The Move to the Cloud

Why are retailers moving to the Cloud?

Increasing numbers of retailers are adopting cloud-based deployments for their IT systems and business applications. For the last few years this has been widely predicted by the leading analysts, including Gartner, and now we are seeing this actually happening. Early adopters have reported the major advantages being: cost savings, increased flexibility and improved levels of customer service. eCommerce operations tended to be the first to be transitioned, but we are now also seeing many store based applications, including tablet based mobile payment systems, migrating in order to utilise the power of the cloud. In today’s highly competitive retail marketplace we can expect to see an increased rate of cloud adoption. Cloud has become a key factor for most when undertaking an IT refresh. Cloud is seen by most business sectors to be the way forward and it would therefore be risky for the retail sector to ignore its potential.

What are the benefits?

Cloud deployments move applications and data storage to remote datacenters. This makes it easier and cheaper to manage the systems. Importantly cloud allows capital expenditure budgets to be cut and also improves the control of operating expenses. Greater staff utilization is achieved and new software versions and patches can be applied more readily. Cloud implementations ensure that server capacity is always maximized, at the same time as delivering increased scalability for peak trading days such as Christmas trading and Black Friday. With a virtualized cloud architecture capacity is no longer limited by individual server capacity allowing usage demands to be added and smoothed as required. Also, cloud offers full remote software deployment and provisioning as well as simplified systems monitoring which all benefit retailers. One of the key advantages for payment processing is the ability to add new functionality centrally (just once) and for this to immediately be available to an entire estate of stores, POS terminals and PIN pads. So you are in effect “replacing hardware with software”. Cloud payment implementations enable a greater choice when picking devices, acquirers and payment service providers.

Is it secure?

It has been shown that with a Private Cloud deployment, security levels are likely to be increased rather than lowered. Cloud also helps simplify PCI DSS compliance as card sensitive data can be moved out of the store environment and into highly secure central processing centers. Strong encryption can be applied to protect data both in transit or at rest and key management is easier to maintain. A move to the cloud can form part of a cost effective strategy of taking the POS and store out of PCI compliance scope. Additionally, security assessors like the fact that in a cloud deployment software updates will be applied more quickly as these often include security patches to address known vulnerability that could be exploited by criminals.

How about reliability?

We understand that retailing requires extremely high levels of systems reliability and availability. Thanks to modern designs, high levels of investments and built-in redundancy this can be achieved. Today’s ultra fast communication links are far superior to those being offered only a few years back.  eCommerce cloud implementations have demonstrated their high systems reliability and that is partly why many store systems, including POS applications, are now being migrated to the cloud. The US market, which has far longer experience of cloud deployments, shows that Cloud is suitable for use in the retail sector if implemented in the right way and when the right cloud provider is picked.

Which flavour of Cloud?

There are four main types of cloud service available: Private, Public, Community and Hybrid. Due to the sensitive nature of card payments most retailers are advised to utilize Private Clouds for their payment processing applications. Private clouds offer the best balance between the economic arguments and security concerns. There are three main types of Cloud Services delivered: Software as a Service (SaaS), Infrastructure as a Service (IaaS) and Platform as a Service (PaaS). With SaaS pricing models can be directly associated with usage. Retailers also need to be aware of the risks of moving to revenue based sharing models with cloud providers.

Key considerations?

Javelin Group point out that many legacy applications used by retailers often have limited integration options, relying on proprietary and batch processes, and that there are less APIs made publically available. This can make a move to the cloud trickier, but should not detract from the significant benefits that are available to retailers by migrating to the cloud.

Retailers need to carefully assess their attitude to risk as they are moving from in-house operated applications to a contracted service, backed up by strong SLAs, with a cloud provider. By choosing a Private cloud model though a retailer can maintain full control of the security operating guidelines and processes.

Areas for concern

Increased security vulnerabilities

The expansion of trust boundaries

Granting of access privileges

Risk of exposure of sensitive data including card numbers

Reduced operational governance control

Regional, regulatory and legal issues

Limited portability between cloud providers

Our cloud strategy

Here at STS we always strive to be at the forefront of technology advancement and that is why we have been an early adopter of the cloud. We recognize the significant financial and operational benefits that can be achieved. G8:Enterprise has been architected to support hosted cloud deployment options right from the outset. G8 has a modern services based architecture that processes multiple transactions concurrently from many IP connected devices. With a cloud deployment multiple instances of G8 can be run simultaneously thereby providing high resilience and scalability. It has been a long-term strategy of ours to find ways to “replace hardware with software” and cloud deployments are the latest incarnation of this. We always recommend private clouds as we feel these provide the appropriate levels of security. One of the key challenges faced by retailers is the deployment of software and firmware to PINpads. Cloud helps solve this issue as new feature and enhancements can be made centrally just once and then are immediately available to every store and device. G8:Enterprise supports strong TLS authentication and a cloud implementation can help retailers simplify PCI compliance programs and even take the store out of scope. We would be pleased to discuss the appropriateness of cloud for your organization. Do get in touch.

Tuesday, February 3, 2015