Flexible, Agile Networks: The Backbone of Retail Operations
Customer experience remains at the hub of all retail strategies, including technical strategy. Whether it’s global inventory availability, mobile payment or loyalty apps, e-commerce and call center integration, or ubiquitous points-of-sale, infrastructure that uses all assets while integrating suppliers and consumers continues to define a retailer’s network design. Further, in highly competitive retail segments, managing the costs of digital fluidity is not only vital to capturing profitable share; it can also distinguish competitive advantage.
Typically, retailers over-index high-cost bandwidth to ensure they have capacity during peak season, even though they really only tap into all of their bandwidth sporadically. Additionally, the cost to acquire, maintain and manage premise equipment can be complex and excessive for large chains. Reliable network performance during peak seasons, scaled back bandwidth off-season and the ability to cost allocate to individual store levels would be ideal.
During peak seasons, network downtime can threaten or halt a retailer’s business. This can cost large businesses an average of $140,000 to $540,000 an hour , not to mention the consequences their customers and brand may suffer. Retailers need to be able to seamlessly accommodate high demand during seasonal spikes to not only avoid lost revenue, but also maintain a positive customer experience. Conversely, during slower cycles, carrying the expense of networks that provide capacity beyond what is needed may be suboptimal. Too often this concept of seasonally dynamic bandwidth allocation is aspirational. Until now.
Idealistic network architecture may or may not be a priority, but implementing an adaptive platform that allows a retail business to interconnect assets often is. Retailers know the cost to rip and replace their old infrastructure for new is unaffordable and impractical to achieve such a platform. Simultaneously, optimizing and depreciating assets and suppliers can only carry design and strategy for so long, just the same as managing capital across continuous hardware upgrades may no longer be prudent. While these conflicting priorities converge with the proliferation of application migration to the cloud (i.e. lower requirements for premise equipment and the talent to manage it) and consumer demand for an integrated experience (consistent pricing; inventory visibility in store, online or on a mobile device), many retailers struggle to compete in today's digital marketplace while maintaining current network stability and cost control. The software defined network (SDN) can deliver against these ideals.
Benefits
Among its virtues, SDN offers a dynamic, agile and cost-effective capability to scale network bandwidth up and down in near-real time to meet fast-changing demands. It can eliminate the need for specialized premise hardware, just as you replaced your portable CD player with a streaming music app on your mobile device. With SDN, you can exchange networking equipment for software running in the cloud. By doing away with physical, depreciating assets, businesses of all sizes can turn to the power of SDN to access, centrally control and modify their networks quickly, while continuously connecting with their customers.
The value of SDN is especially important to a retailer. Cost, performance and business intelligence or analytics that allow a retailer to seasonally manage network expenses down to a store level are key rationale. With the ability to remove traditional bandwidth limitations in favor of more fluid, real-time scalability, cost management is tacitly more complementary to market activity. More importantly, these capabilities can be added to an existing Wide Area Network.
For example, a chain of highly seasonal ski lodges might increase bandwidth during their peak season to accommodate increased staffing, transactions, and logistics traffic on the network; and then scale back after the season ends. This would help avoid the costs associated with unused bandwidth during the off-season. Similarly, a boutique apparel retailer or a department store could increase bandwidth in the weeks leading up to the holiday shopping season, and quickly reduce paid bandwidth as post-holiday traffic subsides. With dynamic bandwidth allocation made possible over an SDN, businesses only pay for the bandwidth needed during any season.
Competitive retail network strategy demands flexibility and a path that utilizes existing assets with greater agility. SDN delivers the technology required to execute and compete in today's digital, always-on economy. As consumer demand for digital experience (relational video, real-time inventory availability, electronic engagement in/near store, etc.) propagates across all commercial environments, the ability to invisibly flex in harmony with market dynamics becomes one of the most powerful advantages for retailers.
Allowing customer experience to remain coherent while your connectivity bends commensurably with your consumers’ spending behavior aligns your expenses with your income patterns. That balance defines technology strategy while keeping your customer experience first.
Michael Colaneri is VP retail, restaurant and CPG, for Global Business Enterprise Solutions, which is focused on developing and designing comprehensive business solutions that transform operations and dramatically expand capabilities by delivering a full array of integrated solutions to its customers.