Cloud computing has been featured on the annual “Top IT Trends” lists for at least 5 years although it has been a popular topic since the inaugural Web 2.0 Summit (then referred to as the Web 2.0 Conference) in 2004. Despite the exploding popularity of Salesforce.com, for example, many companies across virtually all industries remained somewhat hesitant to embrace comprehensive cloud computing despite the ever-growing buzz surrounding it. However, due to the rampant cost-cutting measures that were implemented at the onset of the financial crisis and continue today as companies look for ways to better adapt to uncertain economic environments, cloud services are gaining increasing popularity. Also, cloud computing was often disparaged for the perceived security threats involved in hosting data on remote cloud servers as opposed to internal servers and data warehouses. As security measures have increased (despite reports of sophisticated hackers compromising millions of consumers’ information from Sony’s Playstation Network and Apple’s iTunes among others) and the new cyber reality emerges, companies are realizing that the future is on the Cloud and are aligning many of their official (and non-official) IT initiatives with the cloud in mind.  

With security in mind, private clouds are especially becoming popular as arduous regulatory requirements for many industries prevent total migration to public clouds. You will especially find private clouds in the financial services industry including insurance. Many organizations, regardless of industry, are experimenting with private clouds to test functionality and security before embracing external cloud solutions.  

While cost-cutting is often the primary driver behind implementing cloud-based software, infrastructure, or platforms, the flexibility that clouds provide companies is causing them to adopt them to support internal collaboration, to improve customer interactions and communication, and to expand storage quickly based on immediate needs. Cloud services are not exempt from licensing fees, but they are typically substantially lower than their software and hardware competitors. Other cloud providers build in all costs up-front, allowing companies more flexibility to adapt their IT services to meet ever changing business needs.

Interestingly, FierceCIO reports that as many as half of cloud software purchases are purposely made by business users outside of the IT department who are trying to circumvent IT policies. Obviously, IT departments are not happy about this, but it further shows the strength of the cloud market and effectiveness of it to solve business challenges quickly.  IT departments are slowly coming around, but they need to do so more quickly to show organizations that IT can add value to both business functions and improving budgetary issues. As organizations learn about new IT functionality – much of which is cloud-based – they want to embrace innovative technologies that help them do their jobs better instead of spending the majority of an organization’s IT budget on licensing fees, IT consulting fees, and infrastructure maintenance. That being said, the IT departments that are embracing cloud services are no longer having theoretical debates about the value of the cloud but rather are discussing how they use them or how that usage can expand in the future. An IDC Analyst noted following the 2011 Cloud Leadership Forum that "this conference had a much more pragmatic feel of 'of course we are using cloud services and here's how.'"

Therefore, as organizations large and small across various industries are employing cloud services in different ways based on their specific needs and challenges, here are some industry examples:

• The insurance industry is embracing cloud computing for improved customer service and interaction in an effort to become more inviting to consumers who often view them as unapproachable and unyielding.
• Retailers have moved large portions of marketing and advertising budgets to social media-based platforms in efforts to directly interact with consumers.
• Professional Services firms are looking to the cloud to help them improve marketing and brand reputation in addition to automating processes to reduce costs.
• Manufacturers have discovered great value in implementing customizable applications that improve efficiencies and allow better communications across the supply chain.
• While the Healthcare industry remains resistant to many technological changes, there is a growing interest in secure clouds to help them manage patient and operational information. Physicians will play an important role in determining what new technologies healthcare providers implement, so it will be interesting to see if cloud services find a more prominent and permanent place in the industry. 
  
• In the Energy industry there will be new cloud opportunities as smart grid technologies that improve communication between users and power companies are implemented to upgrade the existing power grid in the U.S. over the next 20 years.

With cloud services and platforms are evolving just as quickly as companies are adopting them, it appears that all the "buzz" surrounding the potential of the cloud is finally beginning to be realized to the benefit of organizations of all sizes and across virtually all industries. So  is your organization or industry embracing the cloud in an innovative way?

The manufacturing industry has experienced 17 months of continuous growth. This certainly bodes well for continued manufacturing growth in 2011 especially as companies begin to increase spending and to re-stock inventories. The Institute for Supply Chain Management’s survey of manufacturers states that 65% of respondents expected 2011 revenues to be greater than those in 2010. Additionally, the survey cites that while most manufacturers are somewhat optimistic about the first half of 2011, they have even higher hopes for increased performance in the second half of 2011. Perhaps more surprising than this extended period of growth in the midst of unstable economic conditions, are the levels of domestic manufacturing growth occurring in the same period. Domestic manufacturing activity has been feared to be in a state of near-steady decline domestically due to advance in technology and the cost savings realized by offshoring manufacturing labor. Despite positive domestic growth, manufacturers must still remain cautious and implement strategies that allow them to respond better to changes in the economy as noted by IDC Manufacturing Insights in its annual predictions webinar.

Derek Singleton of Software Advice addresses these strategic needs in the post, “5 Strategies for Growing as a Domestic Manufacturer .” He discusses five ways in which domestic manufacturers can maximize new opportunities, which include:

1. Preparing for Re-Shoring Production;
2. Investing in Your Workforce;
3. Designing for the Developing World;
4. Mastering Supply Chain Visibility;
5. Improving Environmental Responsibility.

While some manufacturers have been hesitant to invest from 2008-2010 as most organizations focused on cost control measures to combat effects of the economic downturn, the ISM survey states that there will be as much as 14.5% increases in investments and capital expenditures by manufacturers in 2011 which supports the ability of manufacturers to consider implementing the strategies listed above. Another trend in the ISM report shows that manufacturers are planning to slightly increase their labor forces, but more importantly increase the pay of their work forces. This most likely indicates that they are attracting more skilled professionals to fill in productivity gaps or are investing in new and existing employees to ensure that they are being paid commensurate to their expertise or experience.

Of these five strategies, the use cases for improving environmental responsibility are especially compelling. He notes that in Wisconsin, forty-five manufacturers banded together to create the Profitable Sustainability Initiative which is devoted to the development of environmentally friendly manufacturing methods that simultaneously reduce expenses. Singleton notes that the principal driver for increasing domestic manufacturing is finding ways to offset the higher production costs – that exist primarily as a result of higher labor costs – so that domestic manufacturers can compete with those that are capitalizing on less expensive labor overseas. All of his strategies address ways that manufacturers can reduce costs, but the example of manufacturers realizing cost savings from implementing green programs especially stands out as a new generation of environmentally responsible processes emerges. Also of note is the trend towards increasing domestic production largely due to increasing costs of overseas shipping and reduced production quality. As consumer demands become more important than ever to manufacturers, they cannot risk harming their reputations by using less-skilled labor to product goods that do not meet quality standards. Manufacturers are therefore becoming more creative in their cost-savings and production processes so that they can simultaneously meet product cost targets and consumer demands – in both terms of volume and quality. Often, this is where strategies such as ones that improve environmental responsibility while reducing costs will increasingly be adopted. 

As 2011 progresses it will be interesting to see how manufacturers continue to respond to fluctuations in the economy and continue to develop innovative strategies to cut costs, improve production efficiencies, and satisfy ever-changing consumer demands. As with most industries, the manufacturers that will most likely succeed in 2011 are those that effectively take into account constantly changing economic circumstances when implementing growth strategies, including strategies that employ new IT investments.

At the beginning of 2010 most analysts had an almost rosy view of recovery across most major industries. Accordingly, most organizations changed their focuses from “survival” cost control and efficiency measures to revenue growth initiatives. This change in strategic focus was also a result of most of the cost savings initiatives being maximized, so revenue growth became imperative. Some industries and individual organizations were more successful at this than others. Many industries experienced great first and second quarter growth, but then saw stagnation or even revenue declines in the second half of 2010. High Technology was especially impacted by this as much IT spending stagnated in Q3 2010. Of course, year-end results remain to be seen and could be better than projected. Retail will especially be scrutinized as holiday spending is often an indicator of consumer spending behaviors for the upcoming year. However, the biggest lesson most industries have learned this year is that they remain heavily dependent on the overall recovery of the economy and that there will most likely not be the dramatic increase in spending that many analysts and organizations were hoping to see at the beginning of 2010 despite many organizations maintaining high capital reserves. Therefore, looking ahead to 2011, most organizations are preparing more cautiously and adjusting to the new norm of economic uncertainty to the best of their abilities. The upside is that despite lingering unemployment and a glut of new regulations that were passed this year whose business impact for good or ill remains unknown, that growth rates will still likely be higher than they were in 2010 and it would be shocking if they dropped back down to 2008-2009 levels.

So what were some of the major industry trends from 2010?

Financial Services

Regulation! The Dodd-Frank Wall Street Reform and Consumer Protection Act was finally passed and is targeting such issues as bank fees, capital requirements, and trading regulations. It also has established the National Insurance Office to more closely oversee the insurance industry although at this time it is merely an oversight body to which state insurance bodies/commissioners will report.

Revenue growth is the paramount goal and compliance is an increasing focus as institutions large and small begin implementing new regulatory requirements.

Consumer Packages Goods and Retail

For CPG, supply chain optimization and demand planning are crucial to success. Many CPG manufacturers have capitalized on increased consumer and retail spending and hope that stores will continue to replenish inventories that were allowed to dwindle as a result of the recession. New product development and marketing initiatives were also increased this year.

In massive efforts to improve revenue growth, most retailers focused on improving product mixes to effectively meet customer demand, increasing customer interactions (largely through direct mobile and social media campaigns) to improve visibility and sales, and improving overall marketing strategies to promote brand awareness and the value of their merchandise in the midst of competitive pricing battles among many retailers. For many, these initiatives appear to have been successful at least through the 2010 holiday season. However, final results remain to be seen. Precision retailing and increased marketing initiatives will likely remain trends in 2011. Also, “flash sales” and group purchasing power (through sites such as Groupon) will likely be growing influences in the retail industry.

Manufacturing

Manufacturers largely saw increases in production as demand increased and are likely to have sustainable growth into 2011. However, manufacturers must continue to rely on supply chain optimization and lean production processes to drive down costs and help support revenue growth as supply chain management is more critical than ever to manufacturer’s bottom line. Manufacturers are also turning to SaaS for many of their technology upgrades due to the lower cost and greater flexibility for customized apps and users.  

Energy

The BP oil spill largely overshadowed the other trends in the Energy industry in 2010. Subsequently, a temporary moratorium was issued on deep water drilling off the U.S. Coast and there is highly increased scrutiny on the industry as a whole.

In the natural gas sector, improved technology has allowed producers to more easily access unconventional natural gas (coal bed methane, shale gas, methane hydrates, etc.) which has caused unconventional gas to more convenient to access and less expensive to produce.

In Electric & Utilities, the national power grid’s sustainability and security remains a concern in addition to current rate structures as several states have passed rate increases.  

Healthcare

Many of the challenges facing the healthcare industry have not changed over the last year. Skyrocketing costs coupled with higher levels of both un-insured and under-insured patients continue to place great strains on the system. Nursing shortages remain and doctor shortages are increasing. Also, patients continue to demand better care including more advanced procedures and pharmaceuticals, but do not want to or cannot pay more for them.

In positive news, ARRA grants for hospitals and clinics to implement electronic medical records (EMR) appear to have been very successful as EMR adoption rates increased over the year.

Of course, the biggest healthcare industry news of the year was the passage of the Patient Protection and Affordable Care Act (Healthcare Bill) on March 23, 2010. The Healthcare Bill’s purpose is to address the challenges listed above by expanding coverage to all Americans through insurance exchanges and tax credits (to make it affordable for all.) This will ideally expand the user pool to reduce charge-offs from un-insured and under-insured patients so that costs will decrease for everyone while simultaneously expanding care to all who need it. The public and politicians remain polarized about the bill, but it is unlikely to be overturned so health insurers and healthcare providers are working diligently to meet its mandates.

High Technology and Telecommunications

The High Tech industry has captured many headlines in the last several months with major mergers occurring (often that incited bidding wars and rejected offers), dramatic executive leadership changes (Mike Hurd’s ousting from HP and new position at Oracle for example), and new products being released (the iPad has done exceptionally well and e-readers seem well on their way to becoming mainstream devices.) The first half of 2010 was on track to meet analyst projections as both software and hardware sales saw increases. However, growth slowed much more than expected in the second half of 2010 as the economy remained sluggish and technology companies realized that their 2011 success will still largely be dependent upon the state of the economy. 

The most important issue currently facing Telecommunications is the FCC’s proposed “net neutrality” rules that would grant some Internet regulatory powers to the FCC. Many telcos are vehemently opposing the legislation as they want to maintain control over their networks and profit from them – especially since many have made substantial investments in their implementation and maintenance. Many consumers are also opposed because they do not feel the plan does enough to protect consumer interests or to help regulate wireless as it becomes increasingly used. While the outcomes of these new rules remain unknown (or even the full extent of the rules as they have yet to be fully published), it will undoubtedly a highly debated issue in 2011.

If you are a frequent visitor to this blog, you know that Perform Ventures has a high interest in industry trends, marketing, and sales. Industry marketing’s differentiator is that it takes your products and services and customizes their messaging and positioning to the specific needs and challenges of an industry.This is beneficial to both the seller and the customer because it helps refine the product or service to better solve customers’ specific challenges.  The customer then receives a truly value-adding product or service that improves customer satisfaction and the seller’s relationship with the customer. It is important to note that industry marketing is most commonly used in the high tech industry with financial services generally being the second most prevalent user. However, it truly can benefit any organize regardless of size or industry.

We derive most of our analysis from third-party sources as you can see from previous posts. Occasionally, we like to corroborate those results with primary research. We conducted the initial Industry Messaging Survey last summer. You can view the results here .

The key findings included:

·        80% of respondents’ organizations sell to multiple industries.

·        84% of respondents have different value propositions for different industries.

·        96% of respondents who adjust their value propositions for specific industries see an increase in lead conversion to sales.

·        73% of respondents saw an increase in lead conversions by at least 6% when using industry-specific messaging; 59% saw an increase of at least 10%; and 32% of respondents increased lead conversion rates by 25% or higher.

·        82% of respondents saw their sales cycles accelerate when employing industry-specific value propositions. For approximately 58% of respondents that acceleration was by 10%or more.

Over a year has passed since the last survey, so we decided to conduct the survey again to see if any trends in industry messaging have changed over the last year. We certainly welcome your participation - click here to take the survey.

As an added bonus, all participants will receive a copy of the survey report and will be entered to win a next generation Kindle!

Thank you in advance for your insights and we look forward to sharing the results! Or if you have any industry marketing success stories, we would love to hear about them in the comments section!

The High Tech and Electronics Industry was projected to experience positive growth in 2010 after two bleak years caused by the recession. As many organizations implemented cost-cutting strategies, many IT budgets were frozen. This especially affected hardware, in which the semiconductor industry saw 11.4% decline in revenue in2009. However, most analysts predicted that 2010 would be a positive year for the entire High Tech Industry, and many companies are surpassing their earnings projections. A leading headline from the Wall Street Journal on July 12, 2010 stated, “Tech Sector Defies Gravity as Web Drives Upgrades. ” Intel’s record-breaking quarterly earnings release the following day only bolstered that claim.

Intel’s somewhat shocking 34% quarterly revenue increase was the result of positive earnings across all major divisions.  Some of the trends influencing this growth include:

• Increased investments in cloud computing servers as companies providing data centers strive to meet ever-increasing Web-based services demand.
• Corporations upgrading servers and increasing laptop and PC purchases.
• Even netbook sales have increased –this is typically an incredibly low-margin division for Intel and it saw a 16% increase despite Apple’s iPad being released in the same quarter.

As emphasized in the Wall Street Journal , increasing Internet services – including everything from email to video conferencing to online gaming – and demand for them is a primary driver in the High Tech Industry’s growth. In response to the economic downturn, many organizations began adopting cloud computing initiatives primarily due to their lower cost. Ease of use, upgrade capabilities, application integration, variety of services offered, and improved security are other factors that have contributed to the increasing interest in cloud computing. Organizations are realizing the high value they can receive from implementing web-based services and are implementing the necessary technologies to support them.

In addition to the growing popularity of Internet-based upgrades, the Wall Street Journal cites additional High Tech Industry trends including:

• Apple’s record release sales of iPhone4 (topping 1.7 million sales in the first week) and stronger than predicted sales of the iPad.
• In addition to consumer interest in personal electronics as supported by Apple sales, consumer spending on home computers including both laptops and PCs has also steadily increased.
• Rising prices and key tech component shortages due to heightened demand levels (many popular semiconductors are now taking 18-20 weeks for delivery compared with the previous 10 to 12 week time.)
• Strong increase for chip-manufacturing equipment makers – Gartner predicts a 113.2% increase in spending in this sector for 2010.
• Increased stock offerings, M&A activity, and venture funding are all contributing to industry growth as some investor confidence rebounds. 

In somewhat of a contrast, the Federal Government has implemented a $3 billion Federal IT spending freeze while it evaluates many current IT projects that it believes to be ineffective or that need improvements before proceeding. According to the Wall Street Journal, this freeze may impact such leading companies as IBM, Accenture, and Oracle that currently hold many of these large contracts. The White House and Federal CIO Vivek Kundra are emphasizing the need for IT efficiency and effectiveness, noting the numerous expansive contracts currently in place that have failed to produce the desired results. Many of these include financial management systems that have simply failed to integrate all the disparate systems existing within individual agencies, precluding any inter-agency integration and collaboration. The entire Federal IT budget tops $80 billion, so there will be no cessation for the majority of IT projects and functions, but it remains a White House priority to begin reducing the cumbersome nature of these projects so that they can be implemented in more successful, localized parts. The Administration recognizes that increased transparency is vital to IT project success, although many vendors remain concerned about the current lack of transparency regarding the frozen projects.  The ideal outcome of this budget freeze is to improve IT project transparency going forward so that vendors are aware of expectations and that Government Agencies have a way to ensure their project outcomes are achieved in a timely fashion. Also, reinforcing the overall trend towards implementing cloud computing, Kundra is especially interested in implementing cloud computing initiatives in the Federal Government to reduce costs and improve efficiency.

In both the public and private sectors, high demand for Internet-based services are underscoring many major IT investments and upgrades which is very good news for the High Tech Industry as it continues its revenue growth efforts in 2010.

The manufacturing industry has entered what appears to be a period of sustainable growth as manufacturing activity reached a level not seen since July 2004 according to the Wall Street Journal . This has resulted from increased consumer and business spending, despite spending levels being higher than income increases. Business are finally replenishing inventories as consumers become steadily more willing to spend, which has supported much of the increased manufacturing activity.

With this recovery, the manufacturing industry is placing a renewed focus on technology investments that were previously canceled or delayed.  In the two-part blog series, “2010 Manufacturing Software State of the Industry Roundtable,” the Software Advice blog presents the views of manufacturing software industry leaders about the state of the industry – with specific emphasis on manufacturing ERP solutions.  Software Advice notes that large manufacturers are primarily focusing on replacing or updating legacy ERP that were implemented during the Y2K craze but are no longer fulfilling all manufacturers’ ERP needs.  And, for organizations that have already updated their systems, many are expanding them so that all plants (including offshore facilities) are on the same corporate ERP system to improve functionality and data accuracy.

Small and medium sized manufacturers are also embracing technology investments as technology solutions become more affordable and customizable than ever before – primarily through SaaS.  In the Software Advice Roundtable , Jonathan Gross notes that, “One of the primary drivers [in SME manufacturers’ SaaS adoption] is the fact that end-users are not required to support and maintain the software. The provider does this work... Another key driver is that no supporting infrastructure (databases, networks, etc.) is required.” With the improve functionality and lowered cost of SaaS-based ERP solutions, manufacturers of all sizes are now able to receive the benefits of ERP systems to achieve their cost cutting and revenue growth goals. Some small and medium manufacturers have actually used ERP integration solutions to provide the business value in offshoring, despite some remaining skepticism from manufacturers about data security and dependability when not hosting their data solutions on site. Increasingly the value of SaaS-based ERP solutions overrides this skepticism as SME manufacturers try to become more competitive in the industry.

Software Advice also cites the following trends in manufacturing software:

• Lower prices as software companies compete to gain customers that delayed IT investments as a result of the recession
• Increased integration of enterprise-wide information and systems including those from supply chains, offshore plants, and disparate internal reporting systems
• A slight preference towards adopting integrated ERP suites instead of best-of-breed applications – especially in new adopters. Manufacturers with legacy systems are still more likely to incorporate best-of-breed applications to enhance the functionality of existing solutions to accommodate new and changing information.  

These trends are reflected in a recent IDC Manufacturing Insights Supply Chain Survey , where 43.6% of manufacturing respondents cited “improving profit margin” as the primary business goal driving IT investments. As market activity improves and manufacturers continue to experience growth, a primary goal will be to maximize revenue. Leveraging new and existing IT resources to improve planning will be critical for manufacturers to achieve this as many have fully implemented other cost cutting measures in wake of the recession. With improved capital from increased production, the time is right for manufacturers to assess their technology needs and determine which solutions can truly add value to their organizations - especially while prices are reduced. 

As organizations look for new ways to increase revenue growth, customer engagement becomes more important than ever for several reasons. First, as customers - and businesses - have learned to “do more with less,” consumers of virtually all industries are spending more time researching the products and services they want to buy.  Consumers are also willing to spend more time finding a lower price. Second, as a result of the economic crisis, many organizations realized that they were not employing their data effectively resulting in not only operational inefficiencies but also greatly hindered customer service initiatives. Third, as consumers across industries receive an onslaught of digital marketing materials, marketers and customer service departments have to work even harder to ensure that their campaign stands out from their competitors.

In a recent article, The McKinsey Quarterly notes that despite increased digital marketing budgets and activities – many campaigns fail to generate more leads than when operating at their previously lower budgets.This largely results from marketers spending additional budget dollars on advertising and other paid placements of brands that already have a strong recognition resulting in increased spending with little to no increase in results. The McKinsey Quarterly says that “Most companies have now essentially become publishers, with a more complex set of cost and quality concerns, yet continue to behave like simple advertisers.” When companies in any industry do not readily adopt a flexible, dynamic model their outreach efforts often fail and simply become another piece of the noise that consumers must sort through every day.Therefore, McKinsey claims that a more effective strategy is to become an active digital marketer where less of the marketing budget is spent on advertising and more on content creation and other engagement activities that empower consumers to interact with their brands within the parameters the organization establishes. This allows consumers to access and share the information they want, while still enabling the organization to have active input into what consumers will take away from their encounters with their brand.

So, what are various industries doing to increase customer engagement to meet new revenue growth goals?

Several industries are leading in improved customer engagement programs including Banking, Telecommunications, Retail, and Consumer Goods with Energy and Manufacturing also implementing programs to better gauge consumer demand. To achieve this goal, these industries have discovered the value of fully leveraging both existing technologies and new technology applications. When organizations did not possess a complete view of their customers and the projected performance of customer-facing departments, they continuously lost cross and up-sale opportunities in addition to sometimes weakening their brand by not providing customers will all the information they needed in one location. Much of the High Tech industry has been a leader in this area – or at least when implementing their own solutions that are designed to improve enterprise visibility and improve customer engagement. When high tech organizations fail to do so, they encounter the same challenges as other industries when trying to increase revenues through improved customer engagement activities.

Therefore, as various industries continue in their efforts to better understand and interact with their customers, they need to be mindful of their methods of outreach and interaction ensuring that customers receive the same level of attention and service at each level. A vital component of this process is for customer facing staff to have the resources they need to speak knowledgeably about not only their organization’s product or service, but the industry in which their target operates. Simultaneously, organizations need to effectively monitor customer interactions – whether they be an online chat session, social media message boards about the company,customer service or sales calls, purchase orders and usage volumes, or even just website volume in addition to traditional campaign tracking – to guarantee that their marketing and sales departments are in an optimal position to convert their customer engagement activities into sales and strong revenue growth engines.

Information Resources, Inc. (IRI,) a leading Retail and CPG analyst group, recently published its 2009 CPG Year in Review report. The report makes some unique insights,but most importantly addresses the permanent changes retailers are going to see in consumer behavior. The McKinsey Quarterly published a study of retailers in December 2009 which also echoes this prediction in consumer behavior. McKinsey states, “Many companies with strong premium brands are anticipating a rapid rebound in consumer behavior—a return to normality, as after previous recessions. They are likely to be disappointed.”The reason being is that consumers have tried lower cost items and been satisfied. Or, if not 100% pleased, they now feel that it is not worth the extra expense to buy the higher-priced item even if they do prefer it.

IRI calls the cost-saving strategies employed by many consumers as “draconian” insofar as people have gone far out of their ways to save money on things like food and beauty products. This has resulted in an increase in the purchase of do-it-yourself home goods and has also included increases in self-subsistence projects such as gardens. IRI predicts that some of these more extreme measures will eventually be scaled back, but that a commitment to frugality and value products will remain. 

So what does this mean for Retailers and CPG manufacturers?

First of all, private label goods have cemented their position as desirable goods that actively sought after by a wide range of customers. With cost saving and frugality still being important, consumers will most likely continue to embrace private label goods indefinitely - despite some gradual return to higher-priced premium goods.

Second, many CPG categories saw price increases in 2009which are expected to continue through 2010. IRI remains somewhat doubtful that consumers will not rebel against these increases as companies turn to innovation to capture market share through creating appealing value-priced goods. According to the Wall Street Journal, there appears to be a chance of nominal rebound in premium brands as producers implement pricing and promotiona strategies such as selling larger quantities for the same price or creating a better product whose value outweighs the price. Still, retailers have a harder job than ever of convincing consumers why they should consider purchasing the higher priced item. Marketing effectiveness therefore remains of paramount concern in addition to product innovation.

Ultimately, technology providers for Retail and CPG need to understand that many of the market shifts caused by the recession will have long lasting – if not permanent – effects as consumers continue to embrace cost savings measures despite improved Retail and CPG earnings and projections for 2010. Competition will remain fierce for increasingly demanding and informed consumers who have learned to do more with less. Technology providers therefore have a unique opportunity to capitalize on organizations' needs to better understand their consumers and maintain reduced operating costs so that they can be successful under these new conditions.

The Retail Industry was one of the hardest hit in wake of the recession as consumers sought new ways to save... ultimately reducing the total amounts of products purchased and the price consumers were willing to pay.After drastic price-slashing in late 2008, retailers revamped their strategies to focus on leaner inventories and increased customer interaction with the goal of meeting value-driven consumer demands and returning to profitability. As a result, earnings were much better in 2009 although still significantly less than pre-recessionary levels.

Gartner focuses its prediction on the growing popularity of m-commerce (mobile commerce.) Consumers have actively embraced using mobile devices primarily for research purposes before buying or locating products. Making direct purchases on mobile – which many retailers are considering an integral component of new cross-channel sales strategies - has not yet been adopted by most consumers. As a result, Gartner predicts that “By2010, over 40% of Tier 1 retailers will pursue m-commerce. However, only 20%will be successful in effectively integrating these initiatives to enable cross-channel shopping.” Gartner notes that in order for retailers to be successful that they need to retain focus on customer preferences and cross-channel shopping experiences while trying to drive revenue through m-commerce. 

In Worldwide Retail Industry 2010 Top 10 Predictions, IDC Retail Insights cites some slow recovery efforts in the industry as retailers have implemented huge cost saving initiatives through reducing inventory levels,closing less profitable stores, halting expansion efforts, and more fully relying on IT investments to help them adjust to changing market conditions.Throughout 2010 IDC predicts that all sectors of Retail will increase external IT spending from 2009 levels with drug stores leading with a 4.5% increase and automotive dealers and gasoline service stations experiencing the least with 1.1% growth. Most of the trends IDC predicts for 2010 center around improved customer demand planning and experiences in addition to expanding the functions of IT to improve these experiences and maintain cost reductions.

Other IDC Retail Insights’ predictions for 2010 include:

• Growth strategies will focus on “same shopper sales” and first-time buyers
  
• Retailerswill fully utilize agile supply chains to improve responses to customers,suppliers, and regulations
  
  • Optimizing retail PLM will be integral to supporting agile supply chain goals
    
• Retailers will embrace mobile interaction with customers
• Retailerswill invest in IT programs to support their newly established business models,but reduce traditional IT costs that do not provide that necessary support

• Retailers will try to improve brand performance while cultivating customer loyalty