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Retailers refocus IT investment for e-commerce

Kathleen Hall

Retailers are shifting IT investments from core systems to customer-facing applications, in a move to capitalise on the growth of e-commerce.

Speaking at the IDC Retail Insights conference, delegates described how they were ramping up online investments.

Pete Mitchley-Hughes, IT head at Marks & Spencer, said: “A lot of focus is going into building our own website, which has previously been hosted by Amazon. We’re keen to increase the flexibility and independence we have in that area.”

He said: “Mobile technology for M&S is a massive growth area and trying to keep up with that demand will be a massive challenge.”

Mitchley-Hughes had previously spent four years consolidating the firm’s ERP systems, in a move to enable it to develop a customer-facing operation on top of that. 

“There’s lots of consolidation happening in many different organisations in terms of getting rid of the spaghetti of systems,” he said.

Christine Bardwell, research manager at IDC Retail Insights, said: “In the past a lot of infrastructure spend went on ERP, but today the focus is on more customer-facing technology."

Ivano Ortis, research director at IDC Retail Insights, agreed that adding the proportion of spend on infrastructure has reduced from up to 80% of IT expenditure to 60% as retailers invest more in customer-facing technology.

The news comes following a recent announcement from Tesco that it will invest £150m across all its dotcom businesses in anticipation of further migration of customer shopping habits online.

Matt Jeffers, international development manager, Tesco.com, said: “We are seeing investment across the board, not in any one particular type of technology. 

"But it’s also got to support offline and look at how we build multichannel.” 

He said investments in technology in store so customers could browse products would also be key going forward. 

“Not just in the big stores, but in the local express ones to,” he said.

Jeffers said skills in agile development, where application releases were done iteratively, are in high demand. 

“There has been a move from the large project approach to regular releases on a monthly basis, that’s been a huge shift," said Jeffers.

David Hogg, commerce director at IBM, said customers were re-evaluating technology such as CRM systems they bought five years ago, in the light of changing customer behaviour.

But Peter McCartney, development manager at construction company Travis Perkins, disagreed that organisations were seeing a shift in IT investment costs. 

“Customer facing IT costs are an additional investment that needs to be made on top of existing ones," said McCartney.

“We still need to maintain three large ERP systems, one of which will soon need an upgrade – the cost of which will be significant. Those costs aren’t going away.”


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