Retailers Turning to Managed Services?

With retail sales continuing to suffer in the recession, that vertical may seem like the last place a managed service provider would want to hunt for business. But contrary to conventional wisdom, market researchers say there's MSP life in the retail vertical.

First the bad news: The government recently announced that retail sales for May increased 0.5 percent from the previous month. The $340 billion total represented a 9.6 percent drop compared with May 2008.

Against that backdrop, two recent industry research reports focused on retail as an IT outsourcing opportunity. Datamonitor’s report, “Retailing in a Recession: The Opportunities for Outsourcing,” suggests that the retail segment views off-loading IT responsibilities as a cost cutting measure.

“In a climate of falling sales, while facing cost and finance pressures, retailers are battling to keep afloat,” Datamonitor reports. “As such, cost cutting has become their main priority and any option for reducing loss is being considered.”

Datamonitor doesn’t specifically point to MSPs as a potential beneficiary of this trend. But the report mentioned a couple of factors that may play in their favor. For one, Datamonitor holds that retailer seek services on lower-value contracts as opposed to large-scale infrastructure overhauls. Smaller deals could provide an opening for MSPs.

Datamonitor also notes that retailers “now require outsourcers to offer flexible payment structures, for instances by offering shorter-term contracts with monthly payments.”

You Want Fries -- And Managed Services -- With That?

That seems made-to-order for MSPs. And plenty of technology companies are promoting managed services into the retail sector. Two examples:
Christine Bardwell, retail technology analyst at Datamonitor, said she  believes “smaller providers, particularly those offering a niche or
specialist retail service will benefit from both retail budget cuts  and the changing business priorities of retailers through the recession.”

Meanwhile, a European market report from IDC Retail Insights also cites a turn toward outsourcing. The report states that cost reduction ranks high on retailers’ IT agendas. But IDC Retail Insights also points to investment in customer relationship management, enterprise resource planning, content management systems and collaboration -- technologies that retailers will acquire through outsourcing.

Contributing blogger John Moore covers Master MSPs, Web hosts and emerging opportunities. Follow MSPmentor via RSS; Facebook; Identi.ca; and Twitter. And sign up for our Enewsletter; Webcasts and Resource Center.
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