Omnichannel retailing has become a requirement for satisfying today’s demanding consumer. But the fully integrated, seamless backend architecture needed to fully execute an omnichannel operation often remains an elusive goal. Many retailers are working diligently towards omnichannel by layering new code on top of a range of best-of-breed solutions of different vintages and origins.
This approach can work in the short term by enabling must-have functions such as buy online, pay in store. But a pieced-together approach can never achieve the nimble, fully omnichannel architecture needed to meet customer demands today and into the future.
Underlying solutions change, integrations must be maintained and data must constantly be synchronised. To attain the centralised platform necessary to thrive in today’s omnichannel retailing environment, retailers need the cloud.
The challenge: Legacy systems
“Consumers now expect to begin and end their shopping experience in the digital domain, or augment their store experience with digital mobile,” says ‘Omni-Channel 2014: Double Trouble’ a report from Retail Systems Research (RSR). “It’s no longer an option. It’s a requirement. Retailers who don’t offer a seamless experience that traverses the digital and physical domains are at a disadvantage.”
Operating seamlessly across channels demands instant access to data. But for many retailers that data — inventory, tax files, customer data and so on — resides in decentralised systems that are batched and synched periodically. Strategies to enable omnichannel functions by building on top of that decentralised infrastructure are inherently flawed:
- Integrations must be maintained as each underlying system changes, requiring costly maintenance.
- Critical data is stored in disparate places; even the tightest cross application integration and synching entails a degree of latency.
- Mobile devices often operate off a local point of sale (POS). This means there is no direct access to centralised systems and data. One POS supporting many mobile devices creates a single point of failure that puts daily transaction processing at risk.
- Building layers of coding and integration consumes valuable time and IT resources, during which the retailer is losing ground to more advanced competitors.
- Inventory is not real-time, complicating cross-channel sales/movement. In the RSR “Omni-Channel 2014” study, 93% of respondents said enterprise-wide inventory visibility is very valuable, but less than half had attained a significant level of visibility.
To achieve a sustainable level of success going forward, RSR believes that several key information ‘dimensions’ must be available across the entire enterprise with near real-time currency. Those dimensions are product, inventory, customer, and order. The report reveals significant gaps between those capabilities and current adoption rates.
Under the integration and layering approach, retailers will perennially lag behind consumers’ expectations for a fully omnichannel experience. Demands are evolving faster than retail IT departments can possibly keep up.
The solution: Cloud-based omnichannel
A fully omnichannel IT environment enables retailers to provide the best possible customer experience:
- Seamless, real-time access to all cross-channel features and a single source of data
- The ability to easily combine channels through the path to purchase
- Agility to add capabilities as expectations evolve
To deliver this omnichannel functionality, retailer systems need to be centralised, with all software and data housed in one place and available to all users and devices in real-time from any location – one platform and one single architecture. Retail systems were decentralised because there was no viable method to enable real-time communication with centralised systems. But now there is the Cloud.
When all retailer systems and data reside in the cloud, all functions have 24/7, anywhere-access to a single set of applications and data. That enables real-time posting of transactions no matter what channel, and real-time, accurate inventory, product and customer lookup. Because everything operates off of one suite of retail solutions, integrations are minimal and there are no separate silos of data. All data is available in real-time, with no delays.
On the back end, merchandisers gain real-time insights into the business for better and faster decisions, planning and collaboration.
Accenture says “Cloud computing, scalable computing power delivered-as-a-service on a pay-by-use model, makes it possible for retailers to meet time pressed, on-the-go and digitally connected consumers during various phases of their shopping experience.” Currently, cloud computing is a very effective model for retailers to build capabilities fast enough to hold the attention of consumers.
Many other industries — banking, airlines, car rental — have successfully relied on remote access to centralised IT for years. Retail is just beginning to embrace the model.
Some of the benefits of a cloud-based retail management infrastructure include:
- Lower hardware costs: Cloud-based POS can use thin clients and do not require in-store or corporate servers. A survey from KPMG found 70% of respondents using cloud solutions believe these implementations are delivering efficiencies and cost savings, according to ‘The Cloud Takes Shape, 2013’.
- No polling, uploads or downloads
- Minimal integration and maintenance costs
- Better support of mobile: Each device is communicating directly with backend systems, not via fixed POS.
- Scalability: New IT resources are dynamically added or removed as the retailer’s footprint evolves.
- Rapid implementation: Driving faster delivery of omnichannel functions. A cloud-based retail platform can be phased in to ensure smooth transition.
- Since centralised software is continually updated and professionally maintained, latest features can be added constantly rather than waiting for releases.
Omnichannel retailing benefits:
- Increased agility: Ability to respond to emerging customer demands
- 360 degree view: All-encompassing view of operations and customers
- Rapid access to customer data: Speed drives higher customer engagement, better customer experience and prepares sales associates to deliver high quality services and product knowledge
- Retail best practices are incorporated and updated in the software
- Retailers can focus on their business, not the enabling technology.
Selecting an omnichannel cloud provider
While cloud architecture offers inherent advantages, sharing a software delivery model does not make all cloud vendors the same. Just as with on-premise solutions, cloud-based retail management software developers differ widely in their approach to solution design, services delivery and customer support. Some of the key questions to ask potential cloud partners include:
How was the solution created?
Some cloud providers’ solutions have been developed just like retailers’ current IT environments – a lot of best-of-breed software acquired over time through acquisition, with layers and integrations created in an attempt to merge them. Those must still be maintained, incurring costs and IT resources for the developer. Patched-together systems are also less agile.
Omnichannel retail solutions born in the cloud have been created as a single, unified platform, without legacy architecture left over from on premise. A single platform is inherently more agile.
Even better is a well-established cloud-based provider with a long track record in helping retailers grow their business through managed services and cloud, a rare combination given cloud’s brief history in retail.
Is the cloud data centre robust and secure?
Software and data are mission critical for retailers, whether they post sales in the millions or billions. But some retail cloud providers operate with no true data centre. Or, the data centres they operate may lack sufficient disaster recovery, robust security or call centres for 24/7 retailer support. Fully vetting the host facility, including a tour of the data centre and its processes, is a key step in ensuring the solution will provide the high uptime essential for always-available omnichannel retail.
Is the retail management software hosted or supported?
At its core, cloud is a delivery model. Some developers host a retailer’s solution and make it available via cloud, with the same support relationship as if the solution were on premise. The retailer’s IT staff still administers the software and its integrations with other systems they own, and after initial training, the retailer is responsible for learning to use new features and train new users.
A supported cloud delivery model enables the developer to actively support the software and its users. Because the developer both writes and hosts the software, they are well positioned to ensure users reap the highest value from the software and to modify the application based on first-hand knowledge of customers’ evolving business needs. Retailers interact regularly with software experts, who gain first-hand insights into that retailer and how they run their business.
When omnichannel cloud software is actively supported, the developer’s staff is working to ensure the retailer is getting maximum use of all of the software’s features, maximizing their investment and providing a competitive advantage over others. Other key benefits include:
- Ongoing training and support: Expert staff is dedicated to ensuring the software is running smoothly and supporting the retailer’s business goals. New retailer staffers receive full training and support.
- Always up-to-date: A hands-on developer staff regularly incorporates new features and best practices based on real experiences with real customers.
- First-line store support: In this model, the developer, not the retailer, provides the first line of support to all employees, including store level. This is critical, providing the expertise needed to quickly resolve issues.
- Best of all, in a supported cloud delivery model, the developer’s and the retailer’s goals are aligned. The developer is expending resources on supporting that retailer on a monthly basis, and bigger problems cost them more money. So they have a strong incentive to take actions to ensure the retailer’s success on a consistent basis, month over month.
Right path to omnichannel
Omnichannel operations require seamless interaction between all retail functions and real-time access to data, with no latency. When the underlying infrastructure is not built on a single platform, delivering omnichannel requires layering on additional code that will inevitably incur high costs and delays, without attaining a fully seamless flow of data. This approach is untenable as customer demands grow inevitably more complex.
The only way to attain a truly nimble, omnichannel environment to satisfy today’s demanding customers is to operate on a single, centralised platform with one shared source of data. This model is now available to retailers via the cloud, an architecture that saves money, implements rapidly and ensures retailers always have the latest features.
But not all cloud providers are alike. Retailers that best leverage the power of centralised, cloud-based retail solutions align with developers that work with them daily to ensure their ongoing success.
Source: An RIS News Whitepaper