BrainTrust Query: Cloud Computing – Can Retailers Rise to the Challenge?
By Bill Bittner, President, BWH Consulting
The National Retail Federation’s
ARTS (Association for Retail Technology Standards) division has been working
on a white paper on cloud computing for release in January 2010. The goal
is to give both business and technical people in retail several perspectives
of how this new technology model will affect them. The potential benefits
of cloud computing are significant. Technology delivery costs can be reduced
10 to 40 fold as centralized computing resources delivered over the internet
replace proprietary implementations. But there are also challenges to achieving
The ARTS paper describes two major types of cloud environments.
Technical clouds are strictly infrastructure and system software services
delivered over the internet. By sharing these resources, the retailer avoids
the internal personnel and training costs for maintaining their technical
environment and frees up the office space. The capabilities of these clouds
are limited by physics and the state of the art in technology at a particular
point in time. Vendors supplying technical clouds are thus forced into
a standard that is defined for them.
But as great as the technology benefits
may seem, the even bigger opportunity is the benefit to be achieved from
clouds that offer Software as a Service (SaaS). These clouds include the
technical environment and also offer the actual applications. At this point
SaaS clouds have generally addressed “commodity
applications with wide acceptance that require little integration with
existing applications or business processes. Companies can use Google applications
for email, word processing, spreadsheets, etc. and avoid needing to maintain
application software on individual PCs. If they don’t want to use Google,
there are cloud vendors supporting email servers from a variety of software
The final piece to be covered by cloud computing may have the
most benefit but it will also be the most difficult to achieve. This is
where cloud vendors begin to offer retailers specific software services
that directly address retail operations. These include price management
applications that recommend and execute price changes; distribution applications
that plan, monitor, and control the flow of inventory, etc. The challenge
is that without the same constraints that standardize technology clouds,
the SaaS clouds may provide custom solutions that can only be used by a
small number of retailers. The whole premise of cloud computing is that
shared resources are cheaper than custom. But if the services are developed
in a vacuum, without conformance to any standard, the benefits are missed.
This is the challenge for retailers.
Questions: Can retailers collaborate on common standards for critical retail
applications? Will the full potential of cloud computing be achieved without
Retailers really need to step up to the plate. One of the other projects
ARTS has recently completed was a paper on SOA (Service Oriented Architecture).
This is the first step in defining a standard set of business services
that are needed by retailers. If retailers are going to achieve the benefits
of cloud computing, they need to standardize their business practices so
that different software vendors can address the requirements. This will
spur competition and give retailers service provider options.
don’t mean retailers won’t have their individual operating modes. Some
retailers will continue to use gross cost with allowances and some will
use net cost, some will be everyday low price and others will be high-low,
some will have all their sale retails end in 00 and others will use 99.
What matters is that cloud based service providers have the options in
their applications that allow retailers to achieve their goals.
the potential benefits are so huge, that retailers cannot miss the opportunities
presented by cloud computing. This will make organizations like ARTS even
more important for the future of retail. A few large companies may continue
to run their own internal IT development, but the vast majority of retailers
should be looking to the cloud for IT services.