VERDICT PRESS RELEASE:

Indies can survive if they specialise & play to natural strengths

LONDON – Thursday 23 February 2012 – Growth in the convenience food sector is set to continue to outpace total food & grocery market growth in 2012. Customers are switching to top-up shopping to control their spending and minimise waste. Though the major supermarkets are piling into the £35bn convenience sector, symbol groups and independents still dominate this sector with 56% market share. Independents can fight back against the onslaught by playing to existing strengths and creating new ones.

Verdict, the independent retail analysts, outlines strategies for survival for independent retailers in their latest reports*.

An existing strength for independent retailers is the insulation from inflationary pressure which the convenience market provides. Cliona Lynch, retail analyst at Verdict says “Shoppers tend to be less price sensitive in convenience stores, prioritising time saving, easy access and quick purchases over low prices. They are also more likely to spend a little more on each occasion, picking up impulse purchases that a planned shopping trip would not have allowed. Moreover, convenience stores benefit from distress purchases – unplanned and urgent shopping trips, which are linked to immediate needs rather than price.”

Lynch continues:  “Another strength independent retailers should not overlook is their natural advantage in the local loyalty dynamic.  While loyalty at larger multiples is based around convenience, price, range and rewards, smaller retailers have the benefit of a different loyalty dynamic.  Some customers want to support local produce, local commerce, and often are loyal to a personal relationship with a well-known local retailer.”

However, the most successful independents in an increasingly competitive environment will be those who specialise.  Regardless of the price points associated with their products, specialist ranges combined with expertise in a specific category gives small specialist independents competitive advantage against the multiple retailers. 

Key Facts UK Convenience Food retail sector:

• The UK convenience food retail sector is worth £35.2bn in 2012.
• It has increased its share of consumer spend in food & grocery from 25.7% to 26.6% in the past five years.
• 2012 market shares in the convenience sector are as follows; symbols: 38.4%, grocers: 18.7%, independents: 17.6%, forecourt retailers: 13.9% and co-operatives: 11.5%.

-ENDS-

*Convenience Food Retailing in the UK – Verdict Market Report & UK Neighbourhood Retailers 2012

For further information and/or an interview with Cliona Lynch, Senior Analyst, Verdict Research, please contact Kirstin Stocker on 07716 756453 or kirstin.stocker@informa.com

LUXURY GOODS:  ATTRACTING A 21^ST CENTURY CLIENTELE

Spending on branded luxury goods is forecast to increase by 65% by 2015, but companies that want to reap rewards will have to get to grips with providing a luxury e-commerce experience for their customers, says a new market report by Verdict Research.

LONDON – Wednesday, 9^th November 2011 – Business in the global branded luxury goods market is booming with year-on-year retail expenditure for 2011 forecast to expand by 17.3%, according to a new report from Verdict Research, Global Luxury Retailing.

“This compares to a growth rate of 9.8% observed in 2010, and is being driven by strong spending on luxury goods across all global markets,” explains Ruta Perveneckaite, retail analyst at Verdict.

Europe has remained the largest region for luxury goods consumption and is set to retain this position until 2015, despite its relative share continuously declining due to rapid growth in the emerging markets of Asia Pacific.

During 2010, Asia Pacific excluding Japan overtook the Americas for the first time as the second largest luxury goods market after Europe, and the region is now on course to account for 26.8% of the market in 2011. While Asia Pacific growth is particularly driven by China, which threatens to become the largest single global luxury market, new demand from other countries in the region, including South Korea, Taiwan, and to a lesser extent India, is also responsible for the strong performance.

While luxury goods players are investing heavily in these growth markets, there are other opportunities emerging for which they appear less well prepared, such as luxury e-commerce and digital marketing.

“Initially, luxury houses were sceptical about launching transactional websites, but now the great majority of luxury players have at least a limited online offer,” says Perveneckaite.  “However, there remains much confusion in the luxury goods sector surrounding how to guarantee a premium service online and there is a distinct reluctance to engage customers through digital marketing and mobile platforms.

“ Too often luxury houses adopt practices which are common to the high street, missing the opportunity to use the new channel to further differentiate themselves as luxury retailers and, most importantly, strengthen their brand image and justify premium pricing,” continues Perveneckaite.  “The launch of an attractive website and secure payment processes does not equate to a luxury experience; it requires excellent customer support, top-quality presentation of goods, and more delivery options to satisfy its time-pressured clientele.”

“When purchasing something for a premium price, online customers  expect a much higher quality service, and many luxury goods e-commerce sites fail to reflect this. Site design, product range, dedicated service teams, speed and security and delivery of products are all crucial areas to get right,” adds Perveneckaite.

Highlights of Verdict Research’s Global Luxury Retailing include:

• In 2010 the luxury goods market recovered from downturn and robust growth continued in 2011.
• Spending on branded luxury goods is forecast to increase by nearly 65% between 2010 and 2015.
• In 2010 Asia Pacific excluding Japan overtook the Americas as the second largest luxury market.
• The Middle East and Others is the second fastest growing region for luxury spending.
• Accessories are the key product category in the luxury sector and will be the fastest growing category to 2013.
• Luxury goods houses continue to expand aggressively in Asia Pacific, especially in China, and are putting extra effort into standing out from the competition.
• E-commerce is now an important channel in the luxury goods sector; however, there is much confusion about how to deliver a luxury service online.

-ENDS-

For further information and/or an interview with Ruta Perveneckaite, please contact:  Kirstin Stocker on +44 (0) 1483 825664 or kirstin.stocker@informa.com

ABOUT VERDICT:

Verdict Research is the leading authority on retailing. The firm has privileged access, at the highest level, to key executives working within the top 200 retailers. Its research and publications provide executives working in a wide range of business sectors – retailing, manufacturing, advertising, marketing, professional services, property, finance and the media – with unrivalled independent analysis of the retail sectors, key trends driving each, insight into the major players and forecasts. Verdict Research (www.verdict.co.uk) is a wholly owned subsidiary of Datamonitor.

Internet shopping sales from mobile phones will more than double by 2013 as UK consumers get used to paying for goods on their handsets, according to Ovum and Verdict Research. However, for now, the true role of mobile is to drive growth by enhancing the overall shopping experience.

Verdict’s consumer research shows that while 28% of the UK adult population had internet access on their mobile in 2009, just 2.1% used this access to shop online. However, with internet-savvy consumers now accustomed to the multichannel environment, they are beginning to embrace m-commerce.

Verdict estimates that in 2009, internet shopping sales via mobiles was worth just £122.9m, 0.6% of total £21.2bn online retail spending. At present, rather than shop, it is clear that consumers are using their mobiles to enhance the shopping experience by comparing prices, researching products and interacting with retailers. Indeed, the findings of Verdict’s consumer research reveal that 11.5% of all UK shoppers are using their mobiles to research before shopping, while 3.8% use them to research, engage and interact with retailers while out shopping.

Malcolm Pinkerton, senior analyst at Verdict Research, said: “Consumers are not spending significant amounts via mobiles and, for now, we believe the true potential for m-commerce is to provide consumers with a valuable tool for research, comparison shopping and retailer interaction.”

Christine Bardwell, senior retail technology analyst at Ovum, added: “The opportunities are there for the most proficient multichannel retailers to claim a share of the growing cross-channel expenditure by exploiting the possibilities provided by mobiles to seamlessly link the online and instore environments.”

By 2013, internet sales via mobiles will have doubled to £275 million, driven by a 119% rise in the m-commerce population, improvements in mobile technology, better interoperability and greater take-up of smartphones and Android devices.

Verdict and Ovum believe that though m-commerce will still not have become a significant channel by 2013, its effectiveness as a marketing tool and way of interacting with customers will have increased substantially, providing a massive boost to sales growth across all channels.

“As consumer affiliation with m-commerce increases, retailers will need to decide if they’re going to be pioneers in the market and meet consumer expectations, or wait and risk being behind the curve as many were with e-commerce”, added Bardwell.

Pinkerton concluded: “If correctly implemented, m-commerce will not only ensure the needs of tomorrow’s shoppers are met today, but also that growth is maximized across all channels.”

London – Increasing economic pressures affecting the retail industry means companies in Western Europe and North America will increasingly look to outsource technology and business processes in a bid to cut costs, and focus on core skills. This is according to a new report by independent market analyst firm, Datamonitor. The report, “Retailing in a Recession: The Opportunities for Outsourcing“, looks at the business processes retailers are outsourcing, and why.

“To survive or succeed in the downturn, retailers will be looking for efficient ways to generate revenue by managing the demands of the customer, while at the same time making cost savings across the organization”, says Christine Bardwell,  retail technology analyst with Datamonitor and the report’s author. “Many are looking to technology and services to help cut the cost of managing inventory, non-critical business processes and store operations. Although retailers are outsourcing in a recession, the types of contracts have changed; large scale infrastructure overhauls are less common. Instead retailers are requesting a mixture of services on lower value contracts, or transformational deals over longer periods of time.”

Cost reduction is the main driver for outsourcing in recession-hit retail

In the current uncertain environment, the priority for a retailer will be to protect margins. In a climate of falling sales, while facing cost and finance pressures, retailers are battling to keep afloat. As such, cost cutting has become their main priority and any option for reducing loss is being considered.

“Cutting down on staff and inventory, the two biggest costs for a retailer, will be the principal areas of focus”, says Bardwell. “Cuts in these areas offer a two-fold opportunity for outsourcers as retailers will be looking to service providers to help cut costs across the business; and will also be short of staff, or having trouble managing correct stock levels so will look to outsourcers to provide the solution.”

Previous experience and small capital expenditure makes retailers reluctant to outsource

One of the biggest current hurdles to outsourcing is the industry-wide reduction of capital expenditure (capex) in retail. As capex must go a lot further than a year ago, retailers now require outsourcers to offer flexible payment structures, for instance by offering shorter-term contracts with monthly payments.

The shift from capex to operational expenditure frees up capex for more pressing issues. Previous experience with service contracts has caused retailers to doubt whether the benefits of outsourcing outweigh the challenges that can arise. Barriers to outsourcing include the unrest caused by offshoring jobs, language barriers, and retail sector expertise requirements.

Retailers require, strong, flexible partnerships that can evolve with their business

According to Datamonitor, retailers will expect outsourcers to not only know the demands of the retail industry, but also the challenges of their particular retail sector. As such, a service provider must endeavour to understand the nature of the business in order to work in partnership with the retailer. Outsourcing is not a silver bullet but with flexibility of services, payment schemes and contracts, the relationship between retailer and service provider will be a happy and successful one.

The report also assesses the key suppliers of infrastructure technology outsourcing (ITO) and business process outsourcing (BPO) to the retail sector. IBM is the top outsourced service provider to retail, with 14% market share but the report says this could be set to change as competition in the space heats up.

Bardwell concludes:

“The recession is pushing retailers to consider outsourcing in order to achieve cost saving and enhanced operational efficiencies. But competition in the services space is strong.

Retailers are looking for more than just a supplier; they need a partner. A service provider that takes strides to understand the pulse of the organization will win over.”

]]> http://about.datamonitor.com/media/archives/2899/feed 0 http://about.datamonitor.com/media/archives/1843 http://about.datamonitor.com/media/archives/1843#comments Thu, 05 Feb 2009 11:56:33 +0000 media@datamonitor.com http://about.datamonitor.com/media/?p=1843  Shrink rates are going up while retail sales are going down, making shrink a higher percentage of overall sales

London – Amounting to over $100 billion worldwide*, overall retail shrink from theft, crime and waste is having a hugely damaging impact on retailers profit margins. Over half the losses can be attributed to Point of sale (POS) shrink – loss incurred through cashier error, theft and fraudulent POS transactions. In a new report, ‘Using Business Intelligence and CCTV to Reduce Shrink in Retail (Strategic Focus)‘, independent market analyst Datamonitor predicts global retail shrinkage will climb to almost $115 billion by the end of 2009. With global retail sales growth in the tough economic climate expected to be small or even non-existent, technology such as data mining used in conjunction with CCTV is one of the key solutions being tipped when it comes to retailers investing in technology to combat shrink and improve the bottom line. Moreover their dual-use beyond loss prevention means they can also be utilized for marketing and merchandising purposes.

“Retailers have long focused their attention on customer merchandise theft. Efforts and big budgets have been spent on expensive closed circuit television (CCTV), digital recording, electronic security tagging, and alarms to prevent and monitor customer theft, says Christine Bardwell, retail technology analyst at Datamonitor and the report’s author. “But attentions are shifting. Over half of shrink can be attributed to internal loss, and general employee- and cashier-caused shrink, whether intentional or not, is a now a massive concern in most retail organizations.”

Process error and ‘sweethearting’ are the biggest causes of loss from internal shrink

The three biggest causes of loss at POS are cash theft, fraud and process error.

‘Sweethearting’, a form of theft involving collusion between an employee and customer, (usually a friend or family member), falls under all three categories, because it can involve cash theft and/or fraud and is very difficult to distinguish from process error. Retailers agree that process error and sweethearting combined, form the biggest part of loss incurred at the POS.

Technology can help identify many of the contributing factors of POS shrink

There are two technologies at the forefront of the fight against the major causes of shrink at the POS. Data mining is used to identify patterns that identify cash theft, fraud, and process errors, while CCTV provides visual evidence to separate actual shrink from false positives.

A data mining application is relatively inexpensive. It quickly highlights weaknesses and fraud in the system and has a huge deterrent effect: as stealing employees are caught, it will discourage others. It is also useful for picking up external crime scams such as organized refund fraud and credit card fraud, as data mining will quickly establish if a card has been cloned and is refunded at stores all over country.

A major advantage for using data mining rather than a simple exception reporting or business intelligence (BI) application is that retailers can monitor multiple aspects, such as the cashier, location, product, and credit card details. Using train of thought analysis, the system can re-write queries.

The benefits of these technologies can also be used for marketing and merchandising

Data mining and CCTV have uses that extend beyond loss prevention. Retailers can also benefit by using them for marketing and merchandising. Data mining can assist in providing data for overall performance and, more specifically, basket analysis and customer loyalty. Video analytics can aid marketing and merchandising. Staff training could benefit from CCTV footage. Internet protocol (IP) networks could help retailers realize further cost savings across the business.

British clothing brand Jaeger rolled out a loss prevention program with a view to cut fraud by a fifth. Shoplifting was only 30% of the problem: analysis estimated that internal theft accounted for 42% of losses, and process errors for 21%. In August 2008, Jaeger completed the implementation of a data mining system. Data from the POS and other sources such as the supply chain, product development and design are merged to allow Jaeger to identify sources of loss. The system enables the retailer to spot process errors and potential fraud, and is also being used for basket analysis. Jaeger expects to improve its bottom line by 2%.

Virgin Megastores in the US provides a good case study for the overall benefits of IP. The retailer has networked ‘Digital Listening Stations’ which allow customers to play album samples and search through the inventory in stock at that location. In addition, the IP WAN is connected to IP phones, servers, kiosks and POS registers. If there is a problem with any device, an alert is triggered.

Technology vendors will need to prove to retailers that the investment will deliver a quick return through a trial or working case studies before a retailer will part with their money.

Bardwell concludes:

“Retailers need to be efficient in dealing with shrink. Loss prevention (LP) will be a high priority in the coming years because of the hard business climate so there will be growing pressure on retailers to invest. Using technology to uncover internal fraud quickly will enable them to discipline or retrain the staff responsible without further damage to the bottom line.”

“Organisational IT structures are often characterised by many different silo’ed teams of technical specialists,” says Roy Illsley, Senior Research Analyst with Butler Group and co-author of the report. “These silos often drive the technology selection process in organisations, which to a large extent is governed by the existing skills within the IT department. This approach has created tensions between the requirements of the business users, and the capabilities to manage the technology of the IT department. The result of this silo’ed approach is that IT resources are locked into technologies, and organisations face expensive retraining or new hiring cost if technologies new to the organisation are selected.”

Systems Management = Simplification

The market in Systems Management has evolved over recent years. The leading vendors have all integrated the ability to monitor and manage a variety of infrastructure components, from virtual servers to network switches, into their solutions. Systems Management tools are changing IT from being mainly reactive in its response, to being more proactive and business focused.

The new, more holistic approach to Systems Management is that of simplification, so that the IT department can manage the technology stack at a higher level, and therefore enable it to manage a wider range of technologies more efficiently.

Allocation of IT resources becomes a major factor in how IT departments are perceived

As IT becomes ever more ingrained in the organisation the need to be responsive to business demand in a controlled approach has increased in significance. In fact Butler Group believes that the approach to this problem will differentiate the good IT departments from the average.

In the current economic climate many organisations are facing a tightening of financial controls and spending, IT is not immune from this recession; a recent Butler Group survey found that 73% of respondents expect their IT budgets to be reduced or remain flat in 2008, as compared to 2007. With this more prudent approach the allocation of IT resources becomes a major factor in how IT departments are perceived.

Different approach required when it comes to managing infrastructure

In order for IT to perform this role a number of fundamental changes are required to its operation and its remit, and these must be endorsed by the executive management team.

Firstly the IT department must have envoys in the business units/departments who act as the eyes and ears of the IT department, while also representing the department/business unit when it comes to delivery of IT change. This dual role creates a tension that IT must exploit so that it can on the one hand collect the real significance and value of any change requested by the business unit/department, and on the other hand ensure that the requirements are in line with IT strategy. Obtaining this level of intelligence will allow IT to establish the impact on existing services, and cost the change accordingly.

Secondly, the IT department must act as the arbitrator, and not decision maker, in the prioritisation of business demand; to do this it must be the IT department’s role to chair a cross-departmental strategy meeting. This meeting should act as the control body where the decisions are made on which new changes are developed, and which services are of a greater importance than another.

Finally, the IT department must develop a strategy that is intrinsically linked to the business strategy; this is a critical shift for most organisations, as IT is not usually invited to the business strategy table. Butler Group contends that having a Chief Technology Officer (CTO) with the responsibility for IT strategy, and making some IT staff have dual reporting into the Chief Information Officer (CIO) and the CTO, provides not only the independence but also the separation required so that IT can play a significant role in the development and execution of business strategy.

Illsley concludes:

“Taking a holistic perspective to managing the organisation’s infrastructure requires a different approach and one which many IT organisations are not equipped to adopt. The concept of business-driven demand is not new – in fact IT has evolved based on this premise – however, currently the IT department responds to the department/business unit that either shouts the loudest, or has the capital to invest in new projects. It is our contention that the landscape is moving, and Chief Executive Officers (CEOs) are increasingly looking toward the CIO as the guardian of business process prioritisation; in other words the IT department is being asked to police the business units based on corporate prioritisation.”

“The need for new and enhanced service provision to support business requirements must drive infrastructure and technology deployment. A services-based approach is best suited to this environment to insulate developers and users from the complexity of the infrastructure, and to ease the integration of the different systems and communication mechanisms. There should be a move towards the provision of common integrated communication services, which are ideal for catering for a complex and distributed environment. Web services can also be utilised to mobilise information to all stakeholders”, says Mark Blowers, Enterprise Architectures Practice Director and co-author of the study.

“Moving away from proprietary solutions for voice and data to a horizontal communications architecture will enable the communications environment to be broken down into separate layers, making use of industry standards to integrate the hardware, common services, and administration elements. This componentisation and services-based approach increases flexibility, enabling services to be developed independent of the equipment. Using IP-based components instead of vendor-dependent solutions improves scalability, along with driving down infrastructure costs with price/performance optimisation.” 

Communications convergence is a key enabler for better collaboration

The term ‘convergence’ can be misleading. It is not a merger of voice and data networks, but the utilisation of the existing data, fixed, and wireless infrastructure for the provision of IP-based services, including voice, data, video, and storage. Within this all-encompassing environment one of the most important building blocks is the establishment of voice as an application. This fundamentally alters the communications paradigm, enabling the development and integration of many new innovative services.

The reach and range of business processes continues to increase as organisations extend and expand their interactions with partners, suppliers, and customers; and so the need to integrate geographically dispersed teams into complex business processes presents something of a challenge for the IT manager. Fax, e-mail, pager, SMS, Web conferencing, video conferencing, and conventional teleconferencing are all in use today, yet many business processes are still hampered by ineffective collaboration. Organisations must therefore re-examine their corporate communication and collaboration strategies in order to better support business activities and objectives.

“Communications play an important role in ensuring businesses function efficiently. It is therefore vital for systems to be effective and easy to use. Enterprises are concerned with both employee and customer satisfaction when deploying communication technologies and are looking to improve productivity through their IP and unified communications investments”, continues Blowers.

“There is pressure on the IT manager to provide enterprise presence functionality due to the availability of consumer instant messaging. Social networking techniques and Web 2.0 functionality used in the consumer environment will be demanded by the enterprise workforce, which will come to expect these new tools and technologies to be readily available at any location, as well as being able to use any device.”

Implementation costs, as well as security and reliability are important considerations within the unified communications environment

Although reliability and security are amongst the most important factors in investment decisions, the cost of implementation is the leading inhibitor. Whilst this is slightly more of a factor for small or medium-sized enterprises with tighter IT budgets, it is still an issue for a majority of the enterprises responding to a 2007 Datamonitor survey on Communications Convergence.

Another challenge is to securing the extended environment that most IT managers now need to support. There are many instances of successful attacks and loss of data, which includes finance companies and government agencies. The issue of security must be adequately addressed when contemplating utilising an IP-based environment. Whilst the introduction of voice and video on to the network presents new security worries, it does not, however, add any new vulnerability that did not previously exist.

Effective management is a key capability in the unified environment where policies must drive availability, and visibility moves from individual point solutions to being system wide, along with the shift from fixed asset administration to dynamic asset utilisation. A cornerstone for the provision of multi-modal channels is the ability to deliver intelligent central performance management, enabling efficient use of the available resources. The accessibility of end-to-end Quality of Service (QoS) supporting data, voice, and multimedia, is an important first step in the evolution towards an automated solution.

Blowers concludes: “Many communication and collaboration strategies are primarily initiated to reap the benefits of infrastructure consolidation, such as reductions in operational costs, and to improve levels of service quality. However, although these are useful goals, the real value afforded by unified communications and collaboration solutions ultimately arises from improvements to business processes, enhancement of stakeholder interactions, the optimisation of workflow, and driving innovation in the business.”

However, according to Andrew Kellett, Butler Group Senior Research Analyst and co-author of the study, before there is an opportunity to get carried away with the benefits package that modern BPM appears to provide, he comments: “There is an underlying requirement to deal with some of the baggage that comes with today’s mainstream BPM products. For example, there remain serious divisions between what the vendors see as the most important components within their all-inclusive offerings, and the basic function-driven approaches to BPM – application development, modelling, and integration services – that business users say drive their basic requirements of the technology.

“Furthermore, as the divide between the vendor and business user view of the key elements of BPM appears to be widening, it is interesting to find that many of the latest features which the vendors genuinely feel add value to their product offerings are viewed by the end-user community as little more than lightweight bells-and-whistles.”

Another significant issue that also divides the vendor and user communities is the ‘automation’ (the vendor position) versus ‘human workflow’ (business analyst vision) disparity that continues to exist. Unfortunately, even today, many BPM vendors still struggle to move away from their entrenched position of seeing BPM as a technology sell, a stance that works to the detriment of human interaction.

Solutions that operate under the BPM banner have become more functionally inclusive

Today solutions that operate under the BPM banner have become more functionally inclusive. A constructive and helpful part of this fleshing-out process has involved a consistency of approach across all service delivery components, so that most core elements of mainstream BPM platforms are properly targeted at the business professional rather than the IT technician.

Many of the solutions can be fairly described as end-to-end offerings; taking in process discovery, modelling, simulation, deployment, lifecycle improvement, and ongoing change management. Many also include, as standard, previous extended functionality such as business rules capabilities, business process reporting, alerting, and more recently analysis, plus associated services such as: Business Activity Monitoring (BAM), Service Oriented Architecture (SOA), and Business Intelligence (BI) functionality.

Understanding, managing, and aligning the rule element of processes is central to ensuring the success of BPM

From a business perspective, one of the oft-promoted benefits of BPM is that it will help remove the functional mismatch that occurs with more traditional development methodologies. This is certainly the case, but it has to be underpinned by a codified structure – which involves bringing together the management of process activities with the rules that underpin their use. Understanding, managing, and aligning the rule element of processes is central to ensuring the success of BPM.

“BPM started out with the clear message that its process-centric approach had the potential to revolutionise the way that business users could interact with manual and technology systems. Automate where appropriate, but essentially focus on the delivery of services where the most efficient combinations of human and technology-driven interactions are brought together for the benefit of all concerned. This, Butler Group continues to see as the primary role of BPM,” says Kellett.

BPM can only deliver on its full potential when the facilities that the vendors provide fully match up to the requirements of the end users

Over the years vendors have promoted BPM on the basis that it has the ability to dynamically link disparate systems by providing a build methodology that will significantly reduce the need for IT involvement when new processes are required or existing processes need to change.

This, Butler Group believes, is an important point that must be emphasised because history tells us that business differentiators tend not to be driven by all organisations making the same use of standard technology. The real differences and advantages come when the innovative skills of the business community to seek and deliver change can be aligned with the effective use of technology solutions that have the flexibility and ease-of-use to deliver change whenever it is required. Fundamentally Butler Group believes that this is the BPM advantage, but it can only deliver on its full potential when the facilities that the vendors provide fully match up to the requirements of the end users.

“BPM is about business improvement and change management, and a supporting systems implementation methodology that enables business processes to be updated in line with operational requirements”, says Kellett. “It has to be accepted that many business processes will constantly need to change, and processes and their usage will cut across each other. Ultimately information flows between processes will span business as well as departmental boundaries.”

Kellett concludes:

“The ownership and the business knowledge of such processes must remain with the users. Their views of the business world and its operational requirements start out from a very human-centric standpoint. Therefore, in Butler Group’s opinion, the way forward for BPM involves getting a better alignment between what the technology vendors think is required, and what the end users are actually looking to do with their BPM solutions.”

“New opportunities continue to emerge which enable organisations to work in a more environmentally-friendly way. Innovative organisations can make the most of these openings to gain a leadership position ahead of the competition. Yet many enterprises are failing to act and have not yet recognised the fact that business-as-usual is no longer an option. IT management and the use of new technologies have a great opportunity to take a leading role in assisting the organisation in meeting these social expectations”, says Mark Blowers, Senior Research Analyst and co-author of the study.

“Two ways in which the IT organisation can help to improve the situation are by enabling measurement of the exposure to climate change, and by increasing the efficiency of IT operations, which comprise such an important part of the overall foundations for the organisation.” 

IT management has an opportunity to take the lead by being proactive in supporting the sustainability objectives of the organisation

There is increasing prominence being placed on the ability of IT deliverables to match organisational sustainability objectives. Unfortunately, there still appears to be a lack of focus by IT management on understanding the organisation’s main goals in this area. Without this, it is impossible to formulate an IT strategy that will meet the organisation’s sustainability needs. To facilitate this IT must improve the flexibility and efficiency of its operations, and measure performance related to environmental and social objectives.

Those taking an interest in environmental aspects of life may have already come across the mantra of the Three R’s – Reduce, Reuse, and Recycle. Butler Group has added a fourth for the IT manager – Re-engineer – which encompasses the approaches and technologies that need some investment in resources to bring to fruition but can be a significant factor in the IT department’s contribution to sustainability.

“Clearly, any organisation’s printing activities are an area likely to be suitable for investigation in terms of lowering environmental impact and possible reuse. Cheap printers ubiquitous in office environments, along with a combination of spiralling information volumes and the accessibility of printed output, have led to wasteful practices and needless paper use. The net effect on resources and the environment is highly detrimental, especially when combined with many organisations’ lack of formal recycling practices”, continues Blowers.

“It is important to take a holistic approach which encompasses not only equipment energy usage, but product, software, and building design. For example, during the procurement process, questions need to be asked regarding the use of toxic chemicals during their manufacture and within the products, as well as ascertaining how recyclable the equipment and resources are.”

Power consumption is a very important consideration for the IT manager

An obvious starting point for energy reduction is to ensure that all computer equipment is turned off when it is not being used, enabling power management capability, and having effective asset management where unused equipment is quickly decommissioned. In addition, all organisations should aim to dispose of old hardware responsibly by sending unwanted PC equipment to be reconditioned and recycled.

Many data centres are bursting at the seams with hundreds of underutilised servers and storage systems, many of which are consuming the same amount of electricity as a fully-loaded server. The adoption of key re-engineering efforts, such as implementing an architectural approach, deploying hardware designed to use a Direct Current (DC) supply, and utilising fresh air cooling, as well as improving utilisation by investing in consolidation and virtualisation, can result in not only reduced energy consumption, but also significant efficiency benefits and lower overheads.

The increasing energy requirements of data storage can no longer be ignored by the IT manager. The growing amount of uncontrolled storage cannot be allowed to carry on indefinitely. The time has come to address the mounting disparity between storage management capability and the increasing number of storage devices and capacity.

Blowers concludes: “One reason why IT departments have been slow to react is because IT management often does not have energy expenditure in their budget. Power costs are usually tied to the property portfolio, so energy savings do not translate directly to budget savings for IT. In addition, we are sometimes guilty of focusing on the effects (such as improving cooling systems) rather than addressing the root causes by looking at things that actually reduce the amount of code processed in the first place (such as software design).”