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Is Cloud Computing the Next Innovative Retail Solution?

Cloud computing innovates retail software

Cloud computing is an innovative retail solution that can help companies better to adapt in a rapidly changing retail landscape. With cloud computing, retailers can potentially reduce their infrastructure costs, helping this innovative retail solution make inroads in the industry.

Consider this scenario: you need a server for your retail operations that’s large enough to handle transactions during peak times. Let’s say the server that can handle most of your daily operations costs $15,000, but to ensure that it can handle those peak times during the day, you’ll have to buy a $20,000 server. That means the server you purchase is larger than what you need most of the time.

With cloud computing, retailers typically pay for only the amount of service they use, which could flex up during peak times. It’s similar to a company leasing space on a server and being charged a minimum fee or paying only for the amount of space used. That’s the power of the cloud; you only pay for what you use rather than buying a server large enough to handle peak traffic.

Cloud computing also enables better operations scalability. Say you buy a server for a single store, but a few months later, you decide to open 10 more stores. Now you have to buy a bigger server to handle your increased retail operations. With cloud computing, you gain ease of scalability as you grow your retail operations.

As for functionality, the speed of applications in the cloud largely depends on the Internet connectivity strength and the types of data being transmitted. Viewing screens through cloud applications tend to process faster compared to applications running on your computer that tap into data or databases hosted in the cloud.

But while cloud technology is changing retail operations, use of the cloud isn’t without some hesitation from retailers.

A retailer looks at cloud computing from a different perspective than other industries. A small or mid-size manufacturer, for example, will typically have one plant with several different departments — plant floor, scheduling, accounting, human resources, etc. This manufacturer usually operates an ERP system from one server, with multiple users interacting with a single database in an integrated system.

Now consider a retail operation with 10 stores, each with two cashier lanes. Does the retailer want those cashier lanes connected to a central source to ring up a sale? Most retailers will say no. They’re hesitant to rely on external sources, like a wide area network, to ring up a sale. Extremely large companies might be able to negotiate with their city for the installation of a metro area network, meaning the company has its own fiber network spanning a large geographic area. However, that’s not likely a cost-effective solution for a retail chain, which may be located in multiple cities.

Here’s another scenario to consider. In the past, a retailer might have used a handwritten receipt book when their checkout system was down. But these days, bigger retailers will typically tell customers to move to another checkout lane or return when the retail POS system is back up. To avoid that scenario, retailers work hard to ensure that their sales transactions are able to go through despite a glitch in their hardware or Internet infrastructure.

Another aspect of the retail model that cloud computing can refine is replication of data as it transfers between multiple stores and headquarters. Typically, each store has a server that drives its own retail POS system. These self-contained servers must select specific data to send and receive from the home office, so while sales or inventory transactions are transmitted in real time, the total cash and credit sales might be sent at the end of each day. This can present challenges because transmitting data between servers is about striking a balance between transferring the necessary data and the server’s performance.

As Internet connections become faster, more reliable and cheaper, cloud computing will undoubtedly grow in popularity as the infrastructure of choice.