Take a fresh look
Written by Glynn Davis
Growing numbers of successful retail implementations of cloud-based solutions are removing some of the earlier security concerns merchants harboured as well as highlighting some of the benefits of operating with more flexible infrastructures.
Flooring specialist Harvey Maria was well ahead of the retail curve when it moved all its operating systems and ecommerce solutions into the cloud in the 2007. NetSuite’s cloud-based SuiteCommerce enabled the business to outsource everything to the cloud, thereby keeping staffing numbers down to just three full-time employees despite the company growing fast.
Mark Findlay, founder of Harvey Maria, says: “The solution also integrates accounting, CRM b2b and b2c e-commerce, including shopping cart management and check-out, which makes managing our outsourced processes really easy.”
Using the cloud has also enabled the company to more easily sell and ship internationally. “The technology automates the whole process taking into account currency exchange rates and delivery costs. Moving to the cloud for us was also the natural choice as it’s scalable as well, which prevents any IT headaches when you want to grow,” he says.
It is a similar story at Hobbycraft where management took the decision to have its recently installed end-to-end K3 Retail solution hosted in the cloud via K3’s managed services division. Mike Thomas, IT director at Hobbycraft, says: “It’s a pay-as-you-consume service that we pay for on a monthly basis. It’s going great and it required no capital expenditure at all on hardware and software. We can also consider running thin-clients, which means it will be cheaper buying devices versus having to purchase PCs.”
This suggests some of the grandiose predictions for cloud adoption might well be coming true. Ramanan Ramakrishna, associate vice president for retail and CPG in Europe for Infosys, points to a 2012 study by IDC that predicted cloud adoption within the retail sector would grow by 300 per cent over the next two years, which he believes is no surprise considering the benefits the cloud can bring to the industry.
“Cloud computing empowers retailers with a flexible and cost-effective technology platform to drive revenues and boost performance. Plus, it allows retailers to seamlessly manage the multiple ways they interact with consumers from one platform, capture and store customer data for analysis and scale processes up and down based on levels of customer demand,” he suggests.
Sarah Kellett, associate director of consumer facing industries at Fujitsu, has no doubt that cloud technology offers great opportunities for retailers including providing them with the option to be able to try things they would not otherwise implement: “The idea is try a range of things that are quite interesting but they do not need a big capital expenditure requirement.”
The cloud also enables the creation of duplicate environments for system upgrades. And the big benefit is that it frees up merchants from having to invest large sums in IT infrastructure. Fujitsu has been providing cloud-based services to a growing number of retailers including Hallmark whose entire store IT systems are now run in the cloud by Fujitsu.
But despite the clear benefits there is still plenty of uncertainly in the market about making the move into the cloud. Although Kellett says more companies are starting to put together operational expenditure models that incorporate cloud solutions she says there is still a gap between customer expectations and reality.
“The cloud has many different forms but retailers view it as what they’d like it to be rather than what it actually is. They’ve not got their heads around what it is yet. It depends what they’ve read!” she says, adding that there is the additional issue of CIOs with a more technical backdrop “nervous” about what it means for their part of the organisation. “Some are struggling to grasp this and have a long way to go to understanding the cloud,” she suggests.
There is also the issue of security the threat of which is shot down by Pravin Kothari, chief executive and co-founder of CipherCloud's, who says: "The biggest issue surrounding cloud security is on the misconception that the cloud is fundamentally insecure. While this may have been true five years ago when the security industry first encountered cloud computing, and only had solutions from legacy providers that were functioning in an on-premise, firewalled world, the market has since evolved to meet the challenges of cloud.”
CipherCloud has coupled military-grade encryption with enabling native cloud application functions including search, sort and analysis that previously weren’t possible. Against this backdrop he forecasts: "Confidence in the cloud will continue to flourish with market education. Additionally, data legislation advancements in the EU, US and Australia will encourage organisations to bolster their cloud security."
Andy Lloyd, general manager of commerce products at NetSuite, is also of the opinion that security should not be seen as a barrier, suggesting it is a “reaction to the unknown”. He adds: “When we tell retailers about our products’ security then they see it as a positive. Retailers’ biggest [security] liability is credit card data in their database and they don’t have any deep technical focus on this. When they see our levels of security then they are more comfortable”.
This was the case with Harvey Maria, according to Findlay, who says: “It’s probably better than if we had a proprietary system because they [NetSuite] are more focused on security than we would be. You read about issues people have had but it does not worry us.”
So much so that the company is fully intent on utilising the flexibility that cloud computing provides, to help it continue to grow its business. As it targets new markets and seeks out new objectives it can easily add a new module from its provider, which can then be hosted in the cloud. “The beauty of what we do is flexibility. It’s good not to be tied down. The technology makes it a much easier job for us to grow into a larger business,” says Findlay.
Greater recognition of the cloud as a provider of improved agility, and also a cost model that delivers savings when looked at in terms of total cost of ownership, will result in an acceleration of adoption, according to Lloyd, who says an increasingly competitive marketplace will push merchants into further investigating the cloud.
Nigel Garrett, business development director at Workplace, agrees cloud can deliver excellent speed to value with minimal disruption and a lower total cost of ownership than an on-premise solution. This is helped by the ability to deploy cloud-based solutions into a business quickly and with lower risk than traditional on-premise software solutions because there are no upfront costs for hardware and databases and no lengthy implementation cycles.
Another driver of adoption is the constantly evolving customer behaviour in today’s multi-channel worlds that is forcing ongoing change on retailers. This is a big problem in the context of merchants having typically upgraded their enterprise systems every eight years. “This means you’re always years behind. Cloud helps solve this as we’re doing upgrades every six months and so our customers have the latest versions,” says Lloyd.
As the pros for cloud look to be increasingly outnumbering the cons it seems inevitable that cloud-based technology will be ubiquitous within the retail industry, just as many commentators had been predicting. For one in the IT industry it is not proving to have been hype over substance.