Market Survey: North America

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VDC Research Group is a technology-based market research and strategy consulting firm that advises clients in a number of technology markets including retail and transaction automation. Their 2009 Self-Service and Customer Interaction Management Solutions study explores current and emerging self-service applications within North America, focusing specifically on retail, hospitality and healthcare.
 
By Rory Gardner, Analyst for the Auto ID & Transaction Automation Practice at VDC Research Group
 
VDC surveyed 25 suppliers of self-service solutions, 100 integrators and over 300 enterprise end-users, evaluating several different self-service delivery platforms, including kiosks, personal shopping solutions and self-checkout systems. Kiosks, the study found, remain the predominant deployment platform, but this is beginning to change. Deploying enterprises are increasingly turning to mobile devices, digital signage, and micro/mini kiosks to meet the customer at the point of decision, providing relevant information, presenting alternatives and transacting business. Personal shopping solutions, and table-side POS systems are relevant examples.
 
Interest in solutions such as these has created a high growth market for suppliers of self-service technologies. In fact, North American retailers, hospitality operators, and health care providers invested more than $2.8 billion in self-service and customer interaction management solutions in 2008, and the market for these solutions is expected to grow by 15.3% annually through 2013.
 
While many North American business operators are trimming their IT investments in light of the global recession, self-service solutions continue to receive investment consideration because of their ability to reduce costs and create new sources of revenue. More specifically, enterprises are experiencing overwhelming pressure to improve turnover, reduce costs and enhance customer experiences. The value propositions associated with self-service solutions, coupled with changing consumer attitudes regarding the use of technology, will position these solutions near the top of a short list of competing IT investments in the years ahead. While the benefits of self-service are clear, the application of the technology varies by vertical market. Let’s look at three industries that are each taking unique approaches to serving their customers through the selection, deployment and management of their self service platforms:
 
Retail
 
In spite of the current economic climate, retail remains the largest and most established industry for self-service solutions. Retail’s leading position can be attributed to its size, the wide range of self-service applications currently supported, and strong familiarity with supporting technologies and sub-systems. Retailers continue to view self-service as a key source of competitive differentiation. In fact, 39% of retailers view self-service as a ‘must have’ while 49% saw it as ‘nice to have’. Only 3% of retailers surveyed viewed investment in self-service solutions as unnecessary.
 
One of the biggest challenges associated with the deployment of self-service within a retail environment has been employee acceptance. While kiosks have been historically – albeit inaccurately – viewed as a vehicle for staff reduction, employees are now beginning to perceive the advantages that self-service solutions offer them, enabling them to concentrate on escalated customer requirements, cross-selling and up-selling.
 
 
Leading retailers recognize that their employees have a key role to play in the successful deployment of self-service solutions. Employee acceptance remains crucial to the success of any self-service project, and appropriate time must be allocated to train employees regarding the benefits these solutions provide to them as well as their customers.
 
 
Enhancing the customer experience by empowering the customer with relevant information, viable alternatives and an intuitive interface is the primary objective of retailers contemplating an investment in self-service. While customer empowerment is hard to measure, other self-service adoption drivers are more concrete. Labour cost reduction, capturing incremental revenue, increasing customer site visits, and reducing transaction costs can be accurately measured with quantitative and financial metrics, demonstrating a compelling ROI.
 
The recession presents a challenging investment environment for retailers. Only those projects that demonstrate a compelling near-term ROI will be considered. The good news for the self-service industry is that the value propositions associated with the best self-service solutions are even more likely to resonate now with retailers and their associates.

Hospitality
 
Self-service suppliers recognise that hospitality markets have been materially impacted by the recession. Many planned investments have been stalled and other more ambitious projects have been cancelled altogether. Still the value proposition associated with many self-service solutions is resonating in core hospitality markets, with mobile solutions creating new and desired capabilities. Through 2013, investment in self-service solutions by hospitality companies is expected to climb, growing by 9.2% annually.
 
Automation technology spend in hospitality will focus on vital infrastructure, enabling technologies and new solutions offering compelling ROI timeframes or scenarios. According to our research, more than 50% of hospitality respondents have installed self-service solutions, with 54% viewing them as a ‘must have’ and 40% as ‘nice to have’. In hospitality, a variety of deployment platforms are playing key roles in the replacement or elimination of specific tasks and their associated costs, enabling hospitality operators to streamline their workforce, increase focus on customer satisfaction and improve their bottom line.
 
Hospitality operators continue to rely on complete solution providers, system integrators and third party consultants while sourcing their self-service solutions. Direct sales channels remain necessary for the vast majority of self-service solutions sold to hospitality enterprises, because of the high degree of customisation required for each installation.
 
Healthcare
 
Spending on self-service solutions within healthcare is projected to decline marginally in 2009, but rebound in 2010 as healthcare service providers realise the benefits from pilot deployments and roll out new applications and solutions.
 
Self-service has been successful in healthcare for a variety of reasons, including the proliferation of on-line information that enables patients to access relevant information regarding their health and think through alternative treatment options. This real-time access to information, coupled with an aging population in North America, is creating a desire among healthcare providers to focus on patient care while automating more mundane processes such as scheduling, way finding, claims processing and payment. The challenge is in integrating the systems required to aggregate relevant patient information to enable faster, more accurate, and more flexible patient care processes.
 
Today’s North American healthcare organisations see self-service solutions as a cornerstone for many of their most pressing IT objectives. Improving patient service and security, increasing procedure throughput, improving the accuracy of patient information and reducing operational costs are leading objectives healthcare organisations are addressing through the deployment of their self-service solutions. The value propositions associated with these solutions are compelling. From 2008 to 2013, investment in self-service solutions by North American Healthcare institutions will grow annually by more than 25%.