Cloud is 2013’s Doorbuster: Smooth Your Holiday Cost Spikes With Technology

By Alex Brown, CEO, 10th Magnitude

I certainly don’t have to tell you that the 2013 holiday retail season is upon us, since you’ve probably had to plan your technology all year to handle the imminent spikes in in-store and online traffic. And, in just a couple of weeks, you’ll start planning your technology budget for 2014’s holiday season.

But what if I said that you don’t have to start your 2014 holiday season planning with a functional website assessment, a capacity needs forecast and a customer service review? Instead you could have an innovative envisioning session to brainstorm new technology strategies and mobile applications that would make costs smoother, customers happier and sales associates more effective next year from Thanksgiving to New Year’s? Sounds more appealing, right?

And you can make “nice to have” improvements that smooth holiday customer spikes without increasing your IT costs. Moving your data, storage, website, systems and other technology used to run your business and your stores into the cloud is the trick. The move to the cloud creates three critical dynamics:

1. Your IT costs come down because you only pay for the capacity you use. You no longer have to provision capacity and maintain staff and systems for your greatest use levels.

2. The savings you have now harvested from capacity going into the cloud can be reinvested into applications that mobilize your workforce to better serve your customers.

3. Your cost base shifts from a capex model geared towards hardware and datacenter provisioning to an opex model that keeps costs of IT in line with revenue.

All of a sudden, you have dollars coming back into your budget — how often does that happen? Let me describe a couple of the many interesting scenarios I see from that opportunity.

One area that seems ripe for improvement is the cost structure associated with hiring, training and outfitting seasonal workers. The challenge is to outfit these additional staffers quickly and easily with the selling tools they need. Once you have cloud-enabled your back end, customer and product information, you can provide all your workers real-time access to that data via a mobile application specifically designed to best address your customers’ unique shopping needs. Sales associates can use familiar, easy to understand, inexpensive mobile devices (such as phones and tablets) to scan products for information about stock, pricing, color availability, backorder status etc.

The increased network usage from additional sales associates only two months a year is no problem — cloud capacity scales up and down with your needs. Your sales force would no longer be tied to a dumb terminal and make customers wait through laborious stock checks. Depending on your particular business model, there are numerous other functions that you can program your application to handle.

Another exciting opportunity is in the social media space. Imagine a geo-aware application that offers customers close to your store promotional incentives. For example: I’m a customer who has given you my mobile number or email. As I’m driving through Anytown, where your flagship store is located, I get a text message offering me a limited time, targeted incentive. Additionally, you could do micro targeted promotions via social media.

These projects would have been unthinkable in the past because of the cost—particularly for a smaller retail chain. You would have needed proprietary technology and devices, and creating an application that harnesses data from multiple back-end systems and connects over mobile and Internet would have been next to impossible to do inside of your firewall. Now, cloud allows you to bridge information across multiple systems, seamlessly.

If you’re a major retail chain, you’ve no doubt heard of, understand and probably even use elements of cloud’s on-demand capacity and vast, flexible data storage. You may have even put your dev/test environments in the cloud and, if you’re on the leading edge of the curve, you’ve moved other workloads to the cloud as well. If so you should see the benefits in your P&L this holiday season.

If you’re a smaller chain, cloud may be a relatively unknown quantity. Think of it this way: If your website usually has 2,000 customers each week but in November and December the number goes to 25,000, why should you pay all year to have enough capacity for that huge spike that you only need for 30 days out of the year? With cloud the capacity is flexible and you only pay for what you use at any given time.

Whether you are managing a big cloud-savvy chain or small cloud-newbie chain, you are probably only seeing the tip of the iceberg of possibilities. In addition to the scenarios I talked about before, there are untold ways using the cloud can not only lower costs but also open the floodgates on innovation that can improve sales.  

As retailers move more back end systems into the cloud, the data they aggregate will create exponentially greater opportunities for improving customer satisfaction. I would urge you to use 2013 as a jumping off point for ideas.

After the holiday season, ask yourself these questions:

•    What technology levels do you feel you have to buy for next year?
•    Where were the problems or limitations in your system this year?
•    What convenience or service do you want to offer customers next year?
•    What would make sales associates more efficient?
•    What data do you wish your employees had immediate access to?

There are infinite opportunities that exist to not only smooth out costs but also improve sales and customer service by transitioning to the cloud. What can you imagine?

Alex Brown is CEO Of 10th Magnitude, a cloud software and services firm that exists at the critical crossroads of cutting-edge technology and exceptional user experience. They develop custom software applications, provide application management and enable Microsoft Azure migration to help businesses of all sizes innovate and compete more effectively.

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