In every market, vertical, and region, the cloud is an established and expanding trend. And because being first to market can have so many advantages, adopting the cloud has become a strategic imperative not just for ecommerce but for all applications. Even in instances where first-mover status doesn’t confer categorical advantages, those companies that are using the cloud maintain that status because they’re the first to innovate as well. Let’s take a look at why so many retailers and their executives care about the cloud.
Why the CEO Cares About the Cloud
Because the global economic climate is uncertain, especially in retail, CEOs have a tough job. Their necks are on the line to growth revenue and earnings, so when their primary or secondary profit center, ecommerce, isn’t performing well, they must ask some tough questions.
In the context of company performance and ecommerce, we have found that CEOs care about three main things:
Consumer expectations: Where is the disconnect between what my customers expect and what my company delivers? This is the fundamental issue when a company’s customers don’t show loyalty. Customers don’t like the experience they’re getting, so they don’t come back. The cloud helps address this challenge by giving retailers an agile platform to fix their problems. The cloud and web 2.0 technologies have eliminated the need for entire systems to be updated in order to fix a poor experience.
Global growth: Many retail markets are saturated. The competition in those markets is fierce, so retailers are looking to acquire companies to grow. The cloud can provide the flexibility needed to integrate different companies’ systems quickly and get you into new markets before the competition.
New business models: Because of the two points above, it has become painfully clear that the legacy infrastructure that got a company to this point can’t support its future. New operating models require a level of speed and flexibility not offered on premises. Similarly, these new models require companies to operate on a lean diet. The bloated server rooms of the past are dead weight in the new economy.
Why the CIO Cares About the Cloud
It’s both a cardinal rule of business and common sense that when your boss is under extreme financial pressures, you don’t deliver a budget filled with allocations for systems and process that don’t support growing the business. The CIO’s role is to accelerate the company’s success through IT systems and data. Today that means the cloud. Like the CEO, the CIO has to focus on driving revenue, but he also has to be mindful of managing his organization’s costs.
For a growing majority of retailers, on-premises software costs too much and doesn’t offer nearly enough innovation. When you factor in the financial obligation of the software, hardware, supporting infrastructure, and support staff, you’re looking at spending most of your IT budget without getting anything new. Innovation requires both people and agility. You need people who can leverage the right tools to drive your systems, applications, and customer touchpoints in the direction they need to go.
Why the CFO Cares About the Cloud
Perhaps the biggest force driving retailers to the cloud is the CFO. Competition, new markets, global economic factors, the increasing cost of goods sold, and many other factors all force the CFO toward the cloud. As the person responsible for making sure the company’s finances are in order, the CFO has to manage both sides of the balance sheet. The cloud offers solutions to many of the CFO’s problems.
Operating efficiencies: From a financial perspective, the cost of IT can be very high relative to its value. Costly systems get put in place and a company is forced to rely on them without receiving the promised benefits. Unfortunately, the cost of ripping and replacing those systems can be so high that the ROI is pushed out years at a time. The cloud gives retailers an infrastructure-free avenue to respond to customers, trends, and markets at the right time and in the right way.
Confident growth: Cloud-based services offer the necessary speed, agility, and instant access to resources needed to scale growth and develop competitive multichannel shopping experiences, all without beefing up staff. For a known and fixed cost, a retailer can focus on creating the most relevant digital experience without having to plug in a single server. The cloud acts as an innovation engine. It also requires far less commitment. If the application isn’t delivering the needed results there is a much smaller barrier to switching.
Digital models: Global sales are growing rapidly year over year, and retailers capitalizing on that growth are focusing on new technology enable digital models to deliver the experiences that customers crave. Customers expect browsing, buying, and returning to be effortlessly available online. As the trends and experiences customer desire change, retailers need to adapt rather than doubling down on what previously worked. The CEO cares about meeting the customers’ expectations, the CIO helps this happen with technology, but it’s the CFO who demands that it be done affordably. This is where the cloud helps.
The Cloud Levels the Playing Field
Increased competition and broadly available technology have made fast-growing companies just as effective as the big boys. They got to this point by leveraging cloud-based ecommerce systems and technology, and now even the major retailers are abandoning their on-premises footprint to see if they can experience the same success as fast-growing and midmarket retailers running lean operations.