Cloud is a priority for retailers looking to respond to changes in the marketplace, as we learned in the Winter 2013 issue of Industry Edge. But many still have doubts about the viability and security of cloud solutions.
We caught up with HP cloud specialist Spencer Knapp and HP Fellow Doug Chey to get their thoughts on this IT delivery model and the barriers that face the retail industry as they work to implement cloud options.
Anne Harding: I think business and technology professionals are savvy enough to understand the benefits of cloud and why they want it. But how does it benefit the retail industry specifically?
Spencer Knapp: Well, of course, some benefits of cloud are common to all industries. Specific to retail, I think that most clients look at cost reduction as an entry point, because it’s a big concern of theirs. But they can also see a benefit in the business and IT agility that cloud offers. For example, they might need additional capacity and flexible infrastructure for seasonal retail demands. Cloud would allow them to quickly scale up and then back down after the season ends.
Another issue specific to retail is that there is a lot of regulation in the industry, especially around payment card processing. The majority of companies offering cloud services are still undergoing certification for things such as PCI [Payment Card Industry Security Standards]. So for retail companies, the systems they need that run PCI compliance are not necessarily ready to move into a cloud environment.
Anne: So it sounds like this is a difficult transition for retailers to be making right now.
Spencer: I would say yes, it’s a challenge for retailers right now. Many of them are constrained by cash flow, especially when they’re talking about making big shifts in technology. So they have to have a clear line of sight into the short-term gains as well as the long-term benefits. That’s why most retailers look at the cost reduction components of cloud, because that’s their primary driver.
What we at HP have been trying to emphasize is that the cost savings may not be as dramatic as the client might expect. When enterprises look at the word “cloud,” their first thought goes to providers in the market that have low cost entry points. But those providers are not as secure and available as environments need to be for retailers. Enterprises need to balance those choices.
Anne: For a retail client inquiring about cloud, what’s the conversation?
Spencer: We first really talk about applications. Cloud itself is just a delivery model that is much more efficient and faster than traditional IT. But all the benefits you get from a cloud infrastructure won’t be achieved unless your applications are compatible. We start a lot of conversations just trying to understand what applications they’re trying to move—and what they’re trying to achieve.
This leads to a deeper conversation about business constraints, which helps us define a business strategy and roadmap. It’s a much better approach than the staccato method we often see in this area, where the enterprise moves one application [to the cloud] at a time and just goes forward.
Anne: Doug, you mentioned that you’re working across HP on this issue. Can you talk about what that means and how it benefits our clients?
Doug Chey: HP is such a broad organization and we have hundreds of cloud solutions that meet the client wherever they are in their journey. I work to assure that the enterprise has a single point of contact with HP, but is still able to access and benefit from the array of products and services across our portfolio. Because clients engage with HP in different ways—through software or personal systems, for example—they might only see that aspect of the company. We want to make sure they’re taking advantage of all that we can offer.
Spencer: We have such a broad portfolio of services around building, managing, and consuming cloud.
It’s like having multiple companies through one provider. So if they want to do testing, we have a solution for that. If they want to outsource to the public cloud, we have that solution. If they want to create a private cloud, we have that solution.
Doug: On top of that, clients will migrate based on their experience with the cloud. They’ll take small steps at first, and get more and more aggressive. We have that entire spectrum.
Anne: Are retailers migrating one way or another? What trends are you seeing?
Spencer: Retailers are going in every direction. They’re trying to find the best blend of all the cloud options, because there are certain advantages for private cloud versus virtual private cloud versus public cloud. When you can adopt all of them to achieve different advantages for different use cases, then you get the best of all worlds.
Doug: The hybrid option is definitely where a lot of our clients are going, blending private and public, hosted and not hosted. The percentage distribution between the two will shift along the journey. Because we have hardware, software and services—and services within software, which are different from services for hosting and managing and so on—we can drill down in ways that other companies cannot.
Anne: What’s the best advice we can give a retailer who is looking to move to cloud or who has taken a few small steps in that direction?
Doug: The IT world is changing. Standard operations are changing. The financial models of overhead versus capital are changing. If you want to be a progressive CIO or CTO, you need to get aggressive in applying these technologies.
Spencer: With all the new opportunities around business intelligence and segmentation, you have to put this infrastructure in place. Those options will enable retailers to better understand their customers—what they’re buying, how they’re buying—so that enterprises can respond to demand signals in real time and ultimately be able to generate more revenue. And no matter how our clients define success, that’s definitely at the top of the lists. HP can help them get there, but they need to start right away.