Pat Bakey, Global General Manager for SAP Retail, explains how Big Data, real-time computing, and the cloud are helping retailers.
What are the main drivers in the retail industry?
Bakey: If you take a look at the force of change today, it is the consumer, and the speed of change – which is unlike anything these retailers have ever seen before. That in and of itself is a challenge, but what makes it even more so is the fact that this industry – because it is closest to the consumer – has more information and more customer data than any other. This situation has created larger data sets than in any industry imaginable, generating an environment of incredible IT complexity. So here you have an industry that needs to move really fast, with agility, speed, but also has this boat anchor of IT complexity holding it back. That is an extremely scary proposition for retailers.
What trends are you seeing in retail?
What we see happening is the emergence of these super aggregators. These are companies like Amazon, Ebay and Alibaba. These are the traditional “e-tailers” that created these retail value propositions about the endless aisle, unlimited assortment, and a real ability to navigate into new business areas where they saw value. So more than the market caps of these organizations, which are in excess of a €100 billion and capturing a lot of the attention in the press, is the concern retailers have about the trajectory of these super aggregators: how they got there, and their ability to capitalize on these new opportunities.
So their whole attitude about moving quickly, being agile, taking risks, learning from those risks, and moving forward is what has catapulted these super aggregators to the size and the strength that they are right now. A lot of retailers are taking a look at this and ask: How do I compete against those?
What is SAP’s value proposition for retail customers?
The biggest value that we offer retailers is that we can help them simplify their business. When we help them do that, they are able to take advantage of their unique proximity to the customer, the insight they have about their customer, and translate that into business strategies to move and sustain their business forward.
SAP HANA is a great example of how the platform itself can simplify the IT landscape and allow retailers to move a lot quicker. So, historically these retailers have built up large databases, managed by complex indices and data tables, just to physically manage, let alone understand what was going on inside of these data marts and data repositories.
What SAP HANA enables these retailers to do is not only to manage all that data in a more simplified, lower cost manner and manage it real-time, but they’re actually able to create insight into that data at the most granular level.
They now have context of their customer in their business, allowing them to understand more about what is going on at their customers and make more intelligent enterprise business decisions. And the way that we actually deliver this is through our application (SAP Customer Activity Repository), which combines all the incredible insight these retailers have of their customers, both inside and outside the enterprise and marry that with the rich information they have of their enterprise itself. And that really is how SAP HANA with CAR is simplifying the IT landscape and driving greater speed and agility into the business for retailers.
What advantages does the cloud bring to retailers?
In a business environment, where the pace is dictated by the speed of the consumer, you have to keep up. If you’re really good, you are going to be couple of steps ahead of the consumer, trying to anticipate what they want. But at a minimum you need to just keep up with the consumer.
Cloud is an opportunity for retailers to actually deploy solutions faster and with more agility than ever before. Cloud provides retailers a platform to reduce complexity and add greater value for their customers. Retailers need to recognize that it is not about when they leverage cloud, it is about who is in the cloud right now competing against them at a lower cost base and executing a much faster pace of innovation.
Cloud lowers the barrier for new entrants to retailing. Retailers have gone global and simultaneously are moving to a segment of one. These conditions have created all sorts of niche opportunities for really interesting, modern retailing. Naturally, they need to have flexible IT systems that support their businesses, but without a huge staff. Many just have a couple of people that are running the business. What cloud gives them is the ability to actually act big and global while moving really fast.