Retailers accelerate cloud investment as trust in outsourced technology grows

20 November 2017

Loss of sales remains the top business risk. SOURCE: MINIMISING IT RISK IN RETAIL, SIX DEGREES

Loss of sales remains the top business risk. SOURCE: MINIMISING IT RISK IN RETAIL, SIX DEGREES

The retail industry has seen significant growth in both trust and adoption of cloud-based technologies, according to recent research by managed service provider Six Degrees.

In a survey carried out on its behalf by specialist retail consultants Martec International, Six Degrees reveals that there is “almost universal” interest in the use of cloud computing. 

It says this comes as an increasing number of retail organisations start to put more trust in outsourced technologies. 

The study found that of the 35 UK and Ireland based mid-market retailers surveyed, 94 per cent are now happy to use cloud-based systems for business-critical applications. 

That’s an increase from 87 per cent in 2015 which is the last time Six Degrees carried out its biennial poll.

According to the company, retail organisations previously had “little trust” in outsourcing business critical applications. However, as outsourcing has become more common, it believes this is no longer perceived as risky, and is seen instead as a new way of managing and minimising IT risk. 

More than 90 per cent of respondents in the latest survey said the biggest business risks in the event of critical application failure were loss of sales or an inability to trade. These were closely followed by the impact on customer service or loss of customers.

Six Degrees says these perceived risks have reduced with at least one critical business application now being outsourced by 77 per cent of the retailers surveyed -– a almost 10 per cent increase from 2015.

Of this, the research found that outsourcing has become more popular than internal management for e-commerce, with 57 per cent using or planning to use outsourced solutions here. 

Six Degrees believes confidence in the current performance, availability and stability of business-critical applications in the retail industry is high (7.6 out of 10). 

It adds that with more vendors offering an outsourced option for their solutions, it has become a more mainstream option within the retail industry. 

“Outsourcing, whether it is e-commerce, HR, payroll or other business-critical systems, is very much the future for the retail,” says Frances Riseley, deputy MD, Martec International. “Retailers are far more confident in the resilience of their applications and are now looking at different ways to capitalise on the value of outsourcing expertise and risk management.”

When deciding whether or not to outsource these applications, 46 per cent cited cost as the overriding influence. 

Specifically, for the use of managed cloud for business-critical applications, the top two reasons given were risk management (34 per cent) and the need to make provision for more focus on core business objectives (18 per cent). 

Only six per cent said they would not use a private cloud provider, having already made large investments in on-site infrastructure and facilities, or not being convinced of the cost benefits.