Research from Sungard Availability Services® (Sungard AS), a leading provider of information availability through managed IT, cloud and recovery services, has revealed that the many retailers in Western Europe[1] fear they lack the skills needed to manage their complex IT estates.
The research questioned 61 senior IT decision makers from retail sector organisations across the UK, Ireland, France and Sweden around the current challenges and opportunities in managing their IT. The research was part of a wider multi-sector study that questioned 500 senior IT decision makers with more than 500 employees. Retail respondents had an average IT spend of £13m per year sitting slightly ahead of the average across all industries of £12 million.
Cloud computing is now considered a vital part of the retail industry’s IT strategy, offering the means to create more agile and responsive infrastructure, particularly to support demand peaks in service requirements during Christmas and related discount periods. Indeed, IDC confirmed that the cloud has now established itself as a viable IT model within retail, with the market set to increase its investment over the next two years[2].
The rise of cloud computing has placed IT into an era of transition from traditional / legacy IT to the cloud, with many retailers actively deploying ‘Hybrid IT’ as a strategic choice, running their business across a number of different IT platforms – whether that is private or public cloud, on-premise servers, or data centre services. Hybrid IT has been identified as a vital component of their success, with over half (57 per cent) of retailers stating that it is a necessary part of staying competitive within their industry. Over two thirds of retail businesses (62 per cent) also identified Hybrid IT as their stepping stone to the cloud.
Those retailers who have adopted a Hybrid IT approach have experienced numerous benefits – with 43 per cent pointing towards increased business agility, a third citing scalability improvements, and 30 per cent claiming it has improved customer service and response times. These three factors are particularly important to retailers, especially in this age of the 24/7 customer where even a slight dip in availability – particularly online – could be costly for businesses. The cloud allows organisations to scale up and cope with high website traffic, particularly during busy seasonal and sale periods.
Short Changed by Complexity
However, the research also revealed Hybrid IT’s ‘Jekyll and Hyde’ nature with a darker side existing. As increasing numbers of businesses adopt a Hybrid IT approach, the perennial issue of IT complexity is once again rearing its head; nearly half (43 per cent) of the IT decision makers within retail organisations rate their current IT estate as either ‘very’ or ‘extremely’ complex while nearly two-thirds (64 per cent) of retailers say they are now running even more complex IT systems than before.
This complexity is adding significant cost to the running of IT estates, with over a third (39 per cent) having seen an increase in operating costs thanks to Hybrid IT, with these organisations having experienced an average increase of £98,004 in IT costs every year.
Taking Stock of the Skills Set
In addition, over half (59 per cent) of retailers claim that they did not have the skills within their organisation to manage a complex IT estate, with 34 per cent stating that managing different IT systems across different departments was the biggest skills challenge they face.
Add to this that 30 per cent of retailers believe they lack the security skills needed to manage Hybrid IT and there is real cause for concern. In today’s era of cyber attacks and data breaches, where any slip up could not only result in a massive fine but also, irreparable damage to their reputation and, ultimately, the loss of customer trust.
“What we are starting to see here is the ‘split personality’ of today’s Hybrid IT environment,” said Keith Tilley, Executive Vice President, Global Sales & Customer Services Management at Sungard Availability Services. “On the one hand, retailers rely on this approach to IT to increase customer response times, agility and scalability. However, on the other hand, retailers are facing a lack of skills to manage this complexity, alongside the additional costs of running these environments.
“With consumers now facing so much choice both on the high street or online it is becoming increasingly vital to ensure that their high expectations are met. This is particularly important as we enter peak periods such as Black Friday and the wider Christmas period, which can account for a significant proportion of annual turnover. Like any IT strategy, it needs to be carefully planned. Hybrid IT might be, for many retail organisations, a stepping stone towards a cloud-first policy, but a failure to equip themselves with the skills needed will lead to significant issues for retailers both during the impending Christmas period, and into the future.”
The full report is available to download here.
[1] Respondents referred to as retail or retailers also include those from organisations who may be involved in the supply chain for this sector such as distribution and transportation
[2] https://www.idc.com/getdoc.jsp?containerId=prUK25349214
