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Retail Trends 2014: #4 – The Enterprise Ascends into the Cloud

The cloud trend continues into 2014 as more cloud platforms mature, confidence in security and reliability grows, and the retail use cases for cloud begin to overlap with driving trends like mobile and big data. Analysis from Aberdeen and Accenture show retail investments doubling or tripling through 2015 as cloud business cases begin to prove themselves out.
We follow the traditional definition of cloud computing, breaking it up into various services (infrastructure, platform, software) and deployments (public, community, private, hybrid.) The key characteristics of a cloud solution continue to drive business case development and adoption:

  • Quick startup with minimal investment
  • Highly elastic and scalable as demands change
  • Outsourcing benefits of pay-as-you-go managed services
  • If done well, loosely coupled to your business and easy to change or cancel

Retailers are making the most of these characteristics to take advantage of cloud in 2014.
Find the Best-of-Breed in the Cloud is considered by many to be the galactic leader in online retail, but where they have achieved lesser-known success is with Amazon Web Services (AWS), their $3B business that has the combined capacity of its next 14 rivals, according to a research report by Gartner. AWS is the cloud-based platform for entire companies: Pinterest, Netflix, and Foursquare among them. Not a bad endorsement for cloud computing!
But despite the maturity of cloud, core retail systems like merchandising, inventory, and financials are either custom-built or large-scale enterprise class systems running in company-run data centers. A few vendors like Epicor and Workday cater to the small and medium markets with a full-scale core SaaS, but large scale inroads are being made with the adoption of point and niche cloud services outside of the core.
Customer care, loyalty, marketing automation, payment processing, and other departmental functions are getting the best-of-breed treatment from the cloud. The range of cloud options is growing, with huge providers like bringing proven scale to entire departments and small players like Boxella bringing specialized differentiators to consumers. Highly specialized systems like monthly planogram generation take up capacity but with sparse utilization, and are ideal candidates to offload to the cloud. Retail-as-a-Service isn’t quite turnkey, but the table is being set.
Cloud is the Convergence of Mobile and Big Data
As we’ve noted before, retailers have more data than ever to collect, correlate, and analyze. In fact, the most interesting analysis may lie in data correlated between sources never considered until they were revealed and assembled in the cloud. Social media trends, weather, in-store shopper movements, and the internet of things are great examples of data points begging to be extracted and applied to build a richer consumer experience.
Companies are processing 1,000 times more data than they did 10 years ago and are seeing their volume of data rise 35-50% every year. Since much of this data is being sourced in the cloud and externally, why not crunch the data in the cloud as well? Cloud-based analytics will continue to evolve in 2014 to meet demands for faster analytics and compounding volumes of data.
Ramp Up. Ramp Down. Repeat.
The lowest hanging fruit in a cloud solution is arguably the ability to start using it RIGHT NOW. Take a side of ANYWHERE with that and you have the combo platter to ramp new experiences up and down when your connected consumers need it. Holidays, peak seasons, special events, major promos and campaigns, even pop-up stores and food trucks are all ideal scenarios for the elasticity of cloud.
Of course, scalability, reliability, and security are not exactly low hanging fruit, but are certainly in better shape in 2014 than ever before.  Coupled with internal IT’s inability to move fast, and cloud evolves as an essential tool for retailers.
Cloud and the API Economy
Cloud adoption will keep increasing in 2014, but in addition to using the cloud, retailers are also building out their own clouds to extend their consumer experiences with web APIs. The API Economy is the next retail channel.
More on APIs in an upcoming post!

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Jim Hertzfeld, Principal and Chief Strategist

Jim Hertzfeld is Principal and Chief Strategist for Perficient, and works with clients to make their customers and shareholders happy through insanely great digital experiences.

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