One of the strategic questions a lot of retailers currently ask themselves is whether the future of retail IT belongs in the Cloud?
The media likes to publish headlines that say yes, and so do many consultants and technology start-ups, but the answer isn’t that simple.
To get a true insider’s perspective, we spoke to seasoned retail technology expert Rob Bowyer.
Currently working as GM of Technology for the Cotton On Group, Rob spent seven years at The Body Shop handling everything from retail systems to global eCommerce and 10 years running systems at Harrods in London.
The Cotton On Group has more than 1,300 stores and eight brands operating in 17 countries. We’re fortunate to have a person with Rob’s background and responsibilities to help us clarify how retailers could be using Cloud technology.
This is an important question as the term ‘Cloud’ has been overused and now covers a wide range of concepts, says Bowyer.
“Innovation and marketing hype aside, when you strip it back the Cloud essentially covers four elements – access to remote processing power, a pricing model, application software and network architecture. It’s a tool or approach we can use to solve a specific class of problems.
“On its own, the term ‘Cloud’ doesn’t even explain what the service is. For example, I manage a private Cloud at the Cotton On Group’s data centre, the main differences between my ‘Cloud’ and a third-party ‘Cloud’ is that I have to put the diesel in the generator.”
Not really, thinks Bowyer. He can see merit in the argument that, to a degree, the Cloud is a repackaged version of the 1960s concept of centralised mainframes powering remote terminals, paid for using a “time sharing” method.
But, he says the modern version of the concept is also noticeably different, “In the past, the mainframe was bespoke and on premise, today’s ‘Cloud’ is shared, highly scalable and universally accessible over a public network.
“The Cloud’s accessibility gives value because it helps us do things quickly. It’s on demand, it’s self-sufficient, it’s rapid and it’s elastic. You can throttle it up to get things done and then throttle down when the requirement passes. That’s the strength which makes it much more than just a mainframe. But, it has its limits.”
Rob believes that if the system needs to be accessible to the public then the Cloud is usually the best solution, “eCommerce, for example, is ideally suited to the Cloud. In the past, I’ve successfully used Cloud infrastructure to manage loyalty and stock systems across multiple geographic locations.”
That said, Bowyer doesn’t see mainstream Cloud technology as a practical solution for core retail systems. Other than eCommerce, he sees the architecture as well suited to the Cotton On Group’s non-retail functions like email, file storage and data archiving.
For internal retail systems, Rob favours a mix of technology and judges where to use specific architectures based on three essential metrics: value, speed and reliability.
Point of Sale is case in point, he says. “It has to be working all the time, selling goods to customers at a high, consistent speed. It simply can’t be dependent on the network – it also has to be able to function offline, sometimes for long periods of time.
“When I was first introduced to Retail Directions’ POS system (SMS) back when I worked for The Body Shop, the business was really pleased that SMS could run for 30 days without network connectivity.
“Back then, in the event of a prolonged network outage, we could even keep the store and head office data aligned using USB sticks to download and upload all vital system information – price changes, stock and promotions.
“This is my benchmark for a POS system, the ability to trade offline taking credit payments, managing loyalty and gift cards – all in the dark.
“Even if I were to consider a Cloud-based POS solution, retailers such as the Cotton On Group typically use a domestic internet connection costing around $30 per month per store – in our case at more than 1,300 locations.
“For Cloud-based POS, trading would be completely dependent on the network connection. This means each store would need managed broadband at a significantly higher cost per store. Reliability of connection aside – do the maths, it’s just not worth doing.”
Rob asserts that retailers running large databases with high IOP and CPU demands should also keep their core retail systems on the premises for the time being.
“To effectively cater for Head Office users and functions such as batch processes, local processing power at a centralised location delivers the best speed, value and reliability,” says Bowyer.
“With a database that’s around 12 terrabytes and forecast to grow to 20 terrabytes, we have a rule at the Cotton On Group: we build systems with 20 per cent anticipated growth and three years headroom,’’ he says.
“We can’t operate like this in the Cloud, for technical and economical reasons. For example, if I wanted to put Retail Directions RMS, our Head Office ERP, into the Cloud, the scalability of the infrastructure at my disposal wouldn’t meet our current or future growth and speed requirements.
“Plus, once I move one platform to the Cloud, integration with the rest of the system, latency and network reliability become a serious issue. The business also becomes completely dependent on our fibre connection.
“The Cloud isn’t a silver bullet, it still presents many of the same challenges to an IT department and to the retail business. It also brings with it different challenges. For example, dialling up is a great facility, but I have already experienced the cost of not dialling down after a peak activity period,” says Bowyer.
But, he says, “If one day the cloud is faster and offers better service, performance and value then I’ll move – it all comes down to value, speed and reliability.”
He shrugs off the question.
“Cloud is plumbing and you shouldn’t have plumbing conversations with CEOs,’’ he says. “The conversation should be about enabling the business to grow quickly whilst delivering exceptional value.”