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To ITO or Not to ITO: Retailers Ask the Question

Information technology outsourcing (ITO) enables organizations to cut labor and infrastructure costs, improve operating efficiencies and increase flexibility in the IT department. Although certain aspects of retailing are ideally suited to out-of-house automation via ITO, the retail industry as a whole has not embraced ITO as much as some other industries.

That said, ITO is not an appropriate strategy for every company, IT department or IT-related situation. So how can a retail executive making IT decisions determine when they should outsource and when they should keep things in-house? Following are three situations where a retailer should at least seriously consider using ITO as a means of increasing efficiencies while reducing costs.

Don’t Sweat the Small Stuff
One area of any enterprise where ITO can prove hugely valuable is in the management and processing of low-level processes and data. Generating large volumes of individual transactions both on the front and back ends of the business, retailers typically execute numerous low-level processes and collect reams of low-level data (more on that in a moment).

By moving some or all of the processing of their “small stuff” to outsourcing providers, retailers can shrink their IT budgets without sacrificing any solutions or personnel focused on handling more important areas of the business. In addition, IT employees are freed to spend more time developing, implementing and managing higher-level systems that perform more mission-critical processes and tasks.

No Task is Too Big
On the other end of the ITO spectrum, sometimes IT-related tasks that require expensive and complex systems and/or highly trained personnel are best left to outsourced experts. For example, all those low-level transactions retailers execute every day produce tiny nuggets of data that don’t mean much individually, but when holistically combined and analyzed as “Big Data” can offer unparalleled insight into the enterprise.

Harnessing and leveraging Big Data to obtain the actionable insight hidden within is neither cheap nor easy. Rather than going to the considerable time and expense required to develop in-house Big Data competency, retailers may find it much more effective and efficient to outsource Big Data operations to a third-party expert. This also applies to other leading-edge IT-related activities that are becoming more crucial to everyday operations, such as social listening and monitoring, mobile integration and personalized marketing.

Call for Help
Say the word “outsourcing,” and many people think of someone wearing a headset in a call center. Call center was one of the original outsourcing practice areas, and remains a major outsourcing competency. However, modern call center outsourcing encompasses much more than routing customer complaints to a phone representative in a distant office. Using sophisticated systems, ITO providers can automatically screen all forms of customer contact (including email, IM, text, and online/social commentary as well as phone calls), categorize and prioritize them, and route them to a specific expert for prompt resolution. In some cases, automated response may be sufficient. ITO can also be applied to internal call center operations, such as IT help desks.

So while ITO is not a panacea for all retailer IT needs, it is a viable option that should always be part of the technology conversation.


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