Join the cloud crowd: Three key reasons why retailers should adopt cloud computing

By Niklas Hedin, CEO of Centiro.

This article is brought to you by Retail Technology Review: Join the cloud crowd: Three key reasons why retailers should adopt cloud computing.

One of the things that makes the world of omnichannel retail so exciting is that it doesn't tend to stand still for long. In recent months, for example, we have seen Amazon announcing a full online supermarket service with same-day deliveries in parts of London and Sainsbury's doubling the number of Click & Collect sites it provides.

More often than not, the key to success in this environment is having the ability to expand offerings and services. Failing to do so can be costly. The recent demises of BHS and Woolworths, along with the announcement that Marks & Spencer is closing and downsizing a number of stores, has proved that not even the biggest household names are 'too big to fail' within the modern retail sector.

Legacy IT straightjacket

Although established retailers have a significant head-start on the rest of the field in many areas including experience, brand name and physical store locations, legacy IT systems can significantly hold back their attempts to evolve. This can make it hard for them to push boundaries, acting as a straightjacket that restricts their efforts to grow and keep pace with the rest of the field.

Indeed, research from Daisy Group recently revealed more than two thirds of retailers feel legacy IT systems have made them less competitive against retailers with more modern retail technologies.

This is where cloud computing can make a critical difference, enabling the flexibility and scalability that is very much the order of the day in the current retail climate. However not all retailers are moving with the times, as some of them still have reservations about cloud , feeling that it represents a leap into the unknown.

Fight your fears

To keep pace with the rest of the field, retailers must find a way to overcome their fears and move to the cloud. Here are three key reasons why they should feel confident to move to the cloud:

1. Cloud makes you more secure. It is quite understandably a culture shock to go from having computer hardware sitting in the corner of an office, to remote systems which are far from physical view. A security breach could have serious implications for retailers, as recent research from KMPG revealed retailers risk losing a fifth of their customers following a security breach. Cloud isn't a threat for retailers in these terms however: Gartner says that public cloud providers are in fact much better positioned to provide more effective security measures than would be available if a business attempted to provide them in-house.
   
   
2. Costs can be greatly reduced. If a retailer has a traditional on-premise system and anticipates a spike in traffic over a specific period, they will be faced with large up-front costs, involving purchasing new equipment and licenses, setting everything up and manning an increased amount of servers. A major factor in success in the retail arena is being able to perform during peak periods, such as Black Friday and Cyber Monday, a shopping weekend which saw £3.3 billion spend in the UK in 2015.
   
   
3. Retailers will find cloud computing is a lot more flexible, allowing a retailer to scale up in line with what's required, without facing the up-front cash outlay involved in expanding a more traditional system. Similarly, during quieter periods, cloud can be scaled back; many service providers operate on a pay-as-you-go model, meaning retailers only pay for what they use. This is a lot more balance sheet-friendly than being faced with the headache of having equipment that's been paid for sitting idle.

Retailers can be more agile than ever before. Rather than having to wait months (or even sometimes years) for software updates on legacy IT systems, cloud operating systems are often updated every few weeks. This means retailers are always using an up-to-date version of all software they use, enjoying the benefits of a better operating system straight away, rather than having to wait for quarterly updates to trickle through and having to make do with a poorer experience in the meantime. With the rest of the retail supply chain plugging into a retailer's IT system, even the smallest improvement in terms of service could have a huge knock-on effect.

The implementation of cloud computing technology is clearly already well underway in the business world, with industry analyst Gartner forecasting that more than $1 trillion will be spent on cloud within the next five years.

As cloud continues to mature, it will continue to have a significant impact on the retail landscape. The myths have now been dispelled, so it's time to make the move: with tightened security, reduced costs and increased agility, cloud will enable retailers to compete at the top level and continue pushing omnichannel boundaries.