3 key reasons why South African retailers are embracing cloud

As a South African-based investment and holding company that manages a portfolio of retail chains, Pepkor deals with a lot of data. The company made the move to Google Cloud because they needed to democratise all of this information and break down the data silos that existed across their various business entities, says Michael Yolland, the brand’s digital transformation officer.

The SPAR Group, a South Africa–based food retailer, has embraced cloud to streamline their IT operations and enhance their digital transformation efforts. Using Microsoft Office 365 and Azure, the retail brand has reduced physical servers by a third and decreased system setup time from hours to just minutes, according to Robbi Laurenson, a digital architect at Microsoft. 

The second largest retailer in the pan-African space, Makro, has embraced cloud to improve their marketing and advertising efforts. By importing store purchase data into Google Cloud and using store sales management analytics, Makro has uncovered a wealth of information about online-to-offline behaviour. These insights are then used to assess the effectiveness of their digital advertising and to discover if these investments are driving sales.

If anything, these examples indicate just how strong the South African appetite for cloud is and how many different applications there are for this technology, says Mark Walker, associate VP for sub-Saharan Africa at IDC. And the entire market is getting involved – be it SMEs, larger enterprises and, of course, retailers.

Cloud adoption in South Africa is certainly on the up, agrees Leonie McManus, an IT analytics consultant for McManus Consulting. As vendors like Amazon Web Services, Huawei and Microsoft make their play for South African customers, the pieces are falling in place for local businesses of all sizes and across a range of industries to capitalise on cloud technologies.

CIO.com chatted to retail IT leaders and cloud vendors to find out why they’re leveraging cloud as an essential, and valuable, business tool.

Using cloud for improved insights

If Daniel Acton, regional tech lead for cloud at Google South Africa, had a penny for every time someone spoke to him about having a “single-view” of the customer, he’d be a very rich man. This concept is on everyone’s radars because no one is really getting it right, he explains. “I know this because when I visit online retailers, quite frankly, the recommendations suck.” This is a wasted opportunity when you consider that the point of a recommendation is to tap into a customer’s purchase history in an attempt to offer useful/relevant suggestions and, ultimately, encourage consumers to make an additional purchase.

But it’s not all bad. There are some innovative e-commerce players out there who are using artificial intelligence (AI) and cloud to get recommendations right, says Acton. For example, recommendations “on the fly” move beyond a customer’s purchase or search history to suggest products that might enhance their recent purchases; for example, suggesting a surround sound system to enhance and complement the TV the customer purchased the previous week.

When retail CIOs move to cloud, all of the data they have about their customer sits in one place, which means that it can be more easily accessible by everyone across the retail business to make better decisions, says Acton.

Crucially, public cloud providers  provide the compute power necessary for machine learning — a subset of AI embracing methods and algorithms, such as neural networks — that let computer systems better their performance as they ingest more data. This allows retailers to use the infrastructure they need and scale as they grow, avoiding huge upfront costs. Just as important, cloud providers are increasingly adding machine learning programming tools and AI-based analytics to their offerings, essentially providing AI-as-a-service for retailers.

Retailers offer enhanced customer experiences

Customer experiences have become the new currency for retailers and physical stores are the destinations for these experiences, notes Ravindra Prabhala, global head of consumer industries at SAP.  So how does cloud factor into the equation?

For Prabhala, smart CIOs are using cloud technology to enhance their in-store and online retail experience so that they can guarantee that customers are satisfied no matter what channel they are using.

As noted above, cloud enables retail CIOs to merge their in-store experience data with their operations/sales data to deliver improved insights about their customers. Improved insight can lead to an enhanced experience for the customer. For example, customers may arrive in a store and receive messages with special offers based on the products they’ve recently searched for online, Prabhala explains.

Cloud helps embrace change

One thing is certain: retailers are no strangers to change, asserts Microsoft’s Laurenson. From fashion trends and product innovations to seasonable foods, it’s an industry that is almost defined by change. The retail world is highly competitive and it is the savvy CIOs who will leverage emergent cloud technologies to deliver insights to the business that optimise how they interact with their customers, what products they offer, as well as streamlining their supply chain and broader business processes.

With cloud, retailers are transforming across all aspects of the value chain, says Google’s Acton. This presents a wide range of opportunities for retailers to automate manual processes, spot customer trends, personalise offerings and centralise insights.

However, it’s not only about the technology. While speaking at a recent SAP Future of Retail event, Prabhala was challenged by an audience member to address his concern that cloud and automation can actually alienate internal users because the need for this technology implies that the humans working in stores are “incapable and unintelligent.”

But Prabhala explained that the CIO’s message should not be about technology being more intelligent than people, but about improving efficiency, reducing waste and saving time.  With this potential stumbling block in mind, Pepkor’s Yolland stresses that any retail CIO embarking on a cloud journey must be sure to take their people along for the ride. “People are used to working in a certain way. They are comfortable with the existing solutions and approaches they know.” Successful CIOs will take the time to show people the value of what is possible with cloud and how cloud optimisation can improve their daily activities.

If you think that cloud only empowers IT teams to do its job better, you’re missing the point, concludes Acton. “In fact, cloud, and the transformation it brings, allows the business to innovate for the future and rethink what is possible.”