Retailing in the cloud

Adopting cloud computing into the retail space is now high on the agenda of many companies looking to reduce costs and improve efficiency. But, asks Dave Howell, can today’s cloud computing platforms deliver the gains that retailers are looking to achieve?

The momentum that is gathering in the application of cloud computing is something that no retailer can ignore. Estimates vary, but the Centre for Economics and Business Research (CEBR) has stated that the top five EU economies could see a boost of at least Euro 177 billion a year by 2015, thanks solely to the adoption of cloud-based systems. This assessment has a backdrop where retailers from tier one to independents, are all asking whether an investment in cloud-based platforms should be built into their development roadmaps.

Oliver Hogan, managing economist at CEBR, comments: “As a driver of enhanced productive performance, cloud computing is likely to be especially important in playing a part to ensure that Europe’s international trading position remains competitive, hence boosting export growth. Moreover, as one of the major means of maximising the ‘bang for buck’ in modern IT investment, cloud computing could also be an important driver of European business investment that will, in turn, drive European economies forward.”

In their report, Six questions every retail executive should ask about cloud computing, Accenture vocalised many retailers’ concerns: “While cloud can undoubtedly bring significant benefits to retail businesses - significantly reducing the required capital investment in infrastructure, while also opening up new opportunities to reduce operating costs and work in new ways - questions and concerns remain about issues such as the security of customer data, a feared loss of control over business-critical applications, and the reliability of cloud technology for retailers’ most critical customer-facing systems.”

What is clear is that the cloud as an operating environment will become increasingly important for many retailers. However, it is a mistake to believe that a wholesale move to SaaS systems and the cloud in general is inevitable and right for all retailers, as a hybrid approach is more sensible. Malcolm Rowe, sales director Northern Europe, Akamai, says: “Don’t see the decision to move into the cloud as ‘all or nothing’ or something that cannot be reversed in the future. Security, hosting, scalability, PCI compliance and content offloading can all be treated as discrete projects that will bring business benefit.”

Disruptive developments

With what can often be entrenched legacy systems and a focus on centralised data management and processing; moving even some areas of a business’ IT systems to the cloud can seem a daunting prospect. “The main stumbling blocks are perceived as security and control and retail based robust applications,” says Peter Lewis, marketing director at Episys. “The idea of handing over important data to a cloud vendor does worry many retailers. However cloud computing companies operate under strict security guidelines and it is to their advantage and reputation to employ the most advanced techniques to protect their clients’ data.”

The rapid development of social networking has, however, illustrated that consumers have a propensity to offer sensitive data to trusted retailers, perhaps opening the way for retailers to use cloud-based customer services systems. Steve Gurney, retail industry partner, EMEA, Verizon Business states: “The increasing need for retailers to integrate and exchange information with multiple third party services like Facebook, Twitter, Foursquare etc. will drive a faster move to cloud platforms. As more and more e-commerce systems use web services to mash-up data from several sources to enhance the consumer experience, it is only natural that they choose cloud and SOA based environments to achieve this. Successful retailers are already moving their IT functions to cloud systems and adopting SaaS models. We can expect this to continue in the coming years.”

Clearly each retailer will have to carefully evaluate his or her existing use of IT and how this interfaces with their customer base. Once this is understood, the current cloud-based services can be evaluated within that context. Many retailers won’t see an immediate fit with their existing and legacy systems, but as cloud vendors diversify, even legacy systems will be able to integrate into some form of cloud-based data architecture.

Hosted business

It is possible though to integrate the cloud, as it is understood today into the retail environment. Verizon Business’ Gurney explains how one retailer approached the cloud: “Burberry recently streamed its Spring/Summer 2011 show live into 25 flagship stores around the world, using Verizon Business to help deliver the Retail Theatre experience. Featuring high-definition video screens and pioneering surround-sound technology, the virtual fashion show enabled customers to explore and buy directly from the collection, using a custom-built Burberry iPad application. Burberry is using technology to reshape how customers can engage with the brand, both in-store and online, with the aim of creating the ultimate interactive luxury consumer experience. The Retail Theatre offers a great example of the potential of technology to transform the global retail market.”

Ian Tomlinson, chairman and founder of Cybertill, outlines some retailers that have embraced the cloud with great success: “Monkhouse Group, a school wear and sports retailer, with over 20 stores in the North of England, enjoys the ability that cloud based computing delivers, to monitor system performance right across the business at any time, from any point. This especially important as one director, Suzanne Toner works remotely in Seattle USA. “Having a real-time system on the cloud-based platform is great as I can log on at any time and see exactly what’s going on.”

Hi Ho Silver, a jewellers with over 14 stores predominately in the South West, has been able to improve its supply chain thanks to Cybertill’s cloud-based platform. “We have some employees in Mexico, where Hi Ho source many of our products. Our employees there have full access to Cybertill, which is hugely beneficial. We do a lot of our barcode labelling there, so we save time and cost by being able to fulfil that in Mexico,” comments managing director, Andrew Ransford.

Future platforms

Can a retailer move the vast majority of their IT requirements to the cloud? At the moment the answer is no. What is possible is retailers can use cloud-based systems to augment their existing platforms and deliver a richer experience for their customers. Using the cloud for CRM is a great example as Episys’ Lewis concludes: “The cloud is the way of the future for so many beneficial reasons. With cloud computing, retailers no longer have to worry about software licenses, infrastructure costs, and cost of future proofing, administration and data storage. The real advice is to make sure you have chosen the right provider by doing your research. Look at the vendor’s track record for providing the types of service you are interested in and ask for a reference from existing clients.”

Paul Gullett, VP of the EMEA region for NComputing also concludes: “The hype surrounding ‘the cloud’ has certainly built to unrealistic proportions, and there is a real risk of companies jumping on the bandwagon and trying to achieve too much, too fast. But that should not detract from the market-proven,
cloud-based technologies that are already delivering tangible benefits for retailers.”

Whatever your opinion of cloud computing as it stands at the moment, it will increasingly become a major component of your retail business.

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