How can retailers better leverage information technology in today’s difficult and rapidly changing economic environment?” It’s a common question as retailers search for opportunities to reduce costs, protect profit margins and increase efficiencies all while delivering an engaging customer experience. Microsoft Corp.’s David Gruehn weighs in with some examples and strategies that can help retailers reduce costs and improve performance to stay competitive in a challenging economy.
Save IT costs, reduce carbon footprint by getting virtual. Whether deployed in the store, warehouse or at headquarters, virtualization technologies can simplify the management of computing resources while increasing the use of existing systems. Virtualization is also a green technology—allowing IT budgets to be stretched by lowering net power consumption and associated cooling requirements.
For example, Costco Wholesale Corp. is well under way with plans to virtualize nearly 50% of its servers after discovering that, in many cases, its servers were running at only 5% utilization. The chain expects to reduce data center energy costs by $75,000 each month and gain an advantage by spending much less than its competitors do for IT.
Deliver bottom-line savings by rethinking standard business processes. Another green practice that can deliver fast ROI for retailers is to evaluate their paper dependence and drive to a paperless office. With document-related activities consuming up to 15% of a company’s annual revenue, retailers can achieve a positive boost to their bottom line by reducing paper consumption and moving paper and manual processes online. Electronic and document management software lowers the need to print training materials, manuals, policy forms, schedules and more. The result is substantial cost savings that can be easily monitored and an increase in efficiency and productivity by making information more readably available and searchable for employees.
Lower energy costs by reducing PC power consumption. Decreasing computer energy usage is one of the most effective ways to lower costs without hampering organizational capabilities. Retailers should ensure that they are taking advantage of all power-management tools in today’s software. They can also use central IT administrator features for controlling all enterprise and store-level computing resources and, for example, turning off a store manager’s desktop or a kiosk when the store is closed for business. With the Windows Vista operating system, companies with 1,000 PCs can save more than $70,000 a year and reduce carbon emission by more than 1 million lbs.
Respond faster to change by incorporating business analytics. Retailers need information systems that are not only more cost-effective, but that also enable people to understand and respond to changing business conditions with greater insight and speed than ever before. This means incorporating metrics for business intelligence and insight across their entire organization for smarter decision making and seamless execution. Key areas include enterprise performance management, merchandise assortment and planning, promotion optimization, customer loyalty and analytics, and supply chain optimization.
Consolidate and centralize business systems for reduced cost of ownership. Lower long-term total cost of ownership through vendor consolidation and desktop optimization that will reduce deployment and management costs. Online services can also help provide e-mail or virtual meeting capabilities to retailers at a more affordable cost. Cost savings can then be used to deliver top-line returns in such areas as customer centricity, digital marketing and self-service applications.