Cloud native architecture: The changing landscape in retail

The effect of serverless computing on consumer industry

Retail and consumer goods companies are facing challenges, such as e-commerce and changing consumer demographics, that require serverless computing and cloud native architecture. “Going cloud native,” a shift in the way an organization can design, build, and deploy technology, is a key element in an organization’s drive to achieve scale and growth.

Moving to the cloud to enhance efficiencies

Moving on-premise workloads to the cloud is becoming more prevalent as a way for consumer-facing companies to enhance efficiency. By one estimate, moving applications to the cloud can reduce operational costs by more than 25 percent.1

By itself, migrating an application to the cloud doesn’t automatically provide agility and scalability. AWS, GCP, and Azure now offer far greater capabilities than they offered a few years ago. To fully capitalize on the latest cloud benefits, companies must rethink their application architectures.

In particular, three fundamental forces are reshaping the landscape and prompting retail and consumer product companies to move quickly and seize advantage:

  1. The rise of fast-changing consumer preferences, shifting demographics, and mobile-centric consumer behaviors
  2. Increasing competition from both small and nimble startups and forward-leaning large players who use digital and data-driven methods to snag new customers and retain existing ones
  3. The always-on, buy-anywhere expectation of today’s customer, which has blurred the lines between e-commerce only and brick-and-mortar corporations

Cloud native: Why it matters

Imagine “lifting and shifting” an on-premise, hosted, three-tier internet e-commerce application to the cloud. The app stack may be fully or partially virtualized. Its code base might run into thousands of lines. Depending on the degree of planned integration and other factors, this migration could take developers and systems professionals a few months to complete.

In our scenario, the migration goes well. Within a few weeks of go-live, the marketing team initiates a series of digital campaigns to drive site traffic. One of three things is likely to happen:

  • The application takes up some light user loads and supports the new traffic. Everything looks great.
  • The application takes a beating and user access and experience is poor. The system appears to be fine online, but application performance is far below expectations. Shopping cart abandonment rates skyrocket.
  • The application functions well initially, but runs into one or more snags, such as checkout failure, site timeouts, or regional issues. Customer complaints pour in.

To fix these issues, the development and production teams will have to grapple with a monolithic application stack with thousands of lines of code. All builds for issues and new functionality will have to feed into a monthly deployment release schedule. New feature development takes a back seat. This scenario doesn’t sound like the sunny future the cloud promised.

What could this migration team have done differently? How can an organization engineer its migrating applications to make cloud transition smooth? The answer is to change the playbook from application migration to application modernization—in other words, to go beyond merely using the cloud and instead becoming cloud native. A cloud native approach can make complex applications easier to manage and allow systems personnel to work in more agile ways with quicker release cycles.

Developing a common understanding

The cloud native journey involves five foundational pillars. Each of them is essential to developing a common understanding throughout the organization and to building the right capabilities for the business.

Navigating the future

Going cloud native is a paradigm shift in the way an organization can design, build, and deploy technology. Retail and consumer product company leaders can not only reduce operational complexities and costs, but also simplify the IT landscape and drive more-frequent production releases. During a time of industry convergence and disruption, retail and consumer product IT organizations need to change from within to help lead the way and help their business counterparts navigate the future. Cloud technologies and cloud native applications represent a big step in the direction toward building a resilient, efficient organization that will last for years to come.

Contact us

Ram Ramdattan
Specialist Leader, Deloitte Consulting LLP
+1 469 417 2179

Ken Corless
Principal, Deloitte Consulting LLP
+1 312 486 3061

Habeeb Dihu
Principal, Deloitte Consulting LLP
+1 312 486 4970

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