Why Cloud Is the Next Big Thing in Retail

Retailers are discovering the cloud can deliver more flexible, efficient IT. Here’s how to make the most of the cloud in retail.

Why Cloud is the Next Big Thing in Retail
Wondering if cloud computing is coming to retail?

Across industries, spending on public cloud services will reach $195 billion in 2020, more than double the outlay in 2016. And retail is one of three industries that will see the fastest growth (the other two being media and telecom).1 In fact, three-quarters of all “digital-born” retailers won’t even consider an omnichannel commerce platform that isn’t cloud-based.2

“People have been talking about cloud for years, but retailers have been concerned about relinquishing control of customer information and point-of-sale data,” says Chris Opat, senior vice president of Cloud Technology Services for CompuCom®. “But as cloud providers address security issues, retailers are moving workloads to the cloud in a big way.”

What’s important, Opat says, is that retailers understand which workloads are right for which cloud options, and how to leverage the cloud for optimal competitive advantage.

From Operations to Omnichannel

Figure 1: Future Cloud Penetration in the Retail Industry - Percent of senior executives who say cloud will be a moderate or major factor
After some initial hesitancy, retailers are recognizing the potential advantages of moving critical data and workloads to the cloud. In fact, 70 percent of retail executives say cloud will be a “major factor” in the industry within five years.3
(See Figure 1.)

Retail leaders are looking to the cloud for numerous advantages, from reducing the costs of goods to making shopping more convenient. (See Figure 2.)

Figure 2: Importance of Cloud in Supporting Retail Sectors

The cloud can help them achieve those goals in three primary ways:

 

  • IT efficiency — In a highly competitive landscape, retailers have less appetite for making capital investments in IT infrastructure. “Retailers want to invest scarce dollars in strategic initiatives,” Opat says. “They don’t want to procure a depreciating asset that involves regulatory requirements around audits, plus additional investment in administration and maintenance.”

    By moving data and workloads to the cloud, retailers can make IT infrastructure part of their operational budgets. They can pay predictable amounts on an ongoing basis for only the IT they actually consume.

    They can combine that capability with managed field services to achieve even greater IT efficiency. “By offloading management of the physical IT in their store locations to a managed services provider,” Opat says, “retailers gain several advantages. For one thing, they don’t have to scale up their IT support staff every time they expand into new territory.”


  • Business agility — The cloud is especially attractive to retailers, because they operate in such a dynamic market. “Time to market is critical in retail, and retailers need to be able to open new locations and expand their IT footprint rapidly and reliably,” Opat explains. The cloud gives them that agility.

    The cloud lets retailers deploy new workloads in a small fraction of the time it would take to procure and build out their own IT infrastructure. It also allows them to scale up computing power on demand to handle seasonal surges in sales transactions.


  • Omnichannel capabilities — Finally, the cloud creates new opportunities to deliver a consistent, superior customer experience across channels. For instance, retailers can capture customer information through frequent-buyer programs and combine that data with Internet of Things (IoT) tracking and mobile connectivity.

    That allows retailers to follow customers’ shopping behaviors across electronic channels and into the retail store. They can then make real-time offers — for example, texting a personalized coupon, based on stated preferences and past behaviors, to a shopper as he or she enters a retail store. They can empower sales associates with the same customer view on mobile point-of-sale (POS) devices.

    “But to deliver that kind of real-time, personalized experience,” Opat notes, “almost by necessity you need to be managing that data and that process in the cloud.”

No One-Size-Fits-All

Whether you choose a public cloud, a private cloud, a hosted private cloud or some hybrid approach will depend on your risk profile and individual workloads. For example, elastic workloads that scale up or down rapidly may be well-suited to a public cloud. On the other hand, risk-averse retailers may feel more comfortable managing sensitive data in a private cloud.

Regardless of the cloud provider you select, Opat advises, you need to understand the underlying infrastructure and the nuances of the provider’s offerings to be sure they can meet your needs. For example, one provider might be better suited to housing data you don’t want to physically leave the United States to meet data-residency requirements. Another provider might be better equipped to meet security and audit requirements.

Opat recommends working with a managed services provider that can help you navigate the spectrum of cloud options. An effective IT partner can help you assess needs to determine which applications and workloads are cloud-ready and which cloud environments are most appropriate. It can also help you forecast costs for ramping up workloads and manage those costs on an ongoing basis.

Many retailers begin by offloading messaging and collaboration software to the cloud. They then look at moving more sensitive data, such as POS transactions, and more complex processes, such as omnichannel capabilities. Regardless, Opat says, “over the next five years, more and more retail IT will reside in the cloud.”

1 “Worldwide Public Cloud Services Spending Forecast to Reach $195 Billion by 2020,” IDC, August 2016
2 “IDC FutureScape: Worldwide Retail 2016 Predictions,” IDC, November 2015
3 “Ascending Cloud: The Adoption of Cloud Computing in Five Industries,” The Economist Intelligence Unit, 2016

CompuCom® is a registered trademark of CompuCom Systems, Inc. The Economist Intelligence Unit® is a registered trademark of the Economist Newspaper Ltd. IDC® is a registered trademark of International Data Group, Inc.
All data cited in this article is used by permission.

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