Through a special arrangement, what follows is a summary of an article from Retail Paradox, RSR Research's weekly analysis on emerging issues facing retailers, presented here for discussion.
At Oracle's Industry Connect conference, I probably heard the most rational explanation for why companies will not just end up adopting cloud delivery of solutions but ultimately need to embrace it as a strategy.
The rationale goes like this: consumers are changing. Whether because they are Millennials who grew up as the most digital native population and with spending power, or because no matter what their age they are embracing technology as part of the shopping process, the reality is that how consumers engage with retailers has changed.
And more change is coming. We're only seeing the beginning with Millennials entering the workforce, and there's another generation behind them that is even more digital native. The change is going to happen fast. My favorite stat of the day: by 2020, Millennials will be the largest generational segment in the workforce.
Therefore, retailers need to change — fast. And with companies on average spending 82 percent of their technology budget on maintenance, there is just no way they can change fast enough to keep up with changing consumers. (Eighty-two percent is an average across industries — I suspect it's even higher in retail.)
Enter The Cloud. Cloud delivery models enable retailers to change fast, and to stay flexible so that they can change again. This isn't a one-time transformation that consumers are going through; it's an ongoing thing. The cloud is the only way that retailers can change fast enough and afford it if they want to survive.
Now, for me, I have heard a lot of the same things said by other people when it comes to making the case for the cloud, but the order has been different. For the most part, we at RSR hear questions from vendors more like, "What business case will convince retailers to invest in cloud solutions?" The answer is, there is no business case. It's not about the ROI; it's about the corporate willingness to give up "customization" in favor of "flexibility."
There are a lot of retailers — I'm guessing way more than 50 percent of them out there — who are not yet ready to embrace that philosophy. For those retailers, it doesn't matter how much money you offer to save them, they are not going to be interested in the cloud. And frankly, they'd be a risky bet in taking on the cloud because they would not have the commitment to keep from trying to customize things, something that adds expense and reduces flexibility.