Many retailers are absorbing a recurring cost that is rarely isolated but directly affects profitability. It builds through the accumulation of systems and sits within ongoing operating expenditure. We refer to this as the Integration Tax.
One retail business operated an ERP platform supported by 52 additional applications. Another ran SAP with a further 362 systems layered around it. Each application introduces integration effort, ongoing maintenance and internal management overhead. Over time, this creates a cost base that is difficult to unwind and harder to justify.
Technology complexity translates into sustained cost, slower execution and increased operational risk. It can also limit a retailer’s ability to respond to changing customer demand, particularly where systems are loosely connected or dependent on manual intervention.
A simple benchmark helps assess whether this cost is proportionate. Where EBITDA is below 5%, IT operating expenditure should typically remain within 1.5% of revenue. At EBITDA below 8%, around 2% is a reasonable range. For businesses delivering EBITDA above 10%, IT operating expenditure may rise to between 2.5% and 3%, provided it supports stronger performance.
Retailers operating multiple disconnected systems are more likely to incur duplicated cost and slower execution. By contrast, a unified platform reduces integration requirements, simplifies operations and supports faster decision-making.
itim Group plc (LON:ITIM) is a SaaS-based technology company that enables store-based retailers to optimise their businesses to improve financial performance and effectively compete with online competitors. Itim adds retail value by helping multi-channel retailers optimise their business and their stores to improve financial performance and compete more effectively with the “Amazons”.
