While most businesses struggled to survive the disruption brought by the Covid-19 pandemic, the consumer packaged goods (CPG) and retail sectors responded in ways that kept their businesses going strong. From keeping the supply chain on, managing last-mile and contactless delivery during lockdowns, to ensuring the well-being of employees and customers, the acceleration in these two sectors is possibly the fastest since the e-commerce boom of the early 2000s.
The cloud will dominate the future of enterprises
The technology that powered most business responses was the cloud. A recent IDG Cloud Computing Survey suggests that with 81% of organisations already using cloud computing or having applications in the cloud, the age of the cloud is here. We need to reframe the conversations around the cloud from traditional monolithic ERPs to a more democratised cloud environment where cloud apps can help organisations be more agile in a post-pandemic world.
Cloud apps and the ERP context
ERPs such as SAP and Oracle will succeed in the cloud era owing to the investments companies make in customising an ERP solution. While ERP monoliths continue to service, the internal organisations’ cloud apps become a necessary choice to bring agility in external collaboration. Let’s look at the cloud app environment, particularly the native cloud apps, and the standardised value-added capabilities they bring to the CPG/retail industry.
Scalability and flexibility: The specific, functional value that cloud apps offer in a modular manner provides the deployment scaleability and flexibility at the click of a button. For example, a cloud-based CRM solution can be scaled-up based on seasonality, sales trends—without any downtime, retraining, or fixed overheads.
Security and data privacy: As individual data and privacy concerns take centre-stage, companies want cloud-based solutions that can provide secured data access while complying with regulatory requirements.
User-friendly: Cloud apps come with a front-end and are designed to be used on the go on different devices by users who may not be familiar with the technology. Using principles of design thinking to build highly intuitive UX/UI makes them very appealing.
Potential hurdles to effective deployment
In the current fast-evolving circumstances, it is important to remember that cloud apps are still evolving and come with their share of pitfalls that IT decision-makers need to factor in.
Increased operational and administrative complexity: While most cloud apps are designed for self-service, being function-specific means that a typical app environment could have multiple cloud apps vendors. This translates to multiple contracts and licensing with different application vendors and other administrative work that adds to operational complexity.
Skill gap: Like any other software environment, cloud app strategies can be focussed on building or buying. In either case, the multiplicity of platforms along with the support/maintenance functions require additional, varied skills. Fortunately, the gig economy provides access to niche skills that can be tapped on-demand.
Financial stability of vendors: Given the spread of dependence on multiple, relatively smaller vendors poses a unique risk in the form of their financial stability and ability to continue providing their services. For example, a retail business selling perishable goods cannot afford to have its cloud application vendor going bust, especially for a critical function such as delivery.
Change management:Business processes need to be aligned with the out-of-the-box best practices. While standardisation brings its associated benefits, organisations need to find effective ways of implementing their unique differentiators in the cloud environment.
Best practices from a practitioner’s perspective
The onus of designing a solution that addresses a specific problem lies on developers and the efficacy of deployment often depends on vendors and solution providers.
Specialise in specific functions: CPG and retail companies rely on third-party vendors for native cloud apps that offer standardised and value-added capabilities based on specific functions that complement the larger enterprise applications or address a specific business need as against an existing universal ERP. A vendor is expected to have a thorough understanding of the problems and best practices to address them effectively.
Balance standardisation and customisation: Cloud app developers need to find the balance between offering a standard solution that is cheaper and quicker to deploy, and customisations that traditional ERP customers make to suit their business requirements, albeit with increased complexity. A bias in either direction could make the solution too generic to sell or too niche to be profitable.
Relevant and regular updates: It is critical for cloud app developers to get on-ground intelligence regularly and gather feedback from customers to be able to provide regular updates for their apps. This allows clients to remain compliant from a regulatory perspective and stay relevant to their end-users.
One key takeaway from the numerous innovative and time-compressed pilots we have seen in the last year is that cloud apps warrant a strategic place in CPG and retail companies. Not only as part of the IT strategy but also through the lens of a broader business strategy aimed at making an organisation more resilient and the business more agile.
Views are personal. The author is associate vice president, SAP practice, Infosys.