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DQ-IDC Mega Users Survey 2008 : RETAIL: the New Growth Driver

Continued from page: 2

Stuti Das

Thursday, May 22, 2008

Tracking the Spend
There is no denying that IT has become an integral part of any business, and there is a growing trend of automation across verticals. Indian enterprises are increasingly moving forward from the deployment phase to integration. The conventional manufacturing industry has already implemented ERP, SCADA and is now going in for the next level of integration and automation.

On dissecting the IT spending pattern, enterprise-wide IT infrastructure continues to top the charts at 46% with the oil and petrochemicals sector predictably taking the lead with 61% followed by the pharma and biotech. IT has become crucial to drug discovery efforts and computational biology or bioinformatics offers enormous strategic options in discovering new drugs or modifying old ones to make them more effective.

One has to realize that the petrochemical and oil sector by nature is infrastructure intensive, and that there are lots of processes that are computer controlled. Similarly, in the ITeS sector as well, whether I get five calls or 5,000, a basic infrastructure has to be in place. So whether it is the petrochemical sector or BPO, the day you set the place up, you have to spend on IT infrastructure, says Ajay K Dhir, CIO, Jindal Stainless.

But, like last year, this year too there has been a paradigm shift toward packaged software and IT services. In the business-specific software, retail at 49% emerges as the clear leader. Agrees Anup Mandal, CIO, India Today Group, when it comes to business specific software, we have to keep in mind that retail has arrived just a few years back. Initially, the retail players used to have home-grown applications but now all the big players of packaged applications have specific software for retail, and this is very expensive. Moreover, the retail players had just basic backend in place 5-10 years ago but are now scaling up with the entry of new players. Infrastructure investment along with application investment will be there. The established players are moving from backend applications to vertical applications. And, not surprisingly, since the retail sector is gradually making the shift from mom-and-pop stores to more organized retailing.

Retail chains like Big Bazaar, Spencers, Shoppers Stop, etc, are reorganizing the way the retail business is conducted. The entry of new players like Bharti-Walmart, Reliance Retail, and Birla retail has only meant that technology adoption is on the upswing in these areas. In FY 2007-08, retail was at the bottom of IT spending when it came to enterprise-wide IT infrastructure but when it came to business-specific software, retail led with 49% indicating that retail store management applications and retail end-to-end solutions were in demand.

The auto sector is increasing its spending on packaged software application, namely engineering applications, leading to increase in business efficiency, reduced time-to-market, and seamless integration across the supply chain

Currently, Security Solution, Mail Messaging, and Wide Area Network continue to dominate the technology penetration graph with most organizations continuing to deploy these technologies.

But when it comes to future spending by organizations, Enterprise Resource Management takes the lead followed by VPN, WAN and CRM. Significantly, ERM also has the highest priority across verticals. However, there are some technology areas where even though the companies are looking to invest but would not feature in the top investment priority list simply because the cost of implementing them is quite low as compared to others. For instance, security solutions is a technology where most companies are looking to invest, but it does not feature in the top investment priority list due to low investment costs. On the other hand ERM features in the top priority list due to high investment costs.

The future, of course, will see the ubiquitous mobile phone becoming all pervasive whether it is data capture or money transactionin short, everything. Any application which could earlier be done on computer is now possible on the mobile and it is gradually becoming the most important channel of communication. The situation is not too far away when we will see increasing usage of mobile as credit card, forecasts Wahi.