The shift from cost centre to value driver
Our recent research ‘The 18% Advantage’ shows mature businesses plan to increase digital transformation spending by nearly 4x more than those just starting out. However, 1/3 of businesses report ROI as their biggest digital transformation challenge, with only the leading 18% rating their performance as excellent…
For decades, retail & hospitality technology has been treated as a cost centre - a delivery engine designed to keep systems running, build requested features, and minimise costs.
However, as we enter 2026, this model is breaking.
In an environment of margin erosion, volatile demand, and rising customer expectations driven by AI and digital-native competitors, technology can no longer be justified by activity or output.
Leading organisations now view digital as a strategic growth enabler. One that unlocks new revenue streams and enhances decision-making, enabled by their ability to systematically convert technology investments into commercial value. Those that succeed will capture disproportionate growth and profitability. Those that do not risk falling behind more digitally mature peers.
Context: The Drive for Impact
There are 5 main drivers shaping technology’s role in the business today.
First, investment is growing – and scrutiny is increasing. Global spend on technology is forecast growth from 4% to 10% in 2026[1] with digital leaders planning on spending x3 as much on technology as their peers[2]. This comes alongside an increased mandate for impact, with 85% of CIOs report intense pressure to demonstrate tangible business benefits, with large numbers of executives now required to report ROI directly to the board.
Second, the return on technology investment remains elusive. Despite increased spend, many struggle to link investment to performance, with over a third of technology leaders reporting return on investment as their biggest digital transformation challenge.
Third, a performance gap has opened between digital leaders and laggards. Digitally mature organisations - those that have successfully integrated technology into core business processes and invested in growth - are demonstrably outperforming peers across growth, profitability, and customer retention metrics. These organisations treat technology not as a support function, but as a strategic capability embedded within commercial decision-making.
Fourth, operating models remain stuck in delivery mode.
Many retail & hospitality technology organisations continue to operate as "feature factories" - optimised for output volume rather than outcome achievement. Performance management remains anchored to delivery milestones, feature releases, and roadmap completion rather than validated business impact.
The fundamental question facing technology organisations is shifting, from "did we deliver on time and on budget?" to "did we generate measurable business value."
Fifth, AI is raising the stakes further
AI is fundamentally changing businesses. While the initial impact has been felt in efficiency and cost drives, the disruption is broader and so are the opportunities. 90% of executives expecting AI driven discovery to surpass traditional search engines by 2026[3], and spend on retail media expected to grow 12% annually[4].
These drivers mark a structural redefinition of technology’s role: from cost centre to strategic value driver.
What Retail & Hospitality Leaders Must Do
To shift from a cost centre to a value driver, organisations must fundamentally redefine what "success" looks like.
This requires five fundamental shifts:
From Delivery to Impact: Success is measured by commercial lift, not project completion.
From Outputs to Outcomes: Moving from "number of features" to "conversion rate improvement".
From Projects to Products: Treating tech capabilities as enduring assets, not time-bound tasks.
From IT Alignment to Business Co-ownership: Shared accountability for results.
From Minimising cost to Growth: Looking at both cost reduction, but also growth opportunities.
In practice, this means:
1. Fund Value Streams, Not Time-Bound Projects
Project-based funding is typically locked in for a fiscal year based on early, often inaccurate estimates. Instead, organisations should organise around Value Streams, persistently investing in core value drivers such as customer conversion and operational efficiency.
Funding should also shift to Venture Capital style incremental funding. For uncertain bets, provide small "seed" capital to test assumptions, only scaling funding only once the business impact is proven.
2. Redesign Governance Around ROI
Shift governance from milestone tracking to value realisation. Regularly review initiatives against commercial KPIs, reallocate capital dynamically, and stop initiatives that fail to demonstrate impact. Steering should be done as a regular joint business and tech review to drive joint accountability.
3. Move From Project to Product
Replace siloed projects with persistent product teams aligned around business domains, not functional silos. This team should combine tech, data and business expertise, be accountable for outcomes, and be empowered to identify and test the right solution to drive impact. This goes beyond simply renaming roles, to developing the skills who understand Profit & Loss and business impact.
4. Double Down on Data for Insight
You cannot manage what you cannot measure. Prioritise data use cases that inform decisions, measure what matters and help drive customer insights - allowing for a virtuous cycle of insight to prioritisation to impact.
5. Invest in Growth, Not Just Efficiency and Cost
Retailers and hospitality businesses that don’t move beyond a cost-reduction mindset may struggle to keep pace with more digitally mature competitors that are leveraging technology to deepen customer relationships, develop new revenue streams, and anticipate market shifts. Retail media, AI, agentic commerce and even the continued growth in eCommerce make this a strategic imperative.
The real transformation is not digital, it’s economic.
Many organisations believe they have a digital problem. In reality it’s a value problem.
The winners of the next decade will not be those who deliver the most features or adopt the most emerging technologies. It is those who can clearly articulate and prove how technology creates measurable business value. The organisations that succeed will treat technology not as a delivery function, but as a core driver of growth, profitability, and competitive advantage.
The question is no longer whether technology creates value, but whether your organisation is set up to capture it.
Ready to move from delivery to impact? Get in touch with Alex Mosley today and let’s talk about how you can prove value fast.
[1] Gartner Market Databook, Gartner 2025
[2] The 18% Advantage: How digital leaders are shaping the future of Retail and Hospitality, Enfuse 2025
[3] 2026 Retail Industry Global Outlook, Deloitte 2026
[4] Retail Media Enters the Performance Era, Bain 2025
