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The High Price of Downtime to Retailers

Guest Blog By Matt Ferrari

No business can afford system downtime. One minute lost can equal loss of revenue, customers and more. For retailers, downtime is particularly troublesome – especially considering the importance of e-commerce, which requires round-the-clock uptime in today’s global economy.

Global management consulting firm A.T. Kearney estimates global e-commerce has grown 13 percent annually over the past five years. According to a new report from the Interactive Media in Retail Group (IMRG), a U.K. online retail trade organization, global business-to-consumer e-commerce sales will top $1.25 trillion in 2013. On 2012’s Cyber Monday alone, online shoppers spent $1.465 billion. Mobile commerce, and the proliferation of smartphones and tablets adds new pressures to retailers’ need for an always-on business. Many smartphones are able to scan barcodes and QR codes, adding another feature to multi-channel shopping. In a study on the U.S. smartphone shopping behavior, ComScore found that 4 in every 5 smartphone users – 85.9 million in total – accessed retail content on their device during July 2012.

Perhaps the most obvious and damaging, cost of downtime to retailers is lost revenue associated with customer’s inability to transact during an outage. Target for example, has experienced multiple outages. The first crash was related to a huge surge in traffic when introducing the Missoni for Target apparel line. There were also at least two outages during last year’s holiday season, one of which (according to Rigor) lasted for about two and a half hours. The company used its Uptime Percentage Calculator (located on the Rigor homepage) to determine the outage represented a loss to Target of about $464,000.

It’s not just sales lost. While existing customers might be forgiving and wait for an outage to sort itself out, new customers are less patient. Outages impact brand perception as well, and retailers need all the help they can get to build and sustain their brands in competitive online space.

Today’s IT environments leverage virtualized infrastructures and cloud computing via private, public and hybrid models, making business continuity more complex, because applications and compute power are more fluid and dynamic. Any cloud model that’s not managed within a retailer’s own four walls is susceptible to the practices of a third party, lessening a retailer’s control over IT operations. This leads to missed opportunities in design, planning, testing and deployment of IT initiatives.

Another common misstep is implementing unique infrastructure for each application. This undermines efficiencies and increases the risk of failure and outage. Instead, companies need to take advantage of opportunities for repeatable infrastructure to drive economies of scale. Another point of failure is that for many organizations, planning and execution is non-iterative. IT must engage all stakeholders throughout the process and not just at the beginning, because requirements and expectations change. Retailers can minimize the impact of an outage through a solid disaster recovery plan. Too often, disaster recovery is an afterthought. Any time an application is built, IT departments should plan and build for that app’s disaster recovery by anticipating scenarios and defining requirements.

Many outages could be prevented with the adoption of an Always-On Design Framework, which improves availability and reliability. This framework is premised on three key tenets: reusable components that are easy to deploy and support, interactivity with stakeholders to significantly reduce the risk of project failure, and architecting application infrastructure assuming a failure will occur. It closes the gap between application design and users’ needs. With an Always-On architecture, retailers can take advantage of reusable IT components in a service catalog that can be quickly provisioned. With faster delivery of services, enterprises can focus on other business strategies. They save weeks of time in development, provisioning and training, which boosts agility, cuts operational costs and achieves greater ROI.  The framework also promotes regular evaluation, validation and prioritization of applications and services. That, in turn, aligns expectations and capabilities early in the design process.

This framework will help retailers reduce outages and mitigate damage. The Always On Design Framework is detailed in HOSTING’s publication, the  “essential Guide to Disaster Recovery & Business Continuity.” The free publication can be downloaded from the Website: www.hosting.com. There is no question that retailers should be investing in online channels as eCommerce and mobile commerce continues its exponential growth. But these channels require highly-available, reliable IT systems. Outages of any length immediately affect the bottom line. Architecting with this proven framework can help plan and deliver an IT foundation that keeps retail always on.

Matt Ferrari, CTO at HOSTING

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