Research Reveals Great Disconnect Between Loss Prevention, IT and Other Business
Units in Retail
IHL Group study investigates impact as retail
LP technologies become IP-enabled and IT and other business units leverage for
functions beyond traditional LP;
Retailers with greater than $1B in revenue spend 8.3 percent of IT budget on LP
priorities other than PCI and data breach protection
CHELMSFORD, Mass. -
Communications, the global leader in network video surveillance, today
revealed the results of "The
Great Disconnect Between LP and IT," a 2015 study by
IHL Group, a global
research and advisory firm specializing in technologies for the retail and
hospitality industries. The research illustrates the differing ways in which IT
and loss prevention (LP) teams view priorities, including staff and budgetary
allocation. It also outlines the barriers to a closer LP to IT relationship and
new revenue-generating functions of IP-enabled technologies.
Research suggests that after using IT budget to fund significant data breach
protection and PCI certification efforts, retailers on average still have 6.4
percent of that budget left to spend on other LP priorities. As organization
revenues increase, PCI and data breach protection costs level out, and IT
budgets continue to grow linearly, larger retailers end up with two to three
times more funds than smaller retailers for additional LP activities, such as
organized retail crime and slip and fall prevention, electronic article
surveillance (EAS), CCTV, video analytics and more.
Greg Buzek, founder and president of IHL Group, said, "In the retail industry,
we all have a general understanding that a lot of effort and money is dedicated
to EMV compliance, PCI and data breach protection. In conducting this research,
what was fascinating to our team is just how much that prioritization drains
resources for other LP efforts, specifically in IT. There certainly is a
disconnect in regards to focus of existing budget and resources. However, our
findings indicate that real opportunities exist for other business units to
actually generate revenue from these technologies with new applications, such as
traffic counting and video analytics for marketing optimization, and more."
The Great Divide: LP Thinks and Staffs
Differently than IT
IT budgets for LP are known to experience economies of scale, and the same holds
true for the availability of IT staff for other business unit activities. By
ranking retailers in terms of LP technology spend, with tier 1 retailers
spending the most, the research found that tier 1 retailers with more than $1B
in sales dedicate only 4.5 percent of their IT staff to LP efforts. In contrast,
tier 3 and 4 retailers devote nearly eight percent, clearly demonstrating that
the percentage of IT staff for LP decreases as revenue and access to efficient
systems and technology increases. As retailers devote more spend to investments
like IP-enabled video technology, LP functions demand less personnel attention
and free up resources for business growth activities.
When assigning weight to IT and LP initiatives, PCI and data breach protection
take 35 percent of the overall IT focus, while only 26 percent of LP initiatives
are similarly focused, with LP giving much greater weight to its own functions,
such as employee and consumer theft. At odds with both IT and LP, other
organizational business units, such as finance, see PCI and data breach
protection as 54 percent of their focus-likely linked to recent, high-visibility
data breaches in the public sphere.
Barriers to a Closer IT and LP Relationship
When asked to rank the biggest barriers to a more cohesive relationship, IT and
LP were generally on the same page, weighting "other business priorities" and "systems integration" as the two most important reasons. Other titles in the
organization weighted "systems integration," for example, as the largest
concern, showing a disconnect in perceptions around issues and the influence of
Internal politics is one of the lesser worries when converging the LP and IT
relationship showing a general promise at all levels of the organization to work
more efficiently together to maximize efforts and spending. While primary issues
are due to an overall organizational focus on growth, economically it shows a
shift in moving beyond cost control to forward-looking growth objectives.
Read the rest of the press release here.
Read the full study "The Great Disconnect Between LP and IT" here.
Axis Communications will be at NRF Protect, June 23-25, in Long
Beach, CA, at booth #1019.