Is cloud technology truly the future of retail?

When we ask retailers their thoughts, we encounter two distinct viewpoints. The first group strongly believes in a fully cloud-based future, advocating for a 100% cloud approach with all its implications. The second group argues that retailers will always require some form of offline solutions, which necessitates a hybrid infrastructure blending both onsite and cloud components.

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The solution providers play a key role in this debate, as they strive to cater to both types of retailers. However, offering a unified solution for both scenarios presents significant technical challenges, prompting solution providers to adopt specific strategies tailored to their chosen approach.

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I recall a similar discussion from 25 years ago when the internet emerged. Back then, the debate centered around whether online-connected stores represented the future. We discussed concepts like thin clients, SOA architectures, and later, web services. The question always revolved around the extent to which online connectivity would shape the future.

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Initially, retailers pursued hybrid solutions, backup networks, and even costly satellite connections to ensure stores could transmit data in near real-time or batch mode. Fast forward 30 years: today, hardly any retailers operate in batch mode for data exchange. Waiting until the end of the day to update prices from the ERP system in a retailer's head office is inconceivable. Data is now exchanged in near real-time.

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Governments are even implementing fiscal laws requiring retailers to transmit each transaction (or nearly so) in real-time to tax authorities for signature and immediate printing for consumers.

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The question of whether a store should have an online connection is no longer relevant. So, why should we still debate whether to adopt a cloud-based infrastructure or not? It's no longer solely based on store connectivity.

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Now, we're considering other factors that might necessitate a hybrid approach. This could include concerns about security, the absence of suitable cloud-based solutions, reliance on legacy systems, and potentially, cost considerations.

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Security is frequently cited as a primary concern among retailers—they may hesitate to entrust sensitive data to third parties. But, is this concern warranted? Retailers already maintain maintenance contracts with solution providers who get by that the access to their data, and many governments require real-time data too.

Are retailers' data truly protected and accessible only to them?

Often, providers of cloud infrastructures implement stricter security standards than individual solution providers or even retailers themselves.

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The absence of cloud-based solutions remains a significant challenge. Many solution providers are grappling with the complexities of migrating their products. The required changes are often so extensive that they necessitate the development of entirely new solutions, not mere updates. Moreover, solution providers must maintain existing solutions while simultaneously developing new ones, posing a substantial challenge.

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Additionally, the persistence of old, legacy solutions in retail reflects the industry's conservatism. Outdated cash registers are still prevalent in the field. Transitioning large-scale environments to new solutions is a massive undertaking—risky and costly. Solution providers should prioritize creating clear migration paths and offering retailers more accessible transitions to cloud-based solutions.

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Costs within the cloud environment should not be underestimated. While it's beneficial to have scalable costs that align with business growth, this can introduce unpredictable risks for retailers. Unforeseen costs pose a greater threat than consistently high costs, potentially damaging a business significantly.

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When discussing fiscal laws, it's unfortunate that many governments still enforce outdated regulations that mandate the use of fiscal printers and similar devices, some of which still rely on old serial RS232 interfaces. Even among governments adopting new fiscal laws, some continue with this approach.

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On the flip side, we're witnessing many governments implementing fiscal laws that enable software-based fiscalization, facilitating modern, cloud-based infrastructure. Additionally, hybrid approaches combining both methods are emerging.

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Overall, there's a noticeable trend towards regulatory frameworks that permit the use of cloud-based solutions.

In conclusion, cloud-based solutions are undoubtedly the future path to pursue. Technically and infrastructurally, there are no reasons why retailers shouldn't adopt this approach. However, from a business perspective—considering risks, costs, and benefits—it requires a thorough value-risk calculation. In most cases, the benefits for retailers outweigh the risks and associated migration costs.

To answer the question posed in the title, 'Is cloud technology really the future of retail?'—Yes, it is.