Tech Spend Set to Keep Rising as Digital Investment Delivers Business Value 

The Data

1. 1

   Our analysis shows that the retail industry is increasing tech spend. As a share of revenue, CapEx was 1-2% between 2021 and 2023.

2. 2

   More broadly, global spending on AI is set to rise by more than 100% between 2023 and 2026.

3. 3

   We found that digital leaders – those leading the way on tech and digitization in supply chain – see a +34% increase in revenue growth, +57% Scope 3 reduction, and are 2.4x more accurate on EPS estimates than their peers.

4. 4

   Companies increasing their tech spend include Home Depot, Walmart, and Lenovo.

Spend, Spend, Spend  

From genAI to blockchain, developments in digital technology are creating a once-in-a-generation opportunity for supply chain leaders. But implementation and ROI first depend on investment, be it financial or in terms of effort, time, and energy. Zeroing in on financial investment, we found an increase in the amount companies are spending on technology. Considering the need to embrace the opportunities digitization offers – not just to thrive but to survive – we zoomed in further on the numbers.

Our research found that the retail industry has been investing 1-2% of revenue per year over the last three years (2021-2023), with companies like Home Depot and Target being just some examples.

And with AI remaining the hot tech of the time, spend on this specific digital tool uncovered huge increases in investment. In EMEA, there looks to be a 61% rise in planned AI spending (2024 vs 2023). This trend is similar to organisations in North America (62%), while the figure is slightly lower in APAC (45%). Overall global spending on artificial intelligence looks to increase by more than 100% between 2023 and 2026, according to the latest forecasts from IDC, reaching $154bn this year and more than $300bn in 2026.

Our research found use cases that point to the same levels of investment in line with our analysis above in the realm of AI and also outside of the retail industry. Lenovo, for example, is investing 1.6% of its revenue in AI. It is doubling down on investing in innovation, which includes spending US $1 billion over three years to deploy AI more quickly on a global scale.  

The numbers might be high, but so are the stakes. Those moving from investment to actual implementation to tangible ROI are seeing huge gains across the board, from sustainability to revenue growth. Zero100 research found that digital leaders see a +34% increase in revenue growth, +57% Scope 3 reduction, and are 2.4x more accurate on EPS estimates than their peers.

Walmart’s Investment in GenAI

Walmart, one of the companies we mention above as increasing tech spend, is doing so in a myriad of ways – and has been for several years. Looking at genAI investment, for example, Walmart has piloted and now uses a chatbot from Pactum AI to improve and automate negotiations with suppliers. The chatbot has been rolled out across the US as well as several other countries and expansion into other markets has enhanced productivity as the software improves after every negotiation, which has reduced the time for set up into new categories. Deals that once took weeks and months now take days, and, since 2021, Walmart has saved an average of 3% on contracts.

The Takeaway

We project that tech spend is only going to increase, indicated by our data on the retail industry over the past three years. Given the ROI and gains on the table, investment is the first step in moving toward a roadmap, implementation, and then business value, be that in the form of cost savings and speed, like we’ve seen in the Walmart example above, or in the form of other ROI that broader digital leaders are experiencing.

Getting the team and C-suite on board when it comes to investment is step one – hear supply chain leaders talk about how in our AI Advantage episode under Further Reading below – as is being targeted in your approach to investment. Though AI spend is increasing, consider specifically, for example, what type of AI would be most helpful in meeting your goals or solving the specific problems your org comes up against – or if, in fact, AI is the right place to focus. Then consider more integrated ways of working to get the most out of the investment, avoiding costly, spotty experimentation and instead shrinking time to value. 

To see a different data cut or to dig deeper into this topic, reach out to our Head of Research Analytics, Cody Stack, at Cody.Stack@zero100.com.  

Methodology  

Zero100’s proprietary data and analytics are a combined effort between our data scientists and research analysts. We provide data-first insights matched with our own research-backed points of view and bring this analysis to life via real-world case examples being led by supply chain practitioners today.   

For this study, we analyzed company 10K reports. We also analyzed company financial documents, SBTi data, and LinkedIn data.

Further Reading

• The AI Advantage: Winning Executive Buy-In
• Research Report: Welcome to the Operations Metaverse
• The AI Advantage: Building Tomorrow’s Tech Stack
• Research Report: Make-Move Automation