When deciding on the replacement of your retail IT system,
it pays to consider which particular philosophy and strategy your organisation
wishes to follow in the systems area. Consider the following chart.
Large retail chains should adopt solutions in quadrant 2, where they
can gain the maximum benefit, by leveraging the IT investment in multiple
stores. Such chains are also in a position to fund the necessary investment.
Smaller chains should seek solutions in quadrant 3, to achieve benefits
in line with the level of investment they can afford.
Systems that fall into the ‘poor value’ areas in quadrants
1 and 4 present problems for all parties, including the retailer:
- Systems at high cost (quadrant 1) mean that the retailer pays far
too much for the solution, no matter what intangible benefits might
have been promised. Big money spent can never be fully recovered.
- Comprehensive systems at low cost (quadrant 4) may seem like a bargain
for the retailer. However, when the software vendor underprices their
product, don't be surprised to see the after-sale costs go out of sight.
Always consider TCO (Total Cost of Ownership). Also, beware of the possible
consequences if the vendor persists in making such ‘great deals’.
A bargain IT solution can become an expensive mistake for the retailer
if the software vendor fails to survive and gets out of business.
The bottom line: spend the right amount of money to buy the right thing.
If you spend a little, it will cost you a lot in the long term. If you
spend too much, you will never get it back. If you are in doubt as to
what is reasonable to invest in IT - ask for help.
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