When it came to IT, retail has long been viewed as one of the most laggard of all vertical industries. But thanks to the rise of mobile computing and security issues retailers are not only investing IT more heavily than ever, they are beginning to beat a path to the cloud, as evidenced at the National Retail Federation (NRF) 2015 conference this week.
With the rise of mobile payment systems, many retailers are now looking at the need to increase their investments in IT infrastructure to support those transaction volumes. The challenge is that despite the volume of business a retailer might conduct, profit margins are still very often razor thin. Faced with having to make a capital investment in IT infrastructure, many retailers are now opting for cloud services that can scale up and down more easily to meet transaction requirements that are often by definition seasonal in nature.
The impact of Big Data
At the same time, many retailers are discovering firsthand what a blessing and a curse customer data can be. Interest in Big Data analytics is huge among retailers keen to define what products and services might be most interesting to their customers. The challenge is that much of that data is of a sensitive nature, especially when it involves credit card transactions. As the amount of money that retailers have to allocate to secure that data increases so too does the amount of interest in finding someone else to take on that responsibility.
Of course, as the amount of data that retailers move into the cloud increases, the laws of data gravity start to take effect. With so much data already in the cloud, the preponderance of enterprise applications starts to orbit that data. After all, there’s a whole lot less network latency involved in access data that is stored in the same cloud than there is in trying to access that data across a wide area network.
Advantages of the cloud
For example, Anaplan CEO Frederic Laluyaux says the provider of modeling and planning software delivered via the cloud is already starting to see retailers make the shift. Laluyaux explains that modeling and planning software delivered via the cloud allows retailers to instantaneously collaborate and analyze complex routes to market involving multiple companies, as opposed to relying on traditional spreadsheet applications running on a desktop and waiting a week for an analyst to update a spreadsheet that is not as easily shared or, for the matter, particularly well vetted.
Naturally, the retail industry has many vendors salivating over the potential opportunity. Many of the IT initiatives in the retail sector are being paid for using marketing budgets that by definition are several orders of magnitude greater than IT budgets. In fact, many chief marketing officers have their own dedicated CTOs and associated IT staffs.
It will be interesting to watch how the retail sector will transform in terms of enterprise IT in 2015. The one thing that can be said with certainty is that much of that IT future is going to be a lot cloudier than it’s ever been before.