Reinvest savings from infrastructure modernization into retail transformation

retail digital transformation, SAP on AWS for Retailers
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Unlock new business opportunities by migrating & operating SAP on AWS

2020 may be over but its impact will be permanently felt.

A number of retailers entered the year already grappling with significant long-term structural pressures, which were exacerbated by the impact of Covid-19 and lockdown measures, bringing ever-greater focus and attention to profitability and margins.

In simple terms, the global pandemic created a digital revolution and accelerated the need to get closer to the customer. Customers’ needs changed overnight and the role of stores and supply chains had to pivot in quick-time. To reach locked-down consumers, retailers had to take advantage of the only channel available which was scaling their online capability. This has led more and more retailers to adopt a digital-first approach.

But, the traditional challenges for retailers still remain:

  • Customer experience & loyalty – keep them coming back in order to bring in revenue
  • Supply chain – right product, right time, right place for the right person
  • Business agility – the ability to be fast, agile and responsive to the ever-changing customer want and needs, as well as market dynamics as ongoing change is the norm for retailers

Many commentators speak of “unlocking the future of retail through digital transformation” and there are wide-ranging changes to retailers’ business models afoot to address this trend including:

  • The evolution of the store to be fully omni-channel
  • Greater personalization of offers and services to customers to increase the conversion of one-time buyers into longer-term customers
  • Increased enterprise agility to enable a dynamic supply chain with greater visibility, pricing, and planning through accurate analytics and greater staff productivity leveraging increased automation

But in order to achieve this, many retailers still have two early blockers to overcome:

  • Aging IT infrastructure that is unable to support the required agility of a modern retailer
  • Sufficient funding for digital transformation

Digitalizing operations and ensuring operating models are fully digital-centric will help enable adaptive retailing, reducing the lead time from product planning to sales and, in turn, fuelling growth. Taking it a step further, operating in the Cloud will grant businesses access to additional information and technologies. However, truly effective innovation is about harmonizing and leveraging the use of technology throughout the entire enterprise and reaping the rewards.

So, the first step for many retailers who run their business on SAP is to look to move their workloads to the Cloud. It might make your heart race at the thought of migrating your most important systems to the Cloud but Lemongrass’s retail clients are achieving significant benefits as a result, for four good reasons:

Financial Case (Cost Reduction)

First, the financial case is crystal clear and significant. SAP is usually an expensive item within the data center and most of our clients at least halve the cost once it is running in the Cloud. Two years ago, one of our clients migrated 300 servers in just three months. That migration paid for itself within the first year.

Costs are saved mainly in two areas:

  • Reduced infrastructure costs by migrating SAP systems from on-premises to AWS
  • Reduced maintenance costs by automating repetitive activities

Exiting data centers and embracing an Infrastructure-as-a-Service (IaaS) model delivers metered cost plans so businesses only pay for what they use. Enterprises will also enjoy cost savings as a direct result of the reduced need for operational support, licensing, improved business availability, and faster project cycle times.

Business Agility

A significant amount of the cost and the complexity of SAP is not in the business-as-usual operation but in the cost of change and projects. AWS offers a different, more agile way of working with SAP in the Cloud – SAP DevOps. Historically, the time and cost of commissioning infrastructure have been a key constraint when it comes to delivering change. When enterprises have a number of changes to do, they tend to put them together in a single copy of the development system – which makes the changes big, complex, expensive, and time-consuming. When you work with the SAP DevOps model you create a new full copy of the production system every time there is a change. This dramatically shortens the amount of time it takes to release developments into production.

Business agility is increased and therefore investment costs are reduced via:

  • Seasonal autoscaling of compute power when needed – only pay for what you need
  • Reduced time-to-market by automating the provisioning of on-demand test systems
  • Getting rid of long-term test hardware by utilizing Cloud on-demand pricing models
  • Once SAP runs in the Cloud, new digital services can be added just with a click via the AWS Marketplace

Seasonality can have a big impact on retailers, both online and in-store. Use Cloud infrastructures to sustain scaling and to access best-in-class services, particularly for use cases that best benefit from the Cloud’s features, for instance, data consumption across the globe, and very high storage and processing needs.

Cloud technology, such as AWS, is a cost-effective and low-risk option for ensuring optimal access to information regarding products, customers, or processes at any time.

Staff Productivity

Operating your SAP workloads on AWS enables you to improve processes across the business, so you can run your business predictably and safely. It can accelerate the responsiveness of your business, improve service levels, and reduce costs with intelligent processes that anticipate the future and coordinate people and assets more efficiently. Staff productivity is also improved through automation-driven maintenance efficiencies, elimination of hardware-related tasks, and increased developer productivity.

Existing SAP resources and infrastructure can focus their knowledge on providing new digital services, such as Click & Collect for their customers, as a result of the benefits delivered through:

  • Reduced downtime
  • Improved security
  • Improved integration with other systems
  • Faster reporting times

Innovation

In addition to the more traditional SAP solutions, retailers who are operating in the Cloud are taking advantage of some of the latest and greatest technology benefits using:

  • IoT
  • Artificial Intelligence (beacons, track & trace)
  • Social influence programs
  • Personal commerce journeys
  • Virtual reality
  • Robotics

In today’s lightning-fast digital economy, retailers must take advantage of real-time insights from their SAP systems combined with non-transactional data to succeed in new markets and reinvent themselves in existing markets. Developing insights and quickly turning them into actions are key imperatives for today’s retail leaders. Being able to predict trends and respond to them, or even get ahead of them, enables educated business decisions, and, consequently, improved business performance as a result of higher customer acquisition, satisfaction, and loyalty.

Reinvest savings from modernizing infrastructure for digital transformation

All of the above-mentioned potential cost savings can be re-invested in the creation of new omnichannel offerings for customers. With SAP maintenance costs reduced by up to 50%, these savings can be reinvested in new digital offerings such as Click & Collect, Pick-Up In-Store, and new payment methods. The savings can also be invested in modernizing existing applications e.g., Master Materials Management, webshops, and improving logistical integration with third-party providers.

Modernizing infrastructure helps retailers gain significant business advantages and can provide immense value to the organization. The question is no longer about why and when, it’s all about how to modernize with the least amount of budget and disruption to the business.

Download our eBook – SAP Cost Optimization on AWS, and find out how to modernize SAP systems and cut costs by up to 50% with Lemongrass. Download here.

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