Retail in the Clouds
By David Dorf on Apr 26, 2009
"Cloud Computing" has to be today's most hyped technology. Using Google Trends, one can see that the first mention occurred around mid-2007 with peaks occurring around September 2008 and now (April 2009). I think the recent buzz eminates from several large technology firms getting into the business of clouds. This has led me to ponder how cloud computing might impact the retail industry.
McKinsey just released a study that I found interesting because it stuck to the numbers. Its starts by defining the term as:
Clouds are hardware-based services offering compute, network and storage capacity where (1) Hardware management is highly abstracted from the buyer; (2) Buyers incur infrastructure costs as variable OPEX; (3) Infrastructure capacity is highly elastic (up or down).
Using this as the foundation for calculating and comparing costs, the report states that cloud computing is less financially attractive to large businesses. This is consistent with what we see in the market: the primary customers are small and medium-sized businesses. Those that can afford the initial capital outlay can usually operate their servers more cheaply. However, clouds are still relatively new so I'm sure they will get cheaper over time.
The report goes on to say that clouds do not meet the 99.99% uptime service level agreements required by many CIOs. It also notes that a 99.99% SLA may be overkill in many of those cases. For retailers, some systems are certainly more critical than others.
McKinsey concluded that cloud computing was over-hyped and in danger of hitting the trough of dissillusionment, to put it in Gartner terms. While I agree the term is over-hyped, I'm not pro- or anti-cloud. I'm simply searching for the killer application of clouds for retail. The Association of Retail Technology Standards (ARTS) is collecting comments on cloud computing as they consider researching and assembling a white paper on the topic. I guess others are interested as well.
What do you think about cloud computing? Could it benefit the retail industry?
Update: Bob Parker expressed some interesting views in an article over at RIS News.