Retailers have traditionally been stuck with high fixed costs for running their IT, but now the tables are turning as they seek to tie their success and their IT suppliers’ revenues more closely together.

IT suppliers are finding that retailers expect them to come to the table and renegotiate costs as trading turns negative.

IT costs have come under scrutiny thanks to the SAP User Group, which held its annual conference in London this week. The organisation’s chairman, Alan Bowling, has called for improved total cost of ownership for companies running SAP’s software if further increases in the cost of software support contracts are to be tolerated.

SAP won’t be the only IT vendor or service provider feeling the squeeze right now. Retailers have traditionally been stuck with high fixed costs for running their IT, but now the tables are turning as they seek to tie their success and their IT suppliers’ revenues more closely together.

This makes a lot of sense. Apart from automatically lowering retailers' costs if they are in a position where sales are also falling, it also redistributes the risk involved with the adoption of new technology.

Suppliers who pitch some new system or technology as the next big thing will have to be pretty sure that it can solve a retailer’s business problem if they are remunerated based on its success.

Some IT delivery models, such as outsourcing and software-as-a-service, go some way towards addressing this. But here the costs tend to be incurred as retailers use technology, whether or not it is making any difference to the retailers' top or bottom lines.

IT suppliers often refer to themselves as a retailer’s partner – especially when the retailer is just about to sign off a major IT deal. What they do to help their retail customers in the next 12 months will prove whether they really mean this.

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