with an average department size of 236 people, was the biggest. Frances Riseley, Martec practice manager said this figure need not necessarily suggest the UK has the most bloated retail IT departments. "We counted the number roles outsourced too, which doesn't mean all the people working for the department work directly for the company,' she said.

But Riseley did admit the number of in-house IT systems had had longer to proliferate in the UK than elsewhere in Europe, "partly because the IT director is more likely to want to guard IT and keep it in-house". "Systems developed in-house always need lots of people to keep them going," she added.

The average spend on IT systems among the European retailers interviewed was 1.3 per cent of sales. The Europe, Middle East and Africa IT in Retail 2007 report said this ties in with research carried out in the UK on IT spend and shows no growth. This means retailers have to get more value out of existing or upcoming technology investments.

The top three investment priorities for the next three years - for those 70 per cent of respondents who did not deem the information to be too commercially sensitive - store systems emerged as the main priority for all retailers, at 22 per cent. Second was buying and merchandising systems with 16 per cent, followed closely by supply chain management (15 per cent) and integration of systems, which in many cases follows mergers and acquisitions, with 14 per cent.

Mobile deployments account for some of the increased focus on store IT systems spending. The report found mobile technology is a rapidly growing area for retailers. Half of all retailers use mobile technology in their stores; more than do in their warehouses now. Riseley told IT PRO mobile technology is used for stock management including stock taking, price checking, markdown pricing and delivery scanning.

In addition three per cent are piloting mobile technology instore, three per cent have plans to implement, while the remainder (43 per cent) do not use mobile technology instore and have no plans to implement in the next three years. But the uptake on mobile technology had been almost as significant in the supply chain. Some 39 per cent of the retailers interviewed use mobile technology in the supply chain.

Service oriented architecture (SOA) and outsourcing also featured quite highly on the strategic radar of retail technologists, according to the survey.

SOA is of less concern: it found 12 per cent of all retailers are using SOA now and almost half (48 per cent) have no plans to implement SOA within the next three years. But 10 per cent of retailers will implement SOA within the next 12 months and an even larger proportion - 24 per cent - plan implementations within 12 months to three years. A minority (six per cent) use SOA only by virtue of software they have purchased that uses this methodology.

Although outsourcing is a popular strategic way for retailer to cut costs out of their IT budget, the research also found the most popular applications to outsource are multichannel or web-based systems (67 per cent), back office store systems (65 per cent) and logistics with 65 per cent. Only four per cent of outsource their entire function, where the UK is leading the way with such companies as Somerfield outsourcing to Tata Consulting Services (TCS) and Dixon's parent company, DSG International handing IT operations over to HCL.

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