Moving to the Cloud? Retailers Should Pack Carefully

For many businesses, the key decision isn’t whether or not to migrate to the cloud, it’s deciding which parts to take and which parts to leave behind.

Cloud computing is an undeniably alluring option for companies. According to a recent study, 61 percent of retailers said that cloud technology has led to faster responses to shifts in markets and changing customer needs.

The cloud affords businesses the flexibility to reduce or expand capacity based on their needs at any given moment. Why buy more servers just to accommodate a short-term traffic spike on Cyber Monday? The economical option is to lease cloud-based capacity on an as-needed basis. But embracing the cloud doesn’t have to be an all-or-nothing proposition for retailers. In fact, the most cost-efficient strategy would likely include a mix of cloud-based applications as well as dedicated servers. Moreover, different applications with varying usage characteristics can be combined to share cloud capacity – furthering cost saving benefits.

Consumers’ growing desire for digital interaction is spurring retailers to innovate, with many looking to cloud-based development platforms like IBM Bluemix that allow them to assemble new solutions fast, then experiment and refine.  This approach enables even the largest enterprises to compete with nimble and innovative startups.  For example, a retailer could use this approach to quickly build a consumer mobile app or an analytics application that receives automated data from scores of Internet of Things (IoT) devices used in a retail store to monitor everything from the temperature of the freezers to motion detectors. Both applications require “born-on-the-cloud” style development, which is characterised by agile development and a mashup of multiple forms of data from sources including weather and social media.

[easy-tweet tweet=”Sales applications that are hosted in the cloud can be modified on-the-fly” user=”comparethecloud” hashtags=”retailcloud”]

Certain functions – like e-commerce – are also ideal for the cloud. Sales data from e-commerce is relevant to any number of business functions including marketing, customer service, merchandising and so on. If sales data is stored on the cloud, it can be more efficiently analysed along with other external, unstructured data such as demographics, consumer spending, weather and more. From this data, retailers can gain new insights that can be shared, sorted, filtered and accessed by many groups of people in almost any corner of the globe. An in-store sales associate, for example, could see the last few purchases or even searches a consumer made online and recommend items to the consumer based on that information. Some retailers are also seizing the opportunity to offer cloud based “digital receipts” and other value-added functions as more data moves to the cloud.

Another benefit of cloud-based e-commerce systems, they evolve with the business.

Another benefit of cloud-based e-commerce systems, they evolve with the business. Because sales platforms face the customer, they change frequently based on what the customer wants and what generates the highest sales for the company. Sales applications that are hosted in the cloud can be modified on-the-fly, sometimes in a matter of minutes or hours, versus months or years, which had been (or is) the case with legacy systems. E-Commerce systems are constantly being refreshed, tweaked and enhanced by retailers, as many companies are looking at cloud as a platform to deliver a ‘continuous delivery’ model where a constant stream of small, nimble features can be deployed continuously on to their digital platforms. With its excellent automation and provisioning capabilities, cloud technology can keep up with this constant state of flux very efficiently.

For example, Spanish retail giant El Corte Inglés (ECI) selected a cloud-based Commerce solution from IBM to quickly extend its online presence while addressing the distinct customer needs of consumers in different regions. By deploying a hybrid cloud and on-prem solution, ECI can deliver customised in-country offers, promotions and pricing optimisation in real-time. The solution manages their customer orders across the entire region while supporting the many translation, payment and regulatory requirements unique to each country.  

[easy-tweet tweet=”Retailers can also benefit from cloud’s ability to manage flux efficiently” user=”comparethecloud”]

Retailers can also benefit from cloud’s ability to manage flux efficiently for scenarios where many software changes are needed – such as merchandise and supply-chain transformations. A growing number of retailers are seeing benefits of using cloud for development and testing to support these large business transformations.

legacy monolithic applications are not suited for cloud as making them “cloud ready” would be an expensive affair

Conversely, legacy monolithic applications are not suited for cloud as making them “cloud ready” would be an expensive affair. Applications that consume lots of network bandwidth or are dependent on a large amount of data from several applications need to be reviewed to ensure that moving to cloud does not simply trade one set of costs for another. Applications that deal with highly sensitive or audited and regulated data are also typically not suitable for cloud due to liability concerns.  Instead, these monolithic applications can leverage hybrid cloud models to realise some of the cost-efficiencies of cloud-based automation and virtualisation, for example, without having to completely re-architect monolithic applications when it does not make business sense.

The cloud gets a lot of hype for good reason. We are only limited by our imagination in what we do with it. But just because we can doesn’t mean we should. The best laid plans for the cloud are those that are discriminating and strategic.

[easy-tweet tweet=”The best laid plans for the cloud are those that are discriminating and strategic.”]

Vish Ganapathy is the Vice President & CTO for the global distribution sector at IBM including retail, consumer products, andtravel & transportation.

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