Retail Week Cloud Based Transformation


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How can today’s retailers keep costs low and maximise margins, but at the same time grow market share, find new customer touchpoints and create better customer experiences? It’s a huge challenge – but, as this white paper will show, recent shifts in technology are creating huge opportunities for retailers to achieve these goals.

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Retail Week Cloud Based Transformation

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  2. 2. A white paper presented by Executive summary this year, from 1.3% in 2010 [2]. How can today’s retailers keep costs low Competition between retailers is at an and maximise margins, but at the same all-time high as they slug it out for market time grow market share, find new cus- share. That adds to the pressure, because tomer touchpoints and create better staying one step ahead will mean experi- customer experiences? It’s a huge chal- menting with new sales and service lenge – but, as this white paper will show, concepts, establishing new customer recent shifts in technology are creating touchpoints and creating better customer huge opportunities for retailers to achieve experiences. these goals. With the emergence of cloud The good news is that two key technol- computing and the consumerisation of IT, ogy trends – the emergence of cloud forward-thinking retail businesses have an computing and the consumerisation of IT opportunity to shine, in a way that doesn’t – are creating huge opportunities for require their IT departments to do substan- retailers. These innovations are revolu- tial amounts of heavy lifting. By tapping tionising the way that people use technol- into these trends, retailers can explore new ogy and interact with each other. They’re sales and service concepts without having changing expectations, too – both the to make substantial upfront investments in expectations of retail employees, who IT. Planned well, this transformation want to try new ways of working, and the journey can be made in incremental expectations of customers, who want to stages, where ‘quick wins’ provide firm interact with retailers in new ways too. foundations for future innovations. In this respect, cloud computing may be the best investment that UK retailers make Introduction this year, enabling them to create a plat- Keep costs low and maximise margins: for form for innovation that doesn’t demand most UK retail businesses, these are top huge upfront IT spending or require priorities at a time when government data hard-pressed IT departments to do sub- shows that consumer confidence is at a stantial amounts of heavy lifting. low ebb [1]. If high petrol prices, rising domestic fuel bills and static wage growth are forcing customers to reassess house- “All the things that smart hold spending, they’re having a similar, retail businesses have knock-on effect on retailers, too. wanted to do better for That’s particularly true when it comes to years – from spotting new retail IT budgets. According to the Martec opportunities to getting better insight into customer Global Retail CIO Survey of 136 retail CIOs preferences – are now not in 26 countries, released in late September just in reach, but easier and 2011, IT spend as a percentage of overall cheaper to achieve, too” sales at major retailers has fallen to 1.1% Rick Hudson, chief executive, November 2011 Retail Week II
  3. 3. A white paper presented by Research carried out in late 2010 by the “These touchpoints include channels Centre for Economics and Business Research such as stores, branches, call centres and (Cebr) and commissioned by information websites, but also emerging interactions such management company EMC shows that the as social media, mobile sites, SMS messages European retail sector, along with the hospi- and interactive advertising – across a wide tality and distribution sectors, stands to range of devices such as smartphones, benefit the most from the roll-out of cloud tablets, internet TVs, cars and even appli- computing services, with the potential to ances,” he writes. create new value in excess of w233bn Meanwhile, at Gartner, analysts have (£197bn) over the next three years [3]. predicted that companies will generate 50% At first glance, the appeal of cloud of their web sales via social media and computing for retailers in light of budget mobile applications by 2015. “Customers are constraints is clear: it allows them to clamouring for new and easy ways to interact side-step large, upfront capital expenditure with the organisations they deal with, and no (capex) investments and replace these company should think itself immune to this with predictable, flexible operational new business dynamic,” says Gartner analyst expenditure (opex) payments. Gene Alvarez. “As more people use smart- But deeper benefits are there to be phones, they will expect an extension of their explored, too. Above all, what cloud can customer experience to be supported by this deliver is greater flexibility and speed to kind of device while demanding that social market, enabling savvy retailers to pounce on aspects of the web be intertwined with this new opportunities, balanced with the ability experience.” to scale computing resources up and down as needed, and paying only for those that are “What if this revolution was used at any given time. allowed to filter into your New touch points with customers are in business? What if your company’s easy reach with cloud computing, because employees could work in ways many of the mobile apps and social networks that best suited them? What if you that they access in their day-to-day lives from could listen more closely to how handheld devices are already cloud-based. In your brand is perceived by a recent blog, Forrester Research analyst customers and respond in ways that strengthened your Brian Walker urged retailers to abandon the relationship with them?” notion of ‘multichannel commerce’, and Rick Hudson, chief executive, Star think instead in terms of ‘agile commerce’, which he defines as optimising people, The cloud provides the backbone for these processes and technology to serve today’s innovations. In this white paper, we will see empowered, ever connected customers how the move to cloud computing need not across a rapidly evolving set of customer be an all-or-nothing venture for retail busi- touchpoints. nesses, but an incremental journey November 2011 Retail Week III
  4. 4. A white paper presented by focuses on early quick wins that provide applications, where software is hosted by a a firm foundation for future cloud decisions. cloud provider, typically in return for a In particular, we will look at three main areas monthly per-user subscription fee. A retailer of opportunity that cloud computing using SaaS has no need to purchase and presents, namely the chance to centralise maintain hardware, or perform regular infrastructure; to streamline communica- back-ups, and it can always be sure that it is tions; and to make the most of new running the very latest version, as updates opportunities. are provided automatically, as soon as they become available. Centralise infrastructure: the But cloud computing can also provide a retail IT department perspective handy ‘staging post’ for retailers that are With cloud computing, the retail IT depart- understandably reluctant to abandon legacy ment has the chance to shift disparate IT applications in which considerable invest- systems into a single, central location, ments have been made. These, too, can be operated by a cloud specialist. By making transferred to a central location, operated by that move, they can delegate responsibility a cloud provider who will assume responsi- for keeping systems up and running to a bility for their day-to-day delivery, with no provider’s staff. disruption to users who can still access them That’s important, because today’s decen- over the internet. tralised, in-house retail IT architectures are a An experienced cloud provider will considerable drain on company skills and understand what’s needed to integrate these budgets. With cloud computing, the retail IT key systems with others, so that a retailer’s team has more time to devote to creating multichannel strategy can be maintained or value for company employees and the even improved. customers they serve. Retail applications, in particular, pose a Streamline communications: the particular challenge. Software packages used retail employee’s perspective for customer relationship management One of the biggest challenges facing modern (CRM), merchandise planning or warehous- retail businesses is the need to get individual ing must be regularly upgraded. The servers stores, area managers and head-office staff on which they reside require considerable working as a single team. It’s never been care and maintenance, too. When a particu- more important to keep in close contact with lar application is required for a new retail suppliers, distribution partners and retail outlet, regional office or warehouse facility, customers, creating ‘feedback loops’ for additional hardware is often provisioned and continuous improvement and collective new licenses purchased. innovation. By sharing information gathered It doesn’t have to be that way. Some retail- in real time from various customer touch- ers are already opting to move to a software- points – from the shopfloor to Twitter – as-a-service (SaaS) model for retail retailers are in a better position to November 2011 Retail Week IV
  5. 5. A white paper presented by more informed decisions when it comes Leverage new opportunities: to merchandise planning, based on the the customer perspective latest trends. The retail industry is no stranger to seasonal Here, retailers see a big role for cloud peaks and troughs in customer demand. computing. In its recent UK and Ireland That’s not likely to change: in fact, all the CloudWatch report, networking giant Cisco signs suggest that increased responsiveness found that improved communication was will be a key differentiator for retailers in the the biggest draw for IT decision-makers in next few years. retail, with collaboration cited by almost Cloud computing’s pay-as-you-go model is three-quarters (72%) as the biggest benefit of ideal for retailers in this respect. Systems adopting cloud technologies [4]. migrated to the cloud can be scaled up Again, essential communications systems during key retail periods and scaled back – from email to instant messaging to voice- down during quieter times, with a corre- over-IP (VoIP) telephony – can be a costly sponding rise and fall in IT costs. burden to run in-house and are prime candi- Those are benefits that can be reaped dates for early migration to the cloud. In this immediately, but over time, cloud computing way, access from a wide range of locations is also opens a path for new devices to access instantly improved, allowing more immedi- key retail applications situated in the cloud, ate web-based collaboration between retail from iPads used by retail employees on employees and key partners. By using the shopfloors to ‘pop-up’ EPOS installations in internet as the primary backbone for commu- temporary stores. nications, communications costs are More importantly, that will enable them to instantly slashed. flex activities in a way that meets the chang- And, over time, other cloud-based commu- ing expectations of customers who want to nication services – such as videoconferenc- interact with them in new ways – through ing – can be introduced by the cloud new mobile devices, for example, and social provider and integrated with existing sys- networking sites. Cloud computing, with its tems, increasing frequency of contact emphasis on using third-party platforms, between individual stores, area managers provides an ideal way for retailers to experi- and the rest of the business, while at the same ment with new customer touchpoints in a time reducing travel costs. low-risk way. Finally, it’s worth noting that centralised, The trick here is to use these new touch- cloud-based IT systems are much better points in a cross-functional way; for exam- than today’s mish-mash of distributed, ple, using m-commerce to attract additional standalone systems at providing a ‘single customer footfall to stores. As Walker version of the truth’ for retail employees who explains, an agile commerce operation may need to share vital data about demand trends have similar constituent elements as a and customer demographics, regardless of multichannel model, “it’s how they come their location. together and how the organisation November 2011 Retail Week V
  6. 6. A white paper presented by to the customer that represents the significant structure capable of hosting valuable business change”. The customer, he says, is now at the systems and information in a secure manner centre, and “delivering relevant content, that enables them to comply with industry commerce and service is the key to delivering mandates on, for example, credit-card on the new reality”. transactions. The first step on the journey to the cloud Conclusion is finding a provider that can meet these Cloud-based transformation, as described credentials. From there, the sky’s the limit. above, can be a daunting prospect for many retailers. But it’s the best chance that the retail Footnotes IT department has of making the shift from a [1] Office for National Statistics (ONS) data cost centre to a change agent, finding new ways shows that UK household spending dropped to deliver on new strategies, in a cost-efficient 0.8% in the second quarter of 2011, its sharpest way that makes experimentation an option. decline since the depths of the recession at the Along the way, much help will be needed, start of 2009. “The plan for retail companies national-accounts/q2-2011/stb---qna-2011-q2. should be heightened html responsiveness – and cloud computing provides the [2] Martec Global Retail CIO Survey 2011 foundations for being able to (Martec/Aldata) flex activities, conversations and transactions up and down, according to customer demand” [3] The Cloud Dividend: The economic Rick Hudson, chief executive, Star benefits of cloud computing to Business and which is why retail IT must work closely the Wider EMEA economy (Cebr/EMC), with cloud experts on determining the best December 2010 forward path. They’ll need a comprehensive analysis of cloud-dividend/cloud-dividend-report.pdf their current cost base and challenges, con- ducted independently of internal politics and [4] Cisco CloudWatch Summer 2011, (Cisco/ pressures, by retail specialists who understand Loudhouse) how their business works. Those specialists must be able to shed new light on the impact CloudWatch_Summer2011_V3.pdf that trends in social networking and mobile technologies are likely to have on their busi- ness, in a way that allows the retailer to For further information visit respond to these proactively. Above all, , call 0800 915 6922 retailers will need a robust third-party infra- or email November 2011 Retail Week VI
  7. 7. About StarStar provides on-demand computing and communication services to UK businesses. Utilising an advanced cloud computingplatform, the company has redefined how business people use and pay for the technology that supports them. Star’s on-demand business services are easy to use and pay for and are available any time and from anywhere, removing unnecessarycosts for hardware, software and ongoing maintenance.Since being founded in 1995, Star has been an Internet technology innovator and pioneered the system for cloud based spamand virus scanning for business email that became MessageLabs. In the last 16 years Star has established itself as a leadingIT and communications service provider of the highest pedigree looking after 3,500 UK business customers and their500,000 users.Star has UK based data centres that sit within a network and communications capability that forms the basis of the StarPlatform, from which a wide range of computing and communication services are delivered to customers. Star has 250employees working from offices throughout the UK, providing the highest levels of customer service and support. Star’stechnology roadmap will deliver on-demand, cloud computing services to UK businesses who want immediate access to thelatest enterprise technologies. For more information please go to: is the trading name of Star Technology Ltd., a Company Registered in England No. 3077786. Brighouse Court, Barnett Way, Barnwood, GL4 3RT.VAT No. 810943641 Call: 0800 915 6916 | Visit: | Email: November 2011 Retail Week VII