Retailers innovate with Cloud Technology

Transcription

1 $ Retailers innovate with Cloud Technology Gain the competitive advantage with Amazon Web Services (AWS) April 2014

2 Introduction In the high-street and online every sale is closely contested. Since customers are changing their buying habits, retailers are looking for new ways to differentiate their propositions, and maximize their financial performance. In the battle for sales, innovation is a major differentiator. The latest technologies can help retailers provide a consistently excellent service experience in store, online, and via customers smartphones and tablet PCs. In addition, business intelligence and big data tools provide new types of insight into customer needs and preferences, helping retailers deliver personalized offers that increase loyalty and drive incremental sales. Accelerating innovation with AWS The challenge for retailers is how to innovate their technology, and service propositions cost effectively. Industry research shows that retailers often spend up to 60% of their IT budgets just maintaining the status quo, and that very few organizations have budgets set aside for IT innovation. 1 Even where budgets are not an issue, retailers find it hard to align their IT infrastructures with changing customer demands. Traditional IT procurement is part of the problem, with bureaucratic processes hindering innovation and increasing time to market for new services. The seasonal nature of retail also makes investments in new infrastructure difficult to justify. Research suggests that most retailers use just a fraction of available compute and storage capacity until traffic spikes occur, resulting in high real-estate costs, hardware depreciation and unnecessary year-round IT spending. 1 - Retail Info System News 201 Retailers innovate with Cloud Technology April

3 Amazon.com vs. AWS vs Amazon Web Services is and always has been a standalone Amazon business. AWS is a company on its own right, was established on separate infrastructure from Amazon the retailer and serves a different customer segment: businesses and developers. Amazon.com is merely one of the hundreds of thousands of customers that use AWS. Many of AWS customers compete with Amazon.com and are successfully running their mission critical workloads on the AWS cloud. They have complete confidence in AWS technologies and complete confidence that their data is not visible to, accessed by, or used in any way by any other Amazon entity. Furthermore, any commercially sensitive information such as future plans, product launches, etc. shared with AWS as part of a commercial relationship is strictly confidential and restricted to AWS only. As a result of this strong focus on customer privacy and security AWS now has thousands of retail and CPG customers in over 190 countries and this includes fast growing start-ups such as Yelp, Rangespan and Shutl to enterprises including Nisa, Unilever, Kenneth Cole, Kurt Geiger and Amazon.com Retailers and CPG companies now have the key to the AWS infrastructure and are using it to build and grow their businesses. This enables them to reach the scale of global internet players, to run their most demanding mission workloads without the expensive price tag involved in building and maintaining such global infrastructure. AWS offers the infrastructure and services retailers need to innovate rapidly and at low cost. With virtually unlimited compute and storage resources available on demand, retailers can deploy solutions to enhance omni-channel delivery, cope easily handle seasonal peaks, and garner new insight from operational and customer data. Specifically, the AWS cloud helps retailers: Reduce overall IT costs Replace upfront infrastructure investment with low monthly costs Focus on projects that differentiate your business, not the infrastructure Eliminate guessing on your infrastructure capacity needs Develop and deploy applications faster Take your apps global in minutes Retailers innovate with Cloud Technology April

4 Use Case 01 How are retailers innovating with AWS? Client facing apps For many retailers, the web presence is a good launch pad to the cloud. It is relative simple to migrate web servers to the cloud, and this has great benefits in terms of managing seasonal peaks. Customer story: Kurt Geiger Kurt Geiger operates three major retail websites where customers can buy the brand s luxury footwear. The sites, which are built on Magento and hosted on AWS, handle half a million page views a day. Adam Bidwell, ecommerce Manager at Kurt Geiger, says: We are a fast-paced business and it s difficult to predict what systems we may need in a year or two. With AWS, we can scale up very quickly as our needs change and hourly billing ensures we only pay for what we use. In addition, it all happens on a self-service basis, so there s no need to submit tickets if we need more capacity. Customer story: Nisa Nisa Retail negotiates product pricing and provides supply chain, sales and marketing support for independent food and beverage retailers in the UK. To make it easier for members to take place time-sensitive offers, Nisa partnered with Intechnica and AWS to launch a new mobile app for product ordering. The new mobile solution runs on Amazon Elastic Compute Cloud (EC2) instances and uses Amazon DynamoDB for storage. Incoming mobile orders are stored in Amazon Simple Storage Service (S3) and mirrored to the core ordering system. Nisa and its technology partner Intechnica saved between three and four months by developing the mobile application on AWS. Dave Horton, Technical Account Manager at Intechnica, says: The development team can create multiple testing environments on AWS quickly, which helped us roll out the mobile application much faster. Half of Nisa s 1,000 members are already using the mobile application. I see AWS as the future for IT at Nisa, he says. Everything works as we were told it would, so there is nothing to stop us from fully moving to a cloud-based platform. Retailers innovate with Cloud Technology April

5 Use Case 02 Use case 2: E-commerce applications E-commerce platforms are essential for building and amending online content quickly and cost-effectively, and for delivering the latest products and promotions to customers. To reduce hardware, software and support costs, retailers are hosting all the major e-commerce systems in the AWS cloud, from Magento and ATG Web Commerce, to Oracle Enteca, SAP Hybris, IBM WebSphere Commerce Server and many others. Customer story: 36Boutiques 36Boutiques, an MIH ecommerce company, is a South Africa-based retailer that sells discounted luxury merchandise to members online. The company chose to host its Magento-based e-commerce solution on AWS to reduce IT management workloads and lower costs. Paul Casarin, Head of New Business, MIH ecommerce Africa, says: AWS has allowed us to rapidly deploy a new business without having to wait for co-location hosting servers or commit to a fixed number of servers for a year or more. This has saved us significant time and money in launching a new venture. AWS is also helping 36Boutiques cope with seasonal demand peaks. As we grow our business, the system will always be able to handle the load and we won t lose sales because of our hosting infrastructure, says Casarin. Use Case 03 Big data analytics Many retail customers are analyzing data on transactions and customer behavior to understand more about their needs and preferences and deliver targeted promotions. AWS supports this goal with Elastic Map Reduce (EMR), a managed Hadoop cluster that speeds up complex analytics tasks by distributing workloads across tens, hundreds, or thousands of EC2 compute instances. Another service extensively used by retailers on AWS is Amazon Redshift, a fast, fully managed, petabyte-scale data warehouse service that makes it simple and cost-effective to efficiently analyze all your data using your existing business intelligence tools. Retailers can also perform real time analysis over massive amounts of streamed data using AWS Kinesis. This allows retailers storing and processing terabytes of data each hour from hundreds of thousands of sources, including financial transactions, social media feeds, and location-tracked events. Connecting the dots, users can also move this data around within the AWS cloud between our Simple Storage Service (S3), Elastic Map Reduce (EMR) and Redshift. Retailers innovate with Cloud Technology April

6 Customer story: Etsy Etsy, the online marketplace for vintage and handmade goods, is improving its search capabilities and presenting relevant product recommendations for customers based on big data analysis in AWS. Steve Mardenfelt, Data Engineer at Etsy, says: We spin up clusters of servers for big data analysis with on AWS using EMR, and this has allowed us to safely make the switch from recently to relevancy and improve our search experience. AWS allowed us to really in internal analytics and big data without investing in a lot of infrastructure, and we were able to do this very quickly. Customer story: Yelp Yelp, which shares in-depth reviews and insights on local businesses, has established a loyal consumer following worldwide. With massive compute and storage requirements, the company depends on AWS to reduce in-house infrastructure and management and to drive insight from its big data. Yelp uses Amazon Simple Storage Services (S3) to store daily logs and photos, generating around 100GB of logs per day. The company also uses Amazon Elastic MapReduce (EMR) to power approximately 20 separate batch scripts for processing. Based on this big data analysis in AWS, Yelp can provide a range of innovative features for consumers. These include people who viewed this also viewed, review highlights, auto compete for typed searches, search spelling suggestions, top searches and personalized ads. By using Amazon Elastic MapReduce, Yelp has saved $55,000 in upfront hardware costs and was up and running in a matter of days. However, most important to Yelp is the potential for innovation. Dave Marin, Data Mining Engineer at Yelp, says: With AWS, our developers can now do things they couldn t before. Our systems team can focus their energies on other challenges. Retailers innovate with Cloud Technology April

7 Use Case 04 Operational systems While many retailers start by migrating their web presence to the cloud, it s possible to extend the cost and flexibility benefits to core operational systems, including ERP and CRM systems. With the ability to scale these systems on demand, it becomes easier to handle business growth and faster to react to changing market conditions and customer demands. Customer story: Kenneth Cole When luxury footwear retailer Kenneth Cole decided to explore a new version of the SAP BusinessObjects suite, the company s IT team and tech partner RunE2E used the AWS cloud to run a proof of concept. With AWS, Kenneth Cole was able to provision the required infrastructure and systems in less than three weeks, for less than US$500. Regina Gorinshteyn, Divisional Senior Vice President, Information Technology, RunE2E and AWS provided Kenneth Cole Productions with an alternative to the traditional time, and resource-consuming method of deploying a development environment for an SAP software project. Customer story: Strata Retail & Technology Services (JustBooks) Strata Retail & Technology Services runs JustBooks, a community library chain that helps libraries share inventory, making make more titles available. To manage core functions such as payroll, helpdesk and development, JustBooks uses SAP Business All-in-One delivered as a service on the AWS cloud. Akhilesh Kataria, Technology Director for Strata, says: We can deploy our SAP solution on AWS and only pay for the resources that we use. Scaling and provisioning new instances is self-service and only takes a couple of minutes. Compared to traditional infrastructure we re saving upwards of 60%. Retailers innovate with Cloud Technology April

8 Use Case 05 Business continuity Retailers need constant access to their systems and data to avoid major financial losses, which makes business continuity a board-room issue. With AWS, retailers can build a disaster recovery site in the cloud and replicate critical systems and data in real time to ensure they are always available even in the event of a major hardware failure or site disruption. AWS also offers a less expensive alternative to remote back-up sites, as resources can be turned off until they are needed and autoscaled if there is a disruption to the main datacenter. Customer story: Tokyu Hands After the major earthquake in 2011, Japanese retailer Tokyu Hands decided to deploy new IT backup systems that could withstand even the most disruptive events. Rather than deploying traditional datacenter infrastructure for backup and recovery, Tokyu Hands decided to build a cloud-based business continuity and disaster recovery environment in AWS. Hideki Hasegawa, Executive Officer in the IT-Commerce Department of Tokyu Hands, says, If we had built our DR environment using on-premises environment, additional servers would have been required, which implies time, effort and cost. By contrast, we can launch a new Amazon EC2 instance immediately and build a POS server on it - initial investment is zero and we can react much more quickly. Customer story: Miquel Alimentacio Miquel Alimentacio is one of Spain s leading retailers with 960 million in sales in 2010 alone. Being such a large retailer it was also important for Miquel Alimentacio to have a reliable and secure disaster recovery (DR) plan in place. For retailers, margins are tight so are careful not to incur any unnecessary costs. As this is the case a DR plan, and the idea of building a replica of their existing infrastructure, can come under scrutiny from the business. After looking at their options, including building a second data center and using co-location providers, Miquel settled on using AWS for their DR due to the high investment in security and low cost of the services. Miquel Alimentacio now has a replica copy of their technology infrastructure sitting in the AWS cloud. After looking at their options, including building a second data center and using co-location providers, Miquel settled on using AWS for their DR due to the high investment in security and low cost of the services Retailers innovate with Cloud Technology April

9 The AWS competitive advantage for retailers Scale on demand, with no procurement hurdles The AWS cloud gives retailers virtually unlimited scalability to manage demand peaks. It s possible to spin up hundreds or even thousands of additional servers on demand, and these can be taken down again just as quickly and easily when the rush is over. With no more servers standing idle throughout the year, retailers can reduce their overall IT costs significantly. The autoscaling capabilities of AWS ensure that retailers always have the resources they need, however quickly their needs grow. Autoscaling works by tracking growing requirements and provisioning additional compute and storage resources dynamically within pre-defined thresholds. When demand subsides, autoscaling reduces provisioned resources to ensure retailers never pay for more than they need. Reduce equipment, real-estate and power and cooling costs By replacing traditional infrastructure with AWS cloud services, retailers can reduce equipment, real-estate and power and cooling costs. CAPEX infrastructure investments are also replaced with pay-as-you-go billing, which helps to lower costs overall and increase predictability of IT spending. Another way the AWS cloud saves retailers money is by reducing in-house maintenance, management and support costs. Because AWS handles all this, retailers can focus on adding value to the business. Deliver fast, excellent services across multiple channels The flexibility of the AWS cloud also helps retailers meet customers demands for a consistent service experience across multiple channels, from mobile shopping to personalized promotions delivered through their social networks. Critically, AWS offers all the compute and storage resources needed to develop and launch new services on demand, which shortens lead times for the delivery of new services, and helps retailers stay a step ahead of their competitors. AWS uses a Content Distribution Network (CDN) service called CloudFront to help retailers deliver a faster experience for customers. This pushes both static and dynamic web content from web servers to the edge of our cloud infrastructure. Our global footprint means we can serve content to customers locally, which significantly improves page load times for product images, promotions and payments. AWS offers all the compute and storage resources needed to develop and launch new services on demand, which shortens lead times for the delivery of new services, and helps retailers stay a step ahead of their competitors. Retailers innovate with Cloud Technology April

10 Understand customers better The AWS cloud helps retailers understand their customers better, with the power to analyze vast volumes of customer and transactional data quickly and at low cost. With specialist tools available for big data analysis in the cloud, and cost effective storage on tap, retailers can transform data from POS systems, loyalty programs and customer databases into business insight, and build personalized promotions more quickly and at lower cost. Achieve market-leading reliability The AWS cloud is engineered for failure which means that critical, customerfacing services will be constantly available, even in the event of a major hardware or software outage. We deliver this with AWS Route 53, a fully redundant DNS service backed up by a 100% availability SLA. Amazon cloud computing resources are housed in highly available data center facilities in different areas of the world ( globalinfrastructure/). Each data center location is called a region. Each region contains multiple distinct locations called Availability Zones, or AZs. Each Availability Zone is engineered to be isolated from failures in other Availability Zones, and to provide inexpensive, low-latency network connectivity to other zones in the same region. By launching instances in separate Availability Zones, you can protect your applications from the failure of a single location. Minimize management based on fully managed services AWS provides all the IT services retailers need on a full managed basis, minimizing in house administration and costs. These include our Relational Database Service (RDS), Dynamo DB, Redshift, and search engine services. We also help retailers deploy simple workflows to join up apps, helping to streamline common processes such as customer orders. Lower operational costs Amazon Web Services gives retailers on-demand access to a wide range of cloud infrastructure services on a pay-as-you-go basis. For more information on pricing options please visit our Economics Center page at com/economics. Increase data security The AWS cloud is certified as compliant with a wide range of security standards across all our global locations. These include Sarbanes-Oxley, ISO 27001, Payment Card Industry Data Security Standard (PCI DSS) Level 1, and SAS 70 (now called SOC1). The underlying infrastructure elements and services we provide, including compute, storage, database and network services, are audited for security on a six monthly basis. We can also copy retailers security configurations in the cloud to increase the security of the applications and data they host on AWS. Importantly, retailers data is never moved to AWS infrastructure in other geographical regions, helping to ensure compliance with industry regulations for data protection. Retailers innovate with Cloud Technology April

11 Conclusion In this paper, we ve seen how retailers are taking advantage of the agility and cost-effectiveness of AWS cloud services to innovate their businesses and differentiate the quality of their customer services. Our retail customers are doing everything in the cloud, from powering their global web presence to hosting their critical ERP and CRM systems, helping them stay ahead of their competitors and minimize operational costs. Many retailers understand the value proposition of cloud, but worry that using a cloud or on-premises infrastructure is a binary choice. It is not. We understand that retailers have a number of on-premises data centers that they are not ready to retire yet; what they really want is the ability to use their on-premises data centers easily with AWS for increasing available compute capacity or backing up data. We have spent many years making this integration simpler and easier. Whatever the specific requirement, however, AWS can help retailers achieve an optimal blend of in-house and cloud-based services in the future. To discuss this paper, or for more information on increasing retail success with AWS, please visit our website: aws.amazon.com