The following excerpt, from the article Sunnier Days Ahead for Retailers that Use Cloud Computing, was written by Vish Ganapathy, of IBM, and published on Wired.com. Ganapathy explains how cloud computing can keep your store competitive below; read the full article for an even more detailed account.
Brick-and-mortar retailers have long favored highly visible investments, such as advertising or store design over spending hard-earned income on back-office information technology. In fact, the retail industry devotes only about 1.7% of revenue to IT. Compare that with banking, which spends about 6%.
Big-box and boutique retailers alike see that e-commerce competitors continue to use technology as a means to win on price and selection, and know their customers increasingly use smartphones in-store to compare prices or search for deals.
IBM’s latest Big Data-based retail forecast suggests that some brick-and-mortar retailers are turning the tide against showrooming, a trend in which consumers look at items in a store before ultimately buying them online, usually at lower prices. In order to remain competitive and press their advantage further, brick-and-mortar stores must look to the cloud computing revolution as a way to upgrade their technology without busting their budgets.
Cloud computing involves a new way of thinking about data. In a cloud, a single server can host many virtual servers, slashing hardware costs. The virtual servers can scale on demand depending on the need for computer capacity. That’s very useful for retailers, whose businesses are notoriously seasonal. Automatically expanding capacity on Black Friday, for example, can reduce lines at checkout counters and ensure quick service.
Further, the retail industry is aided by thousands of specialty software programs that are designed for various niches and needs. The average retail chain uses about 450 such applications — far more than most other industries. Naturally, those software programs get heavy use at certain times while they are shut down at others.
The result is that retailers use only about 10% to 15% of the computer capacity in their data centers. Some 85% is sitting idle at any time. Huge economies of scale could be gained by using the same infrastructure across multiple applications in a cloud-computing architecture.
As mobile, social and e-commerce continue to explode in popularity, traditional brick-and-mortar retailers must understand and harness the benefits of cloud computing to optimize the in-store experience, market to the individual and maximize every sale. If they don’t, they risk falling behind their competition.
Want to bring your store to the cloud? Talk with your MBS Systems Sales Consultant about how we can help!