Retail IT in 2012 -- Sourcing Professionals Take Note! (Part 1)

Retailers will be increasing their IT spending in 2012 at a rate higher than many other industries. Why? Advancements in mobile shopping and customer experience delivery, as well as a need to maintain and refresh infrastructure, have shifted customer expectations and the competitive landscape.

With IT spending on the rise, retail IT and sourcing professionals should avoid a few costly mistakes as they forge new vendor relationships and manage new ones:

• Not challenging annual maintenance increases. Remember, most major software/hardware vendors increase rates arbitrarily with little justification. Ask your vendor to justify their rate increase, and negotiate accordingly.
• Paying for maintenance on unused Oracle products. Oracle likes to oversell retailers, and then make them pay maintenance on products they will never use. If you only use a portion of the functionality and products provided in your Oracle suite, it's time to right-size your maintenance agreement -- something that can be challenging, but can be done under the right circumstances.
• Upgrading or buying new PoS terminals without evaluating the competition. Innovations in mobile devices, customer loyalty programs and mobile payments have transformed PoS technology...and the vendor landscape. As tempting as it is to stick with your incumbent, it's wise to evaluate other vendors to see if they can better meet your IT/business objectives. In the very least, it will keep your existing vendor motivated and provide leverage for contract negotiations.
• Agreeing to minimum purchase clauses in SaaS contracts, and not watching ancillary charges. More and more retailers are opting for SaaS. If you're switching to a new vendor, or renewing your current SaaS agreement, eliminate minimum purchase clauses from your contract. These clauses, which specify a minimum number of licenses or users over the contract term, will prevent you from reducing the number of users/licenses in the event you have to scale down your IT infrastructure. Additionally, don't forget to specify your needs and the associated costs for ancillary services (e.g. custom reporting, integration). Defining this up front in the contract will save you bundles down the line.
• Upgrading the contact center without vendor benchmarking. Did you know that some retailers pay 20-30 percent more for the same call center technology than others? That's because retailers often fail to benchmark pricing and contract terms to determine the fair market value of their purchase before signing the deal. In 2012, do yourself a favor: benchmark every contact center agreement to ensure you're paying a fair price.