IT Cost Optimization: How Retailers Can Save Big on Tech Costs
From providing exceptional digital customer experiences to tracking thousands of small pieces of inventory across a national or global supply chain, there are reasons retail is one of the most tech-immersed industries. And with a growing slate of inventory and POS systems, e-commerce platforms, and various customer-facing initiatives like loyalty programs, the industry is growing in its dependence on digital tools.
With this dependence comes challenges, and stifling IT costs are one of the biggest. To get spending down, tech-first retailers have increasingly turned to IT cost optimization: a set of practices that help companies save big on tech costs without slowing innovation or impacting performance.
Get started on your own IT cost optimization framework with these tips:
1. Optimize Your IT Infrastructure Using IT Audits
Investing in the right technology and paying for the right tech partnerships is the foundation of effective IT cost optimization. Retailers must regularly assess their IT infrastructure via routine IT audits and should always be willing to replace or upgrade components that no longer serve business needs. Where possible, consider switching to cloud services, which are typically more cost-effective and scalable than maintaining on-premises servers.
2. Automate Processes
We all know automation can bring significant time and money savings. The trick’s in how you implement it. For retailers, the focus should fall on automating tasks like inventory tracking, price updating, and even ordering. By capitalizing on automation opportunities, your company reduces the chance of human error and frees up staff time for more strategic tasks.
From an IT cost optimization perspective, automating can reduce reliance on certain tools that require expensive licensing and upkeep. For example, replacing a legacy system that requires maintenance with a cloud alternative relieves your organization of that upkeep cost.
3. Streamline Vendor Management
Retailers often deal with multiple tech vendors, which can lead to uncoordinated IT efforts and create tangled, unoptimized webs of agreements. As part of a smart IT cost optimization framework, retailers consolidate tech services to save cash, reduce points of failure/risk, and maximize the value they get from existing contracts.
A retailer with different IT agreements for each US region it operates in, for instance, will see substantial cost savings and performance improvements by consolidating to a single managed support provider.
4. Enhance Cybersecurity
It would be a monumental understatement to say retail cybersecurity breaches are costly. In a highly vibe-driven industry, a single incident can also create crushing reputational damage that — depending on severity — the business might never fully shake. Retailers should invest in robust cybersecurity measures, including firewalls, encryption, intrusion detection systems, and regular vulnerability assessments. While that level of commitment requires an upfront investment, it can save businesses from the potentially catastrophic costs of a data breach.
All that said, cybersecurity can become a money pit without smart controls. To stay truly secure while aligning cybersecurity with your IT cost reduction strategy, work with an expert that can show you exactly what you’re paying for in terms of coverage and outline exactly what value you’re getting back. Then, work with the same auditor to find vendors that align with your current tech usage and upcoming growth plans.
5. Invest in Training
While new technologies can streamline operations and elevate the customer experience, they can also lead to increased costs if employees don’t know how to use them effectively. Retailers should invest in regular training to ensure staff knows how to use tools to their full potential. The right learning program is effective at key points in the employee lifecycle (onboarding, for instance), thus ensuring ongoing tech usage aligns with IT cost optimization efforts.
6. Conduct Regular IT Audits
Regular IT audits can identify inefficiencies, risks, and opportunities for cost savings in a retail business’s IT environment. By understanding their current tech usage and needs, retailers can make informed decisions about their IT investments, identify areas for cost savings, and achieve IT cost optimization goals.
At Profit Advisory Group (PAG), we specialize in conducting comprehensive, risk-free IT audits and providing IT consultation. Get in touch with us to discover how to recapture technology dollars that can be reinvested into customer experiences or other plans.