Retailers Shop for Managed Services
Signs of life in the retail sector began surfacing in mid-2009, and 2010 finds companies carefully sizing up IT spending. Indeed, managed services providers are landing deals as retailers revisit initiatives that may have been stalled last year. Josh Wolff, regional director at Hosted Solutions, an infrastructure-as-a-service provider, says retailers are moving cautiously. But deals are happening. Here are some key examples.
Hosted Solutions this week announced an expanded manage services deal with Belk, a department store company based in Charlotte, N.C. Belk first signed with Hosted Solutions in 2008. At that time, the work focused on hosting and managed services in support of Belk’s e-commerce site. The updated pact includes database administration and the colocation of Belk’s credit and debit card environments, according to Hosted Solutions.
The agreement also involves an application that helps Belk stores calculate taxes. The retailer had formerly used a service to do that, paying a set amount per transaction. Belk, however, found an application that could perform that task and tapped Hosted Solutions to host the system and provide the supporting infrastructure. Wolff said the hosted tax application represents a decrease in cost compared with the service Belk had been using.
Another recent retail pact highlights managed services’ time-to-value benefit. NaviSite, an enterprise hosting and application management vendor, is hosting WorkPlace Systems’ workforce management software-as-a-service offering. The partnership’s first significant installation is with an undisclosed North American retailer. The SaaS solution was rolled out to the 4,000-store chain in 12 weeks, noted Barney Quinn, chief executive officer of WorkPlace Systems. A traditional in-house implementation would have taken more than a year to complete, he added.
Quinn said the SaaS model provides a “quicker return on money” and lets customers obtain business benefits more rapidly.
WorkPlace Systems had been selling strictly traditional enterprise software products up until a couple of years ago. The company began testing the SaaS approach in Australia and, later, the United Kingdom. Last year, WorkPlace Systems introduced its SaaS product in North America.
Quinn said the recession has served to boost customer interest in SaaS versus traditional products, noting that customers don’t wish to deploy their capital on software licenses.
“Over the last year, we’ve seen a complete transformation — particularly in retail,” he said.
Claudine Bianchi, chief marketing officer at NaviSite, said the recession has helped service providers. She said customers don’t want to incur additional CAPEX as their computing needs increase. Customers that bring their applications to NaviSite stand to save 40 percent of what the application would cost to run in-house, according to Bianchi. She said managed services reduces equipment, software, bandwidth, and utilities costs, while also reducing labor costs.
Wolff suggested retailers would rather spend their dollars on marketing and promotion rather than building out a data center.
The winning formula retail MSPs: deliver quick-hitting projects that free customers to invest in more strategic areas.