Six Degrees Retail survey_Loss of Sales

Mid-market retailers accelerate cloud investment as trust in outsourced technology grows

Survey reveals that cloud is firmly established as a ’go to’ technology for business-critical applications.

The retail industry has seen significant growth in both trust and adoption of cloud-based technologies, according to a recent survey commissioned by Six Degrees, a UK based cloud managed service provider, and conducted by specialist retail consultants Martec International. This almost universal interest in and use of cloud computing comes as an increasing number of retail organisations start to put more trust in outsourced technologies. Of the 35 UK and Ireland based, mid-market retailers surveyed, 94% are now happy to use cloud-based systems for business-critical applications – up from 87% in 2015.

The survey, first carried out two years ago, focuses on minimising IT risk in the retail industry and monitors the progress of confidence levels in technologies. Previously retail organisations have had little trust in outsourcing business critical applications, however as outsourcing has become more common, it is no longer perceived as risky, but rather as a new way of managing and minimising IT risk. When asked, more than 90% answered that loss of sales or inability to trade are the biggest business risks in the event of critical application failure, closely followed by the impact on customer service or loss of customers.

This perceived risk has now reduced with at least one critical business application now being outsourced by 77% of the retailers surveyed - a near 10% increase from 2015. Of this, outsourcing has become more popular than internal management for ecommerce, with 57% using or planning to use outsourced ecommerce solutions. Confidence in the current performance, availability and stability of business-critical applications in the retail industry is high (7.6 out of 10), and with more vendors offering an outsourced option for their solutions, it has become a more mainstream option within the retail industry. Similarly, as more retailers use and experience outsourced solutions, its approval rating has also seen improvements, increasing from 6.3 out of 10 in 2015 to 7.1 this year.

“Outsourcing, whether it is ecommerce, HR, payroll or other business-critical systems, is very much the future for the retail industry and this is reflected throughout Six Degrees’ research,” commented Frances Riseley, Deputy MD at 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.”

According to the survey, risk is no longer the main factor when deciding whether or not to outsource these applications, with 46% citing cost as the overriding influence. Specifically, for the use of managed cloud for business-critical applications, the top two reasons cited were risk management (34%) and the need to make provision for more focus on core business objectives (18%). Only 6% of those surveyed would not use a private cloud provider, having already made large investments in on-site infrastructure and facility or not being convinced of the cost benefits.

“Technology is constantly evolving and leveraging cloud services is a great way to utilise these developments without the outlay of infrastructure investment,” explains James Henigan, Cloud Services Director at Six Degrees. “By outsourcing business-critical applications retailers are able to leverage IT investment, knowing their provider is managing the risk for them, while they focus on important core business objectives.”

A copy of the research findings can be accessed here: www4.6dg.co.uk/retail-risk

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