UK shoppers spend more than £1bn per week online, and as a result, our town centres are changing. From badly impacted brands like Jaeger and Austin Reed to Debenhams’ efforts to reshape its high street presence by focusing on “social shopping,” there can be very few retailers who haven’t been affected by the online revolution.
The customer has always been King, but now they dictate how they generate demand, communicate and consume information across all channels. They are demanding more personalisation and faster fulfilment. And to meet these demands, businesses need to ensure customers can interact with them on any device, at anytime, anywhere.
More than ever before, investment in enabling capability and technology is critical.
Now is the time to replace legacy applications that are not digitally compatible, with cloud-based solutions that can be rapidly scaled and transformed to enable digital customer propositions to be delivered and evolved at pace. Businesses that move quickly to integrate the customer journey will win in the omnichannel, digital age.
The integration challenge
There are many factors for those that want to compete and establish the optimal customer experience across all channels, which include:
- the need to understand customers better than before and develop deep customer insight
- The imperative to establish strong business alignment across the organisation. The technology function alone cannot drive digital and neither can marketing – digital needs be embedded in your business, with board sponsorship, to ensure effective channel integration
- investment in enabling capabilities that support information flow between different customer channels and interactions – typically leveraging integration layers (API Platforms)
While many organisations have a vision of the integrated omnichannel capabilities they desire, the journey is not so clear. How do you start to untangle legacy platforms without killing essential services? How do you deliver integration at pace, alongside other initiatives? At the same time, how do you inject future proofing and innovation into the mix? And how do you ensure you are compliant with new regulations such as GDPR?
Cloud capabilities have a significant part to play in helping organisations migrate from a complex point-to-point interfaced application landscape, and introduce cloud application platforms that can be rapidly be deployed to create digital propositions. Thus the digital platform of the future will:
- enable new capabilities to be ‘plugged and played’ within the omnichannel estate
- integrate data from till, loyalty, 3rd party concessions, apps, social, servicing and payment capabilities
However, while cloud solutions can be a digital enabler that can unlock the benefits of an integrated digital business, the choice and selection of cloud solutions and how you migrate from your current business solutions will be key.
New software market entrants over the last few years have architected their products from the ground up – but often do not have the breadth and process maturity expected, while other vendors have migrated/acquired products to incrementally evolve their on-premise and cloud capabilities. These evolving cloud-based solutions may not currently offer all the functionality that their on-premise versions could provide, so, a straight technology upgrade will often not be the answer for many organisations.
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Operating Model
Putting the business process coverage and solution maturity aside, the many benefits of cloud solutions can be realised as long as all aspects of your operating model are considered – not just ‘technical gap fit’. Cloud solutions will change the financial operating model mechanics with a switch to opex from capex. However, often the depreciation of existing assets and desire to delay investment until “end of life” will present challenges regarding when is it right to move to a cloud or hybrid platform.
The ‘currentcy’ of cloud solutions also presents benefits with the ‘provider’ managing technical upgrades and patching for security, as well as leading advances on the solution road map. However, there are potential “downsides”, as a customer you have limited options to say ‘no thank you I want to stay on my current version’. Within an agreed period, you will be forced to accept the cloud platform changes and forced to invest in testing to verify and accommodate business changes that can result from platform enforced changes.
The scale and performance of some cloud platforms have had detrimental impacts on some production business operations over the last 12 months, in some cases extending project delivery timelines, while steps were taken to ensure end-to-end business performance is acceptable. When sizing cloud solutions and subsequent contracting, ensure the SLA’s and performance ‘guarantees’ are locked into your commercial agreements with an appropriate level of growth, or run the risk of business performance impacts and un-planned opex cost growth – just to achieve the expected performance required.
The challenges of cloud platforms often far outweigh the alternative, as long as due consideration is given to all key delivery and operating criteria. This involves how you build internal support capability or outsource support services to 3rd parties, overlayed with the role that the cloud software provider takes. What is certain is that the shape and form of support services will need to evolve compared to the traditional on-premise model.
As organisations look to place the customer at the heart of their business, they need to build intelligent, digital business platforms with the right blend of solutions that balance digital proposition excellence and customer satisfaction, against the cost to transform and to support the business. For that, you need a robust business case and a clear set of business objectives, and that can be a challenge for your organisation and your incumbent software providers. The digital transformation challenge may well see an end to single-vendor “best in suite/portfolio” solutions as costs, benefits, vendor capability maturity and flexibility will not stack up.