September 13, 2017

How retailers can benefit from the cloud

Marie-Louise Forsberg

Head of Retail and Services, Sweden, Tieto

New competitors, changing consumer needs and increasing demands on service and availability add pressure on retailers. Can cloud solutions be a key enabler for improved competitiveness? And do most companies really know where they stand in this journey? Do you?

One way to know is to compare and benchmark. Together with the research analyst company Radar, we have just repeated our Cloud Maturity study for the third time. This time, the research was based on interviews of 268 IT decision makers in Sweden, Finland and Norway.

Cloud maturity is high within Nordic retail. The sector is the second most cloud mature sector after the financial sector. Still, some companies are on a basic level where both a clear definition and a strategy for cloud is missing and the gap between front runners and laggards is increasing. And at the same time we see clear benefits of cloud mature organizations. For example, organizations with high cloud maturity:

- Has 29% greater share of its IT budget available for innovation and transformation

- Spends 21% less on its ongoing IT operations

- Has 18% higher ability to support digitalization of core business

Basically, cloud could help retailers to increase business speed and agility, lower costs, enable new means of growth, innovation, and collaboration to strengthen their competitive position.

Below, based on my experience and how I look at this I will explain seven ways retailers can benefit from cloud solutions. Do you agree?

1. Scalability and availability

As “Digital First” is becoming a reality and norm for many retailers, the ability to scale – and having an infrastructure that is resistant to failure during high traffic (systems cannot go down, especially not during peak loads) – will always be one of the key differentiators in the success (or failure) of a retail organization.

Scale means having the technology capacity to handle spikes in demand from your customers when they need your services most.  How a retailer responds to sudden spikes in visitors and transactions can make the difference between a successful or catastrophic quarter.

Cloud offers unique capabilities for retailers, particularly when it comes to seasonal bursting and cloud elasticity. It helps retailers load balance their information just as they would their staff during busy seasons without incurring new capital investment costs.

Retailers aren’t very resourceful with only perhaps 20% of their computing capacity utilized during a regular day. But they must have that extra space to help manage for example the holiday demands.

Retail organizations all over the world experience huge increases in demand between November and January, and the ability to remain available throughout these peak periods and then burst capacity when necessary is where the superiority of cloud really comes through. One example, would be if you would run a promotional email to hundreds of thousands of user during this period.

 2. Cost efficiency with reduced complexity

Primarily the ability to move capital to operating expenses is clearly one initial benefit for cloud adoption for many retailers. Cloud will offer the possibility to pay only for what you use and a more standardized way of providing services and at the same time reducing complexity. Improved efficiency will also be gained from the automation of many manual tasks, industrializing IT and its processes, freeing up resources.

By moving to the cloud, retailers can significantly reduce spending because they’ll no longer have to pay the money for maintenance, IT labor, data center space and electricity costs. Freeing up that budget to may open a new store, hire new employees, or just focus on the core business.

3. Improved Flexibility

In addition, the amount of data to be handled grows year by year. Building a new infrastructure every time you outgrow your previous infrastructure, is time intensive and costly. Cloud environments are both flexible and scalable.  Cost efficiency combined with flexibility will be key for growing businesses.

4. Faster time to market

Most retailers is under pressure to innovate faster and get new products to the market faster. Cloud-based orchestration and collaboration services can reduce product time-to-market by up to 40 percent. It streamlines and automates processes and application lifecycle management to speed up deployment of new services in an optimized way.

5. Improved Ecosystem collaboration

Cloud services provide significant opportunities for collaboration and connecting internal and external ecosystems and value chains in a more automated, simplified and efficient way breaking down silos and speeding up innovation.

6. Real time information for better and faster decisions

Cloud services can improve real-time decision making providing instant information anywhere, on any device, to both employees and customers

7. Compliance and security

Cloud collaboration is one of the most effective ways to ensure compliance with ever-changing regulations. Cloud services could also simplify the enforcement of network security and help maintain security standards compliance.

Download here the report The benefits of Cloud maturity

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