Rationalizing Cloud Migration for Retail

Photo credit: iStockphoto/shutter_m

The rise of the digital economy has been transforming Hong Kong, and retail executives agree that data analytics is the most important digital technology for businesses in the near future, according to KPMG. The study also found that as companies embrace data as essential to their business, cloud computing is becoming more important. 

For retailers, the future lies in omnichannel strategies that integrate the brand's approach to customers across physical stores, online and mobile for an improved customer experience. These strategies will not be successful without cloud-based applications and infrastructure.

The cloud offers several fantastic advantages and also carries several hefty technology challenges that incumbent retail brands must overcome if they are to succeed. For these businesses, identifying where to add or change channels and applications is a constant challenge. A fine balance must be struck between maintaining revenues for today and having an eye on the future. 

For this reason, when retailers consider an e-commerce platform addition or upgrade, it is vital to determine the services that make sense to migrate to the cloud. There is no clear-cut answer here, but several important motivators to consider. 

While a strong customer interface is crucial, true success also extends to the streamlined management of logistics, stock, staff, and management processes. The cloud may be for everyone, but it is not for everything. Retailers must understand where the cloud can add value to the organization before making any change. 

The shakeup of the retail market

Technology has redefined the service industry, giving birth to a new generation of brands that use it as a weapon to expand quickly and cheaply. The cloud has transformed how businesses grow and change with its ability to morph with the business dynamically, rather than serving a fixed need for a set amount of time like many legacy systems. 

Retailers of all sizes with a brick and mortar heritage have seen operations become more complex with this rise of “born in the cloud” retail organizations over the last decade. Surviving has quickly become a game of sink or swim. Without the advantage of technology in their DNA, many of these traditional retailers have seen growth shrink or their businesses fold under the pressure. 

There are two types of businesses that can thrive in the current environment. The first are the large, quick service companies that can turn around stock from concept to storefront in a matter of weeks. These businesses have a global footprint in every major shopping center. They operate and grow swiftly, thanks to their well-established supply chain network and global contracts. 

The second type includes agile aggregators that exist purely in the online space. They can limit their physical margins and invest more into improving customer experiences. As facilitators, these retailers can streamline orders and keep stock moving, all while providing easy, fast and reliable service to consumers. 

Both business types have achieved economies of scale because they have embraced agility in underlying infrastructure and systems through the cloud early on. They also look to where cloud can provide real value by deploying smart IT strategies that extend beyond the website to optimization of logistics, stock management, point-of-sale, and customer interactions. 

Regardless of your organization’s attitude towards cloud technology, there will come a time in the near future to decide how important it is to keep up with the industry’s movers and shakers. 

What is the goal of cloud migration?

Before making any decision to migrate to the cloud or expand cloud capabilities, businesses must establish clear objectives. Then begin testing with safe workloads and grow from there. It is not necessary to go “all-in” on cloud or replace all legacy systems immediately. Organizations should also keep these six factors in mind during the process. 

1. Business Agility and flexibility: While cost is an important factor, it should not be the only driver because it is not guaranteed. Achieving the agility and flexibility to grow and innovate must be at the heart of the business' thinking. 

2. Team efficiency: Innovative ideas may help retailers reach new audiences, but IT teams need the time and tools to help bring that vision to life. Too often these teams are weighed down with keeping sites and systems running and managing administrative tasks, rather than coming up with solutions to improve supply flows or better engage customers. IT teams need to have time to think creatively and explore new ideas.

3. Logistical insights: Consumer expectations have changed. We now exist in a society where information is available at our fingertips, and as a result, we expect products to be as well. A cloud strategy that supports retailers' logistical operations may help the organization be more flexible and transparent in meeting consumer demands. 

4. Smarter planning: Cloud gives organizations the ability to automatically and cost-effectively scale operation for peak seasons, promotions and shopping events. Retailers also gain the ability to digest and analyze significant amounts of customer data quickly, which may open up new growth channels for the business. 

5. Real-time insights: Cloud allows even the most complex organizations to operate in real time, so there is never a question about the location of a shipment on the delivery journey. 

6. Improved security: Early concerns about the security of the cloud have dissipated so that today a strong security offering goes hand-in-hand with a reputable cloud provider. This is critical in guaranteeing that customer data will be protected. 

Retailers in Hong Kong considering the first steps in migrating to the cloud should consult with an agnostic, unbiased partner to ensure there is no pressure to fit their business needs into a particular cloud platform as well as overcome technological and cultural hurdles. Remember, the point of investing in new technology is to enable internal teams to be more agile, innovative and reliable to create better customer experiences. 

James Hung, managing director for North Asia at Rackspace Technology authored this article. The views and opinions expressed in this article are those of the author and do not necessarily reflect those of CDOTrends. Photo credit: iStockphoto/shutter_m