Hybrid cloud for retailers: Is it the gateway to digital transformation?

Retailers have traditionally been focused on selling, rather than solving problems for customers. But unless you’ve been living under a rock, you’ll probably agree that this no longer cuts it in the modern world of retail.

Thanks to online shopping, an increase in manufacturers selling directly to consumers, and new service-based business models spearheaded by start-ups like Dollar Shave Club, the market is unrecognisable from the way it was a decade ago.  Consumers, enabled by technology, expect an omnichannel shopping experience in-store, online and through new avenues such as mobile, in-app or even smart TV purchases.

Retailers which have not already done so, need to re-focus their resources onto technology-led innovations.

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So, just what are retailers doing about it?

Well, first of all, according to a new study, from the cloud software vendor Nutanix, Inc., they appear to be ditching their data centres and adopting hybrid cloud infrastructures.

In fact, according to Nutanix, the retail industry has the second largest penetration of hybrid cloud deployments at 21%; with 93% identifying hybrid cloud as the ideal IT model, outpacing the global average for other industries.

For retailers, the benefits of adopting hybrid cloud go beyond cost reduction and productivity gains. Hybrid cloud is now the gateway to digital transformation.

“More than many industries, retailers are acutely aware of how IT strategy and execution directly impact the customer experience and the bottom line. The high adoption and planned growth of hybrid cloud in retail show that retailers understand that hybrid is the best solution for keeping up with customer demands while keeping flexibility, security and costs in line,” said Chris Kozup, senior vice president of Global Marketing at Nutanix. “I expect the retail industry to keep its lead in IT innovation as they form new strategies to delight their customers in the retail experience.”

The positive outlook for hybrid cloud adoption globally and across industries is reflective of an IT landscape which is growing increasingly automated and flexible. For example, enterprises have the choice to buy, build, or rent their IT infrastructure resources based on application requirements. The Nutanix study, found that for retailers, having the flexibility to choose the right cloud for each application was the most popular benefit for deploying hybrid cloud (at 18%).  This was followed closely by using cloud ‘on the fly’ to support periods of high traffic loads. Given the seasonality of business and variance of IT and network consumption needs throughout the year, retailers understand the need to keep IT flexible.

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Challenges of hybrid cloud adoption

One of the key benefits of hybrid cloud is how it provides organisations with greater control of IT spending and billing, but without proper management, it can go very wrong. Cloud waste is a common problem for organisations. It’s particularly easy to lose control of public cloud spending if its application is being juggled across different lines of business. 35% of organisations using public clouds said they overspent on their public cloud services budgets.

Retail companies, perhaps due to experience, seem to be doing a better job of managing their public cloud expenses. About 69% of retail companies said their public cloud spend was under or on budget, and just 29% reported being over budget, compared to 35% of cross-industry global companies.

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IT expertise and security are also significant obstacles to hybrid cloud adoption, but cost also tops the list: More than half of survey respondents globally said that data security/compliance, performance, management, and TCO are essential factors in determining where to put their application workloads. While 88% of respondents anticipate hybrid cloud will positively impact their business, hybrid cloud skills placed second in scarcity for retailers (30%), with the leading shortage going to artificial intelligence and machine learning skills. A huge emphasis for retailers compared to other industries was cost – with nearly 20% citing this as a top criterion.

Nutanix commissioned Vanson Bourne to survey more than 2,300 IT decision makers including 329 worldwide retailers, their full report can be found here.

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Andrew Ross

As a reporter with Information Age, Andrew Ross writes articles for technology leaders; helping them manage business critical issues both for today and in the future