RSR Research: Getting Over the Cloud
Through a special arrangement, what follows is an excerpt of an article from Retail Paradox, RSR Research’s weekly analysis on emerging issues facing retailers, presented here for discussion.
For retail line-of-business (LOB) leaders, a fundamental question should have been asked ages ago when their companies were investing in either ERP, best of breed, or even home-grown solutions. That question is: What about your proprietary way of doing business is so important that you can’t modify your internal processes to take advantage of the capabilities of a commercial solution?
Failure to address that question is at the heart of why companies feel compelled to modify packages, thus making them a future support headache for IT. Just last week, I talked to a consultant who is on a project to modify a tried-and-true commercial package for one retailer who feels that their weird merchandise hierarchy is so important that they have to burden their internal IT organization for years with custom code. Really?
Many businesses confuse "strategic" vs. "tactical" advantage. When RSR talks to companies about their strategies, we often find that while they may be strategically disadvantaged if they don’t do something well, they are only tactically advantaged if they improve. But "strategic plans" are often chock-full of projects that do precisely that; they eliminate a roadblock but, at the end of the day, the company in question is merely "keeping up with the Joneses."
The reason this point is important to bring up is because taking full advantage of a commercial cloud demands that the business use the software the way it was intended to be used. This might be the reason why retail IT’ers are generally not favorable on the idea of putting mission critical functionality into a public cloud; they’ve been hearing LOB leaders for a long, long time insist that their way of doing business must be accommodated in the technology. And so "on premise" (capital intensive) solutions tend to find most favor with IT’ers, because they can then modify the code to suit the peculiar needs of the business.
From the responses to a December 2010 survey on IT delivery strategies — which were overwhelmingly from IT decision makers as opposed to LOB leaders — we concluded that there’s a clear disconnect between IT and LOB objectives. IT favors on-premise owned solutions; LOB leaders want results, and the CMO in particular seems willing to bypass IT altogether. Implied in that is the inference that LOB executives are "over" their insistence that technology solutions conform to their odd ways of doing business. In short, they’re just in too big of a hurry.
Given that consumers’ omni-channel behaviors are changing the very foundations of the traditional retail operational model, it’s no surprise that LOB leaders are in a big hurry to technology-enable new business processes. That’s what creates the opening for "cloud" offerings from technology providers.
In your opinion, are on-demand technology solutions the way to address the reality of IT departments burdened with costs yet underfunded for value-adding efforts? Are commercially available applications delivered as on-demand services “good enough” for retail back-office processes?