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Retail Industry Report

Contents

Executive Summary Context for the Sector Key Findings

CLOUD-ENABLED RETAILING: HOW BUSINESS FUNCTIONS ARE DRIVING PUBLIC CLOUD ADOPTION ACROSS THE SECTOR

About the Research Why This Study? Recommendations

Executive

Summary

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Competition from online-only retailers is challenging the traditional business model. As a result, many organisations are turning to public cloud services in order to cope with the growing number of disruptions. Findings from a study from EMC, VCE and VMware showed that 94% of Line of Business (LOBs) decision makers in the retail industry use some form of public cloud services, the highest of all the industry sectors surveyed.

However despite high levels of public cloud procurement from business functions, the industry faces specific challenges, principally due to the sensitive payment card data they handle. It is perhaps unsurprising then, that many still hold concerns over security and data management. The study revealed that top perceived risks by LOBs with using public cloud services included security exploits (47%), customer data loss (42%), and internal data loss (34%), while just 5% stated they have no concerns over using public cloud services.

So what should IT departments do to ensure their organisations can benefit from the scalability and efficiency of the public cloud, without risking security issues? The answer lies in a hybrid cloud approach, where the affordability, ease-of-use and scale of public cloud can be achieved, without compromising safety and compliance regulations, as business-critical applications remain in-house.

The rise of ecommerce and the increasingly digitally savvy consumer has led to challenging times for the retail industry. Organisations are facing increasing pressure to give time-pressed, connected customers a consistent experience, across multiple channels, in an effort to promote brand loyalty. At the same time, building detailed consumer profiles from the sheer mass of information available on the web and managing the growth of online shopping, have placed significant pressure on organisations capabilities.

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While the pressures facing business are becoming clear, the reality is that many of today’s retailers struggle to cope and aren’t even close to fulfilling the fast-changing demands today’s smartphone-wielding, social-media savvy information generation places on them. To meet these, businesses need to change the way in which they gain insight from their customers and use it to drive real-time changes in its strategies, products and services.

Retailers today should see IT as a crucial component in delivering this agile, information-centric way of looking at the world, and look to work with their IT functions to deliver access to applications and data through mobile devices, and to provide greater customer, market and operational insights in real time.

94% of business functions in the retail industry use some form of public cloud services

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CHALLENGING TIMES FOR THE RETAIL INDUSTRY

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CHALLENGING TIMES FOR THE RETAIL INDUSTRY

The nature of the retail industry has changed a great deal over the past few years. As the popularity of e-commerce continues to increase, and social media gives customers the ability to influence opinions, organisations are facing a whole new range of challenges. All of this has caused a scramble to find more efficient and effective ways of running operations. Technology can play a key role in enabling retailers to compete and survive in this new landscape. Cloud services can enable businesses to run operations in a more agile manner and enable easy communication and collaboration between departments. Cloud technologies also mean that a retailer’s infrastructure can be easily scaled up without the need to find

more data centre space, helping retailers to meet surges in demand for services or goods. Successful retailers are also looking to harness customer insights and use social media to identify individual customer preferences and behaviours. While cloud technology offers a way to explore the potential of big data, there remain complications with running commercially sensitive data in a non-secure environment. There’s a huge range of ways in which the public cloud can help organisations. Thanks to their intuitive design, widespread availability and low cost barriers, many employees already know how to use these tools and aren’t afraid to deploy them where they see the need.

While this is an exciting way to empower workers and excel the pace of innovation across all departments, from a security and data management perspective the use of the public cloud within an enterprises can pose several risks. As retailers handle sensitive payment card data and need to conform to strict guidelines laid down by the payment card industry, data protection is a key issue. The chief issue is that data is not always secure in the public cloud as it is hosted in third party data centres. While most cloud service providers claim they conform to PCI standards, retailers are ultimately placing trust in an infrastructure and application they do not control.

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In light of these pressures, this study explores the views of over 600 decision makers and heads of departments from within retail organisations, including finance, marketing, HR and customer services, to capture the breadth of uses of the public cloud across the entire organisation. Commissioned by EMC, VCE and VMware, it identifies the motivations and rationale behind different departments within Public

Sector organisations procuring public cloud services.

The research was conducted by Opinion Matters between March 2015 and April 2015 among 604 decision makers / heads of departments across six industries*. The aim of the study was to compare the influence and impact public cloud purchases has on department efficiency levels.

This report aims to help IT departments in the industry find workable cloud solutions, which don’t impede innovation but also keep the organisation’s data safe – namely, through adopting a hybrid cloud approach.

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Why this study?

4Industries surveyed: Telecoms & Media, Financial Services, Retail, Public Sector, Manufacturing and Oil & Gas.

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Public cloud deployment is widespread in retail organisations: 94% of Line of Business (LOBs) decision makers in the retail industry use some form of public cloud services, the highest of all the industry sectors surveyed.

KEY FINDINGS

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The majority of deployments are done in collaboration with IT departments Over half (52%) run all purchasing decisions past the IT team. This was the highest of all the industries surveyed.

WHICH OF THE FOLLOWING STATEMENTS BEST DESCRIBES YOUR / YOUR DEPARTMENT’S INTERACTION WITH IT WHEN IT COMES TO PURCHASING ANY EXTERNAL / PUBLIC CLOUD SERVICES:

WHICH EXTERNAL IT RELATED SERVICES DOES YOUR DEPARTMENT USE?

Google App Engine

Amazon Web Services

Local UK external IT service

Microsoft Azure48%

31%24%

22%

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0 5 10 15 20 25 30 35

8%We don’t consult with them but we do let them know once the final decision has been made

We run everything by them, including the final decision-making process

40 45 50 55

52%

35%We consult with them, but leave them out of the final decision-making process

Almost half (44%) use public cloud services for internal applications to drive efficiencies ranging from collaboration tools to hosting intranets for knowledge sharing) closely followed by website hosting (42%) and hosting external applications such as customer invoicing or sales-enablement platforms (41%).

Increased efficiency is the main reason for public cloud deployment

KEY FINDINGS

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LOB expenditure on public cloud is set to rocket Business functions expect to spend an average of £940,000 over the next 12 months on public cloud services. This is set to increase by 30% next year.

WHAT DOES YOUR DEPARTMENT USE THESE EXTERNAL SERVICES FOR?

DO YOU EXPECT THE AMOUNT SPENT ON IT RELATED SERVICES OVER THE COMING TWELVE MONTHS TO INCREASE WHEN COMPARED TO THE PREVIOUS TWELVE MONTHS?

HOW MUCH OF YOUR ANNUAL BUDGET DO YOU EXPECT TO SPEND ON IT RELATED SERVICES OVER THE COMING TWELVE MONTHS?

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£100,000 - £249,999

YES 10 - 19%

YES 20 - 29%

NO stay the same

£250,000 - £499,999£1,000 - £99,999

17%

23% 14% 14%

12%13%

0 5 10 15 20 25 30 35

41%

Platform to host digital applications and services (internal)

Platform to host digital applications and services (external)

40 45 50 55

44%

42%Website hosting

Just over a quarter (27%), would see the provider of public cloud services as being primarily accountable for the company data that they hold, while a fifth (22%), see the head of department to blame, closely followed by themselves (20%).

Professionals from the industry are confused about accountability around potential issues that could occur

KEY FINDINGS

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Real concerns remain over security and data management Retailers handle sensitive payment card data every day, so it no surprise that only 5% of those surveyed stated they have no concerns over using public cloud services. The top perceived risks by LOBs with using public cloud services included security exploits (47%), customer data loss (42%), and internal data loss (34%).

IT must be an enabler of innovation: The IT department should align itself with the business priorities of the entire organisation and find ways to help it meet the challenges of driving data use in a digital era in a safe, secure and scalable manner.

WHAT (IF AT ALL) ARE THE RISKS YOU PERCEIVE WITH USING IT RELATED PUBLIC CLOUD SERVICES BOUGHT FROM AN EXTERNAL COMPANY?

WHEN USING EXTERNAL IT RELATED SERVICES IN YOUR DEPARTMENT, WHO DO YOU SEE AS BEING PRIMARILY ACCOUNTABLE IF ANYTHING HAPPENED TO THE COMPANY DATA THAT THESE SERVICES HOLD FOR YOU?

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0 5 10 15

20%

The provider of the IT related services our department has purchased

20 25 30

27%

22%My head of department

Me

Security exploits

Internal data loss

Customer data loss

47% 42%

34%

1 A hybrid cloud approach offers the best of both worlds to Retail organisations, by providing the flexibility, affordability, agility and scale of the public cloud, without compromising safety and compliance regulations.

Get used to the idea of not building all the IT services internally

The IT team should instead be focused on managing the consumption of services from multiple service providers, including their own internal functions.

Select an integrator with a proven track record

Of the specific integration your business is looking for and make your assessment outcomes-based, (rather than time and materials).

Design every integration with security at front of mind

Ensure you are able to manage the identities of the users you want to have access.

Think about possible future data sets

For instance, the Internet of Things could bring new potential data streams to the organisation so it is important to consider how this could one day be integrated into your hybrid cloud environment.

Simplicity should be front of mind

So the whole process can be easily repeatable. Engaging a specialist service integrator to ensure this simplicity as a blueprint may be the best approach.

It ensures that business-critical applications remain in-house, while instantly provisioning the infrastructure from public cloud to cope with new projects and set up virtual servers to handle a new system. It can be scaled back just as easily when needed, a distinct advantage given the difficultly – or sometimes impossibility – of taking workloads back out of the public cloud.

A true hybrid cloud allows organisations to use a common platform for seamlessly extending their existing data center to the cloud while leveraging the tools, existing security policies and processes that they already use on-premise.

WHY LOOK TO A HYBRID CLOUD APPROACH?

HOW TO GET STARTED WITH A HYBRID CLOUD DEPLOYMENT:

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Look at development and testing as a starting point

A hybrid cloud makes it possible to quickly develop and test applications in the cloud and easily move them to onsite production if required. It’s an easy, fast, and cost-effective way to gain on-demand capacity for a limited time period.

Ensure disaster recovery is built in

Many departments do not have the budget, expertise or time to develop a disaster recovery plan. Disaster recovery in the cloud is emerging as a compelling alternative due to the flexibility in commitment, capacity and cost.

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About EMC

EMC Corporation is a global leader in enabling businesses and service providers to transform their operations and deliver IT as a service. Fundamental to this transformation is cloud computing. Through innovative products and services, EMC accelerates the journey to cloud computing, helping IT departments to store, manage, protect and analyze their most valuable asset — information — in a more agile, trusted and cost-efficient way. Additional information about EMC can be found at www.EMC.com

About VMware

VMware is a global leader in cloud infrastructure and business mobility, our solutions deliver a brave new model of IT that is fluid, instant and more secure. VMware’s public cloud platform is built on the trusted foundation of vSphere and delivers a true hybrid cloud. The service provides unified networking that spans between existing and new data center capacity, common management and security, with the same reliability and performance expected from internal data centers. Customers can innovate faster by rapidly developing, automatically delivering and more safely consuming any application. The company is headquartered in Silicon Valley with offices throughout the world and can be found online at http://vcloud.vmware.com/uk/

About VCE

VCE, an EMC Federation Company, is the world market leader in converged infrastructure and converged solutions. VCE accelerates the adoption of converged infrastructure and cloud-based computing models that reduce IT costs while improving time to market. VCE delivers the industry’s only fully integrated and virtualized cloud infrastructure systems, allowing customers to focus on business innovation instead of integrating, validating, and managing IT infrastructure. VCE solutions are available through an extensive partner network.

About Opinion Matters

Opinion Matters is an award winning insight agency, providing consultancy and market research solutions for businesses, organisations and agencies in the UK and overseas. Founded in 2000 as a communications driven research specialist, our expertise is now also key to providing foundations for creating business strategies, gaining insight on perceptions, collecting audience intelligence, providing product development insight, or establishing reaction and need created by compliance and legislation.

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With secure, flexible and manageable access to public cloud data through a hybrid cloud approach, the entire organisation can focus on surviving and thriving within the exciting, fast-paced era of digital enterprise.

Click here to find out more

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