Research from US management consulting company McKinsey found that in 2018, nearly one-quarter of retail industry workloads are in the public cloud. However, retailers expect that to rise to at least one-third in the next year. Traditional retailers, burdened by their legacy systems, have been slower to make the transition. Yet, they know they can’t avoid it forever. Rather than going all in, a better approach may be to identify your highest impact workflows and move them first.
What cloud strategy are your competitors adopting? McKinsey’s report “The cloud as catalyst for retail” found that pure-play retailers, especially the digital natives that started with a “cloud-first” approach, are the ones that currently have the advantage as they are benefiting from the cloud’s ability to scale as needed. If you find yourself in the traditional retailer category, burdened by multiple, disjointed, and hard-to-abandon legacy systems, you’re more likely to take a phased approach when moving to the cloud. One option is to migrate your customer-facing workloads first; another is to shift one function at a time.
Either way, McKinsey recommends taking a journey or workflow approach to leveraging the cloud. Don’t feel pressured to migrate every single application in one go; you need to identify which workflows will benefit your business and customers most and move them first.
“These workflows and their corresponding applications share two key criteria: they are ideally suited to leverage advanced cloud capabilities such as big data, artificial intelligence/machine learning, application-programming-interface platforms, and developer tools, and they will drive maximum value for customers,” the McKinsey report said.
Ultimately, retailers have a choice to buy, rent, or build their IT infrastructure resources based on their application requirements. Some options may be better suited to your business than others.
Public cloud – smaller organizations and start-ups
If you’re a smaller organization, an all-in cloud strategy may be the best option for you. This means that a single retail platform in the cloud handles all of your operational processes, and every piece of data from each process informs and improves the next. You don’t have to worry about system updates; your cloud service provider handles them all for you. Additionally, if you need more server capacity, you simply pay for more as and when required.
For many, this option is particularly desirable as it allows you to access enterprise-standard IT at a fraction of the cost. The trade-off is you no longer host your own data, and you are at risk if the service goes down. But for many, the benefits far outweigh the negatives, and they provide more agility than if the retailer had to build and manage their own technology.
Hybrid cloud – popular solution for retail leaders
For most retailers, a hybrid cloud is the most obvious and sensible approach. This is where your local data center and a cloud provider distribute applications, allowing you to retain confidential information in a private cloud while also gaining access to a wider choice of applications available in public clouds.
Regardless of the size of your operation, moving certain workloads such as your head office operations or back office to the cloud will cause the least disruption and have the most immediate impact at the same time.
Take all this data and host it in the cloud, and your office staff suddenly benefits from the ability to securely access the information they need from wherever they are—on the road, in the office or at home. They will have full visibility of your business’s inventory, so they can develop effective pricing strategies and manage metrics and incentives across all channels. They will be able to take advantage of sophisticated cloud intelligence tools to more effectively do their jobs, and they’re far less likely to be affected by the odd couple of minutes of downtime here and there, if that’s a concern.
The hybrid cloud is an approach that, in short, lets you take advantage of the best of both worlds. If you’re cautious and you don’t want to host any of your transactional data in the cloud, you don’t have to. But you can still put up a data warehouse in the cloud to take advantage of cutting-edge analytics tools.
On-premises data center – Build it yourself and play it safe
You may still be thinking that it makes more sense for your business to build its own on-premises solution. This type of approach may allow you to virtualize certain applications, infrastructure, and communications services for internal business users, but in many ways it allows you to stay in the legacy mindset. Is this going to be the best move for the future of your business? Will it prevent you from progressing?
If security and control of data is your biggest concern, maybe it shouldn’t be. McKinsey’s report acknowledges that high-level security assurances should now be a baseline expectation. “Until relatively recently, this was framed as a trade-off, but modern cloud platforms enable security and control along with productivity and elasticity,” the report said.
Increasingly, a lack of agility and an inability to keep up with changing customer and business needs are more likely to hurt your business. The study “Cloud Computing – Pushing The ‘Go Faster’ Button” by Retail Systems Research found that the IT backlog has taken its toll on retailers, and many now see the cloud as a way to accelerate technology-driven improvements to the business. Indeed, 84% of retail leaders said they believe cloud computing helps them advance their business functionality faster. A further 82% said it saves them time and money, while three-quarters said that they’re able to be more nimble and agile.
Ultimately, a successful cloud strategy comes down to careful planning and managed expectations, but it also requires you to shed legacy mindsets and infrastructure. Are you ready to move to the cloud? Contact one of our experts today!