Johannesburg, 25 Mar 2014
A growing number of enterprise retail groups are adopting cloud service models. What is the motivation behind this shift in gear?
The retail sector, like many governed by the ebb and flow of consumer attitudes and fluctuating spending habits, is a challenging environment in which to operate a profitable and efficient business, says Christelle Hicklin, Customer Experience Director at Mimecast.
Here, robust operational process and economies of scale is what sets the most successful groups apart from the competition. By focusing on pleasing the customer, both via price and efficiency, large retailers are able to realise consistently healthy revenue streams on an ongoing basis.
A strong emphasis on championing shopper needs and expectations is what keeps the retail sector ticking over. Unfortunately, this outward facing view has the potential to impact the evolution of internal processes within the organisation. IT systems and platforms are not typically reconsidered until their effectiveness has a direct impact on the daily delivery of services.
Despite this, a growing number of enterprise level retailers are beginning to embrace cloud offerings with vigour. After decades of investment in complex on-premises systems, these organisations are beginning to move away from traditional IT models with an intention to reduce cost and complexity while improving service delivery.
The benefits associated with embracing cloud technology within this sector are clear.
Implementing proprietary technical systems intended to support thousands of locations, point of sale (POS) frameworks and customer support systems is a costly affair. Although retailers have traditionally 'sweated' these assets, realising maximum value during product life cycles, the maintenance and staff complement required to ensure operational viability has undermined the price effectiveness of this approach.
The cost of failure in this environment is also exceptionally high. To avoid downtime, on-premises systems must become more intricate to include redundancy measures and support systems. This phenomenon often adds unnecessary complexity to retail IT frameworks.
Cloud service models, on the other hand, offer the same level of service delivery on a subscription basis. These offerings can also be scaled according to demand. Instead of purchasing another server rack to accommodate festive season demand, retailers can simply request to increase their capacity until consumer volume reduces.
These partnerships are accompanied by comprehensive service level agreements (SLAs) that ensure uptime and delivery. This reduces the demand for complex on-premises systems - allowing retailers to focus on what they do best.
The primary point of entry into the retail cloud services environment is currently security solutions within the e-mail and electronic messaging environment. This often leads to more comprehensive platforms that incorporate archiving and continuity offerings, which make legislative compliance easier and more cost-effective to achieve.
In response, Mimecast has enjoyed a significant upswing in enterprise level retail agreements over the course of the past year.
The capacity for growth is significant. By routing, securing and archiving messaging systems via a third party cloud service provider, retail groups can begin to make use of operational information that highlights employee habits and potential weak points within the business.
Leveraging data analytics and a comprehensive e-mail archive, an organisation could gain a better understanding of a particular department and why it is not functioning optimally.
Despite enterprise retail's willingness to embrace the cloud service model, smaller players are still weary to make the jump. This could be due to a more pressing need at a national level to meet legislative compliance requirements while reducing costs.
Nonetheless, change is afoot within this environment. As a growing number of retailers begin to move toward the cloud, so they will naturally realise the benefits associated with it.
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