Store IT as a Service: Lighter, Leaner, Cheaper

One Step News

Written by Joe Skorupa, published on on December 20, 2016.

Retailers want to be bigger, better and faster, but those goals don’t really apply to technology. Lighter, leaner and cheaper are better IT goals, which is why software-as-a-service (SaaS) is making powerful inroads in retail today. The boom in SaaS is driven by a desire for technology with a lighter touch, leaner IT team, and lower cost for initial installation. Is store IT as a service next?

Cloud computing has been a reality in one form or another for many years (remember the ASP model from the late 1990s?), but in its current iteration as software-as-a-Service (SaaS) it has only become widely adopted in retail for about five years, maybe a bit longer.

Today, about a quarter (26%) of retailers say SaaS is a major priority in their organizations, according to the report “Store IT as a Service.” This high level of adoption is the culmination of a long, incremental trajectory of growth for cloud computing, which was initially met with strong skepticism by many retailers.

More than half of retailers (55%) say SaaS is rising on their priority list and, importantly, zero say it is not currently a priority.

There is a long list of benefits associated with the cloud-computing model, something that is clearly fueling interest and adoption by retailers. The big four reasons can be summed up by saying they shift a great deal of the burden off of the retailer’s IT team and onto the SaaS provider. They are: 1. Reduced need for internal IT resources (71%), 2. Vendor takes responsibility for updates (68%), 3. Vendor takes responsibility for reliability (65%), and 4. Scalability (65%).

Store IT as a Service?

Options have long been available to retailers to outsource some elements of store IT in a cloud-computing model. These include help desk and payment processing to name a few. However, as retailers become more comfortable with the SaaS model they are also taking a look at adopting it in other store areas.

The top three functional areas most likely to use the IT outsourcing model are help desk (68%), as expected, wireless networks (52%), and payment processing (48%).

While the use of outsourcing IT for wireless networks is a newer development it is also a no-brainer. Despite the hopes and dreams of retailers, installing wireless networks in stores is not a one-and-done proposition. Once the wireless network is installed a constant stream of responsibilities is required for things like identity management, security, administration, updating, break/fix, mobile device management, modifications and scalability.

From an overall industry perspective, a majority of retailers believe that outsourcing IT services to stores is less than two years away for mainstream adoption – 39% say within two years and 16% say within one year.

Today, nearly a third (32%) say they have already implemented some form of outsourcing IT services to stores and 13% say their timeline for adoption is “short term,” which means they are in the process of developing budget and vendor selection plans. Only 16% say they have no interest at all in outsourcing IT services to stores, which is a low number.

Other key takeaways from the report include:

  • The four major technology reasons for growing interest in outsourcing IT for stores are: increasing IT productivity (55%), growth of in-store technology (45%), leaning out IT staff (36%), and stretching the IT budget (32%).
  • The number one business reason for pursuing IT outsourcing for stores is the cost and effort of regular updates or upgrades of both software and hardware, which was selected by 58% of retailers.
  • What is the best way to describe the future of outsourcing IT services for stores? Retailers pick the phrase “unlocks value” as the best description, chosen by 32%. The second best description is “wave of the future,” chosen by 23%.

For more information about store IT as a service, click here to see the full report and a complete set of charts and analysis.

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