Navigating the Cloud I

Considerations for Retail Organizations Planning the Move to the Cloud

Recently, I had a client contact Retail Consult to help them move “everything” to the Cloud. Like many retailers, they hope to realize the wide range of business and IT benefits the Cloud offers. For example, from a business perspective, they hope for increased scalability and continuity. From an IT perspective, increased infrastructure reliability and IT effectiveness. All of these can combine to deliver cost savings and cash flow improvements. For retailers like the one I mentioned, I always start the discussion with an understanding that the Cloud is not an all or nothing decision, but rather the Cloud can offer for many a hybrid transition to gain the desired business benefits.

Making a decision about the Cloud begins with a common understanding of the types of Cloud implementations and available service models. A Private Cloud is also known as an internal or enterprise cloud, which means that it resides the companies intranet or hosted data center. Corporate data is protected behind a firewall and is highly secure and controlled. A  Public Cloud moves the responsibility for hosting management to a 3rd party provider. Corporate data is stored in the provider’s data center and the provider is responsible for the management and maintenance of the data center. A Hybrid is a mix of both private and public Cloud implementations, this means that you may choose to run some applications on a Public Cloud and others on a Private Cloud. To add to the complexity, there is a choice among the service models. On-Premise is where everything from networking, storage, servers, o/s, to applications are under your control. IAAS, or Infrastructure as a Service is where the servers, storage, and networking are moved to a 3rd party partner. PAAS, or Platform as a Service, is where everything BUT the applications and data are managed by a 3rd party partner. And lastly, SAAS, or Software as a Service, where everything is controlled and managed by a 3rd party. 

Which model is the right model for retailers?  In my experience, retailers fall along a spectrum of size, complexity, and geographic dispersion.  At one end, are regional retailers that operate in one country, with one language, and multiple stores.  At the other, global retailers who operate in multiple countries with multiple languages and localized business processes.  All of these organizations have business systems that are a mix of custom, vendor-provided applications, manual sneaker-net, and spreadsheets. For example, smaller, regional retailers have the ability to adopt 3^rd party software  and implement with little modification or “vanilla.” For this reason, these retailers are better suited to move applications to the Cloud.  On the other hand, for global retailers, the decision is more complex,  because they often cannot implement 3^rd party software “vanilla.”  A better option for these larger organizations is a more hybrid approach where you may choose a single application, a logical group of applications, or even a single country to move to the Cloud. When making a decision about your ability to move to the Cloud, you need to consider the size of your organization, the complexity of your business, and geographic dispersion. 
 
From an IT perspective, there are a number of areas to consider as part of any decision to move all or part of your business to the Cloud. 
 
First is the state of your applications. On the one hand, your existing applications may be dated and you are ready to move to new applications.  This may be an opportunity to see what the Cloud-based vendors can offer in terms of functionality.  However, you will be limited in your ability to modify the applications and you must be willing to adopt a vanilla implementation of 3^rd party software.  On the other hand, if you have custom applications that are complex or tightly integrated with other applications, these can be difficult to move to a Cloud service model.  For example, in my experience, planning and predictive applications for Retailers tend to be more challenging to move to the Cloud. 
 
A second area to consider is Usage.  Does your application have steady or spiked usage?  Applications that have usage spikes are better candidates to move to the Cloud as the cost of usage can be shared across the Cloud infrastructure.  Applications with more predictable usage may not deliver the economic benefit from a Cloud implementation. 
 
Next is integration complexity.  It is imperative to understand every integration touchpoint for the applications being considered as candidates for the Cloud. For small organizations, there will be fewer integration points.  Whereas for larger organizations with large numbers of applications this can be a necessary and time-consuming exercise for Cloud candidate applications. 
 
It is also important to understand the operating system (OS) matchup between the applications to be moved and the Cloud OS.  If you are adopting a Cloud application this is not an issue, but if you are trying to move many applications to the Cloud it needs to be analyzed for each application.  I have seen clients who did not ask this question and had applications that only ran on a specific OS that was unsupported by the provider.  The options?   Find a substitute OS, another Cloud provider, or in some cases scrap the migration. 
 
Lastly, it is important to look at the application database, as data is both complex and sensitive.  Complex data structures can affect the difficulty of migration to a new database and the need for safeguarding for situations requiring a rollback.   As you look at your business it is critical to identify any data deemed as highly sensitive, as you may not be comfortable having sensitive data outside of your firewall.  It is also important to understand if there are there regulatory considerations for data that requires it to reside inside your firewall.
 
In our next installment of Navigating the Cloud, we will discuss the approach for implementation and the unique challenges associated with moving to the Cloud. In our last installment,  we will discuss the model necessary to understand the financial parameters and metrics for moving to the Cloud.


By Klaus Sentker, Senior Partner and Chairman of the Board Retail Consult