• Written by Azhar Aliyar, Director

A decision to be made this week by e-commerce and retail executives is where to allocate their IT budget, and currently, it is based on a long list of requested reports, integrations, and system replacements, with the bulk of the money going towards getting answers out of existing systems rather than running them, a situation that can be improved with the use of AI, as seen in the US Census Bureau's Business Trends and Outlook Survey, which found that 22.4% of US businesses reported using AI in the two weeks to July 2026, with 12.6% of US retailers reporting AI usage in the previous two weeks.

IT spending in e-commerce and retail

Most IT money in e-commerce and retail is spent on getting answers out of systems, with a significant portion going towards report generation, data analysis, and system integration, rather than the actual running of the systems, which is why 14.3% of US businesses used AI in sales and marketing in the previous six months, against 1.7% in production of goods and 0.9% in distribution, according to the US Census Bureau's Business Trends and Outlook Survey.

This is because e-commerce and retail businesses often have a complex landscape of systems, including order management, product information management, warehouse management, and marketing platforms, each with its own data silo, making it difficult to get a unified view of the business, and AI can help by providing a layer on top of these systems to answer questions without requiring costly integrations or replacements.

The report and dashboard backlog

The traditional approach to getting answers out of systems is to build a report or dashboard for every new question that arises, which can lead to a backlog of report requests, each requiring significant development and maintenance efforts, and this is where AI can help by providing a natural language interface to the data, allowing users to ask questions and get answers without requiring a new report or dashboard to be built.

This approach can replace the traditional report and dashboard backlog with a more flexible and scalable solution, and as seen in the US, where 11.4% of US businesses used AI in their information technology function in the previous six months, according to the US Census Bureau's Business Trends and Outlook Survey, this can lead to significant cost savings.

Extending existing systems

Rather than replacing existing systems, AI can be used to extend their capabilities, allowing businesses to ask better questions of the systems they already own, and deferring a replacement programme, which can be costly and disruptive, and this approach can also help to reduce the risk of data loss and system downtime associated with replacement programmes.

For example, a category manager can use AI to ask questions of the product information management system, such as "what are the top-selling products in the last quarter?" or "what are the most profitable product categories?", without requiring a new report or dashboard to be built, and this can help to improve decision-making and reduce costs.

Integration spend

Another area where AI can help to reduce IT costs is in integration spend, by joining data at the point of the question rather than building and maintaining a point-to-point link for each one, which can be costly and time-consuming, and this approach can also help to improve data quality and reduce errors.

For instance, a shift supervisor can use AI to ask questions of the warehouse management system, such as "what is the current inventory level of a particular product?" or "what are the shipping schedules for the next day?", without requiring a new integration to be built, and this can help to improve operational efficiency and reduce costs.

Where AI adds cost

While AI can help to reduce IT costs in many areas, there are also areas where it can add cost, such as in the data work and governance required to implement and maintain AI systems, which cannot be skipped, and businesses need to budget for these costs honestly, and as seen in the US, where 64.3% of US businesses made no change of any kind to adopt AI, and only 6.8% changed how they collect or manage data, according to the US Census Bureau's Business Trends and Outlook Survey.

This is why it is essential to have a clear understanding of the costs and benefits of AI and to prioritize investments in areas where AI can have the most significant impact, and businesses can contact us via our contact page to discuss their AI strategy and get guidance on how to implement AI in their organization.

Measuring IT cost reduction

To measure whether IT spending has actually fallen, businesses need to look at the requests and licenses that have stopped, rather than just comparing to a projection, and this requires a clear understanding of the current IT landscape and the areas where AI can have the most significant impact, and as seen in the transformation of e-commerce with AI, this can lead to significant cost savings.

Businesses can also learn from the experience of other organizations that have successfully implemented AI to reduce IT costs, and our executive and strategic leadership team can provide guidance on how to develop a successful AI strategy, and this is particularly important in the US, where 61.6% of US businesses with no plans to adopt AI said it was not applicable to them, and only 6.9% said it was too expensive, according to the US Census Bureau's Business Trends and Outlook Survey.

When AI is not the answer

While AI can be a powerful tool for reducing IT costs in e-commerce and retail, there are also situations where it may not be the best solution, such as in areas where the data is not well-structured or where the questions being asked are highly complex and require human judgment, and in these cases, traditional approaches such as report and dashboard development may still be the best option, and businesses need to carefully evaluate their options and choose the approach that best fits their needs.