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Hybrid cloud rains benefits on forward-thinking retailers

Cloud-based digital technologies are transforming the retail industry to provide digitally connected, time-pressed customers with the value they expect — and as a consumer in 2016, if you've asked for it a certain way, you expect your favorite brand to deliver.

February 2, 2016

By Karl Cama

Cloud-based digital technologies are transforming the retail industry to provide digitally connected, time-pressed customers with the value they expect—and as a consumer in 2016, if you've asked for it a certain way, you expect your favorite brand to deliver.

Not very long ago, retailers could carry a variety of merchandise and rely on big end of the season blow out sales to stay in business. Now with the convergence of social, mobile and the cloud — customers demand online access to the same products, pricing and promotions that they get in-store. Consumers expect consistency across channels and touchpoints, regardless of when, where and how they interact with the retailer. They also want to receive personalized offers based on data-based insights and expect a seamless brand experience, no matter what channel they are placing an order from.

According to Econsultancy, nearly 80 percent of consumers stated the average brand doesn't understand them as an individual. And the retailers failing to adopt technologies that deliver that kind of customized customer experience may lose once-loyal customers in the blink of an eye — or the click of a mouse.

Hybrid cloud computing allows retailers to address these demanding requirements, and provide greeter consistency and personalization, it is possible for these retailers to meet 21st-century consumer expectations during all phases of their shopping experience.

Gartner estimates more than half of large enterprises will deploy hybrid clouds by the end of 2017. Retailers are particularly hungry to adopt a cloud-driven strategy because online pure-plays and customer expectations are impacting profits.

Many retailers are choosing the hybrid cloud — in which software, hardware and platforms are hosted in both third-party and on-premise enterprise data centers — as a best-of-both-worlds approach to reduce costs, improve customer experience and create new revenue streams.

Two recent announcements illustrate the power of hybrid cloud for retailers — and hint at the operational and sales struggles that laggards can face if they don't jump on the hybrid cloud bandwagon.

Retailers' reasons for going hybrid

Fast-growing Chumbak — India's leading retailer of lifestyle products — has big plans to build beyond the 40 stores it operates across the country and further grow its online business. That requires an IT infrastructure that can scale up quickly to propel the applications necessary to fast-track sprawling growth.

That's why the Indian retailer chose a hybrid cloud solution to host and run its enterprise resource planning (ERP) applications, enabling quick integration across all platforms, which significantly reduces IT services costs and operational inefficiencies.

Chumbak's CIO Rajath Kedilaya explains more about why it chose the hybrid cloud: "To support our next phase of hyper growth, we needed to streamline operations (and) integrate seamlessly with our infrastructure."

Hybrid cloud computing in retail also can personalize the shopping experience for consumers.

UK-based Shop Direct sought to extend its digital transformation by deploying a hybrid cloud model for its financial services platform to provide customers with a broader set of financial services options, a more personalized experience and more self-serve options.

Shop Direct chose a hybrid cloud solution because it brings together all applications and data from a myriad of its sources, including public and private clouds. Group CEO Alex Baldock describes the solution as giving Shop Direct "groundbreaking capabilities to use our unique understanding and relationship with our customers to offer services tailored to them."

As these, and other recent hybrid cloud deployments illustrate, retailers require agility and movement in a rapidly evolving marketplace.

The benefits of that kind of agility are numerous — from aggressively pursuing topline growth and cost optimization to enabling next-generation marketing and customer experiences that drive satisfaction and result in conversions. Bricks-and-mortar and online-only companies can both reap benefits.

A key aspect of a hybrid cloud solution is the ability to effectively aggregate and synthesize lots of ubiquitous data. This unearths valuable contextual insights that allow retailers to respond quicker and make decisions with better information.

According to the results of a cloud usage survey conducted by the IBM Center for Applied Insights, respondents who have deployed cloud on a broad scale are gaining competitive advantages. Indeed, 65 percent say the cloud is helping them make better data-driven, evidence-based decisions, and 54 percent have been able to reinvent customer relationships.

To meet the business imperatives and consumer expectations that retailers face today with the exploding use of mobile, social and cloud, retailers are quickly traversing into a new hybrid era of cloud computing. As that journey progresses, the hybrid cloud will allow these merchants to optimize the in-store experience, streamline operational processes and target marketing efforts to the individual to maximize every sale. If they don't, they risk falling behind their competition.

Karl Cama is chief architect for retail at IBM.