5 Things Retailers Should Know About Cloud Computing

By  David Dorf, Director of Technology Strategy, Oracle Retail
Cloud computing is the evolution of several computing paradigms such as grid computing, virtualization and SaaS, most of which have been in existence for years but have only recently entered the mainstream as more mature technologies. In a nutshell, cloud computing refers to accessing computing resources over the Internet using a browser. Imagine if the only application on your PC was a browser, and all your software and data resided in the "cloud."

So how can cloud computing help retailers?

Cloud computing offers several potential benefits for retailers:

- Elastic, on-demand capacity to handle seasonality, unpredictable expansion or contraction, large-scale data warehouse analytics

- Pay-per-use model ideal for temporary applications such as limited-time promotions, events and projects

- High Quality of Service (low latency and high availability) to avoid lost sales and maintain customer satisfaction

- Cost savings through consolidation, enabled by virtualization

- Cloud is a form of IT outsourcing enabling mid-sized retailers to avoid having their own data centers, hardware and IT expertise

Here are five things to consider when you evaluate cloud computing for your retail business:

1. What are the types of cloud computing offerings?
There are several combinations of offerings, but let's roll them up into these categories for simplicity:

Software as a Service (SaaS): Applications are provided via the Internet on-demand, typically as a subscription. The SaaS provider performs all necessary administrative functions like application upgrades, database backups, and operating system patches for a recurring fee that covers the cost of the software licenses and maintenance.

Platform as a Service (PaaS): Application development and deployment platform delivered as a service via the Internet. The platform often includes a database, middleware and development tools, and is often based on a grid computing architecture.

Infrastructure as a Service (IaaS): Computing servers, storage and networking hardware and their associated operating system and virtualization software, provided as an on-demand service on a pay-per-use basis. This allows users to upload their own applications yet not worry about the hassles of infrastructure maintenance.

2. Multi-Tenant or Multi-Instance?
Multi-tenant SaaS uses a single software application to serve the needs of many "tenants" or companies, each with its own, separately partitioned data. This is usually more efficient and less costly; however, all companies must take upgrades to the application at the same time since the application is shared. Multi-instance, on the other hand, dedicates physical or virtual environments to each company, providing that company with greater customization, optimization and control.

Deciding which is best depends of your tolerance for sharing the system with other tenants and need customization beyond simple configuration.

3. How secure is your data?
PCI and similar regulations have changed the face of retail IT forever, so with any deployment security must be a primary concern. Not having direct control over data can reduce in-house complexity, but it doesn't lessen the responsibility (and liability) that goes with owning data. Always make sure your cloud vendor's security certifications are kept up-to-date. Some applications may be better suited for private rather than public clouds.

4. What about high-availability?
Since most cloud computing offerings consist of server and storage grids, high-availability within the cloud is typically built-in. But all forms of cloud computing share a common reliance on the network, and since network availability is not perfect, mission critical applications may not be candidates for public clouds. In the case of point-of-sale, for example, some minimal offline capability is crucial so selling is never completely crippled when the network is down.

5. What's your exit strategy?
Once you've gone down the cloud computing path, how easy will it be to switch to a different vendor or bring the assets back in-house? Are you locked-in? Today there are very few standards in this regard, so consider your switching strategy before you take the plunge.

Relegate generic processes to the cloud, keep strategic operations in-house
Not everything is a candidate for public cloud computing. The best advice I can give is to non-mission critical and non-strategic applications like expense reporting, invoice matching and development/test to the public cloud. Then focus your internal IT resources on those processes that give your company a strategic advantage like pricing, supply chain optimization, and analytics. If you have sufficient economies of scale, consider building a private cloud to provide the advantages of public cloud computing (e.g., agility, quality of service, efficiency) while mitigating some of the issues with public clouds (e.g., security, compliance, integration, long-term costs).