Why the Hybrid Cloud is the Future of Retailing

Written by Rick Madigan
September 3rd 2019

3 minute read

This article was originally published on the Silicon website

The cloud has transformed retail businesses. Enterprises are now leveraging the hybrid cloud to transform their internal data processes and also deliver the next-generation services that the omnichannel now demands.

Rick Madigan is a Digital Strategist at MMT Digital. Starting life as a Project Manager, Rick has worked within the digital sector for many years on a range of CMS-based and bespoke digital projects for national and international businesses.

How has the hybrid cloud transformed retailing?

Due to continual digital advancements in e-commerce from the likes of Amazon and Apple, consumers are now more digitally savvy than ever and, have adopted advanced purchase process as the norm. They expect retailers to provide seamless, omnichannel experiences that stretch beyond websites and apps to smart technology and in-store experiences to make their lives easier.

Some of this has been driven by the big players who have introduced new approaches and new tech, but there are other industry influences as well – increased pressure from competitors abroad (easier for them to reach customers and logistics have vastly improved), traditional manufacturers are starting to go direct (e.g. Nike, Adidas) and there are lots of digitally native start-ups (e.g. Dollar Shave Club, ASOS, Boohoo, Pretty Little Thing) and disruptors (Uber Eats). These brands can get to market quickly and are driving costs down.

A critical pressure for retailers is to balance customer expectations and maintain flexibility, security and costs.
The hybrid cloud is a godsend for retailers as it allows them to effectively mix and match customer solutions. For example, they can use private clouds to meet increasing data protection and data privacy regulations while adopting public clouds for applications and analytics. They can source the right platforms to match their goals – giving them the scalability to match seasonal demands and spikes, while also maintaining a lower Total Cost of Ownership.

What are the current challenges CIOs and CTOs in the retail space face managing their hybrid cloud deployments?

Keeping a handle on costs. Retailers are typically a lot more advanced than their counterparts in other industries and are undoubtedly leading the way. Cloud developments require investment in processes, dashboards, personnel to track carefully and, make the right decisions.

Saying that the biggest obstacle is IT talent and skills. DevOps itself is evolving quickly, and a hybrid cloud deployment requires a comprehensive, flexible and scalable DevOps strategy – especially considering the multiple cloud platforms in operation.

Finding the right cloud architects – DevOps engineers and site reliability engineers – as well as establishing a DevOps culture within the development teams is crucial to success. The culture must be enforced from the top down, and I would argue that this is the most significant challenge due to the overall impact it can have.

Another challenge is visibility. With multiple platforms in operation, it can be easy to lose track of what is happening where and who is accessing what. The process is king here. There needs to be a series of checks and balances in place for access, operations, compliance, and performance – which also must be enforced from the top down.

How will the 5G impact on retailers and their use of the hybrid cloud?

The perceptions of 5G are widely varied, and so retailers have vastly different views. Some (like Jon Markman) reckon 5G will kill the cloud, as it provides blazing speeds, and boast many smart devices.

There is an argument that Edge computing could become the way forward. However, this is quite far-fetched in my opinion, as you need the full infrastructure in place – and in some places in the West, there isn’t even high-speed internet.

While it will take time to see a full rollout of 5G, there’s undoubtedly going to be some major benefits. For example, warehouses could have IoT-enabled devices that can give you instant updates on inventories via 5G networks. It’ll be even easier to collect data from online and offline touchpoints, process it and feed it back out to personalise shopper experiences (both online and offline).

In turn, you’re then enabling even more smart devices, for example, magic mirrors in changing rooms. These can recognise what you’re trying on and analyse your facial expressions to then trigger a personalised email campaign.

In short, 5G will enable retailers to get closer to the customer by giving them rapid access to vast amounts of data to provide increasingly personalised experiences.

However, this will increase the need for greater security around data. As with this tech, we’re straying into the realms of biometrics and customer specific, sensitive data. Also, with the sensitivity around GDPR in Europe, and privacy as a whole, security will be a serious theme moving forward for 5G.

Do you see the dominance of AWS / Azure being challenged in the future as retailers look to rationalise their cloud deployments?

AWS, Azure and Google Cloud Platform occupy such a large share of the market at the moment that’s it difficult to see where the challenge will originate. Due to their sheer scale, it means they are cost effective for the service and functions they offer, and it’s going to be very difficult for smaller players to compete unless they have a niche, highly-specialised services.

Having said that, according to a Gartner report; the number of commercially available cloud management platforms will more than double by 2021 to more than 30, which shows some sign of threat to the big three. However, I can’t see the big three dropping large amounts of market share, so I would guess we’re going to see more competitive pricing and heavier promotion of serverless architectures over more traditional architectures to provide more cost-effective solutions.

What are the current trends across the retail hybrid cloud landscape?

Microsoft is currently ahead of AWS and Google in the hybrid cloud approach as they’ve been acquiring businesses to boost their model. I expect we’ll see more of the same from Google and AWS as they seek to close the gap. Before the end of 2019, there’ll be some acquisition activity from the big three.

Another trend is the revolution of in-store experiences in line with online. Smart tech, use of data warehouses and data lakes and the hybrid cloud will be used together to create more personalised experiences – small steps towards the 5G dream.

Social commerce is going to keep growing (particularly as the number of social influencers increases) which means more investment into data and analytics (data warehouses and lakes, business intelligence, machine learning services) and therefore smarter hybrid cloud setups.

We’re also going to see China taking the lead. They are all over retail tech and are doing innovation at scale. They are going to have a significant impact on driving innovation, which in turn, will influence the hybrid cloud (from the DevOps strategies to tech strategies and innovation investment).

Microsoft is currently ahead of AWS and Google in the hybrid cloud approach as they’ve been acquiring businesses to boost their model. I expect we’ll see more of the same from Google and AWS as they seek to close the gap. Before the end of 2019, there’ll be some acquisition activity from the big three.

Another trend is the revolution of in-store experiences in line with online. Smart tech, use of data warehouses and data lakes and the hybrid cloud will be used together to create more personalised experiences – small steps towards the 5G dream.

Social commerce is going to keep growing (particularly as the number of social influencers increases) which means more investment into data and analytics (data warehouses and lakes, business intelligence, machine learning services) and therefore smarter hybrid cloud setups.

We’re also going to see China taking the lead. They are all over retail tech and are doing innovation at scale. They are going to have a significant impact on driving innovation, which in turn, will influence the hybrid cloud (from the DevOps strategies to tech strategies and innovation investment).