CIO Survey 2016 Retail/Leisure Sector Findings

The Harvey Nash / KPMG CIO Survey is the largest IT leadership study in the world. Almost 3,400 respondents across 82 countries representing over US$200bn of IT budget spend.

This Retail/Leisure industry sector snapshot provides survey responses from over 180 Retail/Leisure companies on some of the key topics and highlights several areas where this sector’s responses were significantly different from those from across all industries.

KEY TOPICS

Looking forward, over the next 12 months, do you What are the key business issues that your What steps are you taking to become more agile expect your IT budget to? management Board are looking for IT to address and responsive? (top 5)? Increase Implementing agile Stay the Driving revenue growth 57% methodologies 51% same Buying rather than building 41% Increasing operational 31% 55% efficiencies Strategic partnerships 37% 33%* 45%* Improving business Multi-mode IT 54% processes 55% 32% 22%* Enabling business More external resources 29% 15% change 50% DevOps 29% Decrease Delivering business intelligence / analytics 50% Other 2%

Retail/leisure companies are more optimistic Compared to the all-industries average, The methods retail/leisure companies use to about their IT budgets than the all-industries retail/leisure companies place a higher priority on become more agile and responsive are similar to average. 54% of retail/leisure companies expect driving revenue growth (57% vs. 39% for all the all-industries average. They are, however, their IT budgets to increase next year, compared industries), enabling business change (50% vs. less likely to implement agile methodologies to 45% for all industries. 44%) and delivering business (51% vs.59% for all industries). intelligence/analytics (50% vs. 44%). *All-industries average All-industries average

CLOUD

How would you characterize your current What are your top three reasons for using cloud What are your top three biggest challenges when investment in the following cloud services and how technology? adopting cloud? do you expect that to change over time? (Significant investment) Improve agility and Integration with existing responsiveness 47% architecture 53%

Data loss and privacy risks Improve availability and (including cross-border 36% 19% resiliency 43% IaaS issues) 38% Legal and regulatory Accelerate product 32% 13% development/innovation 39% compliance issues PaaS 38% Governance over cloud Save money 30% solutions 29% 25% SaaS Making the business 47% 28% Best solution available 27% case/ROI

Current Year Next 1-3 years While retail/leisure companies have spent Retail/leisure companies are more likely to invest Retail/leisure companies face greater cloud somewhat less than other industries on all types in cloud services to improve agility and adoption challenges around integration with of cloud services this year, their expected responsiveness (47% vs. 40% for all industries) existing architectures (53% vs. 47% for all investment in cloud services over the next 1-3 and to accelerate product development (39% vs. industries) and fewer challenges with data loss years is in line with the all-industries average. 34%). and privacy issues (36% vs. 49%).

Source: Harvey Nash/KPMG CIO Survey 2016

© 2016 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved. DIGITAL DISRUPTION

Does your organization have a clear digital business If you are currently experiencing digital disruption, What is the primary method you use for coping vision and strategy? what is the primary source of disruption? with digital disruption?

Yes, enterprise- wide New forms of customer We hire people 34% engagement 34% 28% New innovative We partner 25% products/services 21% 28% Yes, within 34%* 24%* We develop our people 20% business New operating models 17% units 13%* 10% 29%* No We contract 17% Don't know 16%

34% Other 3% New business models 10%

No, but we are currently We acquire 1% working on one Other 3% Retail/leisure companies are roughly equally likely to have a digital strategy as all industries, Retail/leisure companies are more likely to face Retail/Leisure companies are more likely to hire but these strategies are more often within digital disruption from new forms of customer people to cope with digital disruption (34% vs. business units (28% vs. 24% for all industries) engagement (34% vs. 23% for all industries). 26% for all industries), and somewhat less likely and less often enterprise-wide (28% vs. 34%) to develop people (20% vs. 25%) or contract *All-industries average All-industries average (17% vs. 21%)

SIGNIFICANT DIFFERENCES

Do you believe your Board recognises the risks posed by cyber attack, and is How do you expect your spend on outsourcing to change over the next 12 doing enough about it? (% that responded ‘Yes’) months?

Retail/Leisure 59% Retail/LeisureAsia-Pacific 53%63% 34%47% 4%

All Industries 68% All industries Global Average 41%52% 37%59% 11%

Increase StayYes the sameNo Decrease

Retail/Leisure companies have more aggressive plans to outsource than Retail/Leisure respondents are less confident that their management the all-industries average. 63% report that they plan to increase their Boards adequately address cybersecurity. Just 59% believe that their outsourcing spend over the next 12 months, compared to 52% for all Boards recognize the risks posed by cyber attack are and doing enough industries. about it, compared to 68% for all industries. CONCLUSIONS

It is no surprise that CIOs from Retail and Leisure organizations are seeing Customer Engagement as the main source of digital disruption. Digital innovation is creating a significant advantage for forward-looking companies that realize consumers are quickly coming to expect seamless, customer-centric, and fully integrated experiences as an industry standard. CIOs in these sectors said they were relatively more optimistic about their IT budgets increasing than the other sectors were. However, the Retail and Leisure executives were less likely than those in other sectors to say their digital strategy spans the entire enterprise. This is concerning since to be truly successful, Retail and Leisure companies need to be investing in fully integrated, “omni business” models that span not only across sales channels, but throughout the entire organization. Retail and Leisure CIOs need to ensure their investments are focused on enterprise-wide integration and solutions in the coming year.

FURTHER INFORMATION

Willy Kruh Mark Larson Global Chair, Consumer Markets Global Head of Retail KPMG International KPMG International T: +1 416 777 8710 T: +1 312 665 2126 E: [email protected] E: [email protected] www.kpmginfo.com/cioagenda

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