Issues with Introduction and Increased Use of Cloud Computing Services
The organisation chosen for analysis is a fictitious one that operates in the fashion retail business, is based in the UK and is called Magneta. The target market is young people between the ages of 18 and 34, and the company sells mainly casual yet trendy female outfits. Magneta has brick and mortar stores in various parts of the UK, Europe and North America. It also sells clothes online and has built a reputation for fast response to consumer needs. Magneta employs a total of 530 employees worldwide, and this has been possible due to its franchise-like model.
Systems in the company are predominantly legacy-based and operate in silos. Each of the legacy systems is responsible for various parts of the business’s operations. Some of them take care of the inventory, while others focus on shipping. Alternatively, other systems handle terminals while, others work on sales data. A lot of this data is not transformed into useful information, and most times, employees feel overwhelmed by the speed, volume and even variability of the data as it is always changing. The company feels that it currently has too many servers in each of its stores, as most of them are not run in remote server farms.
Current Status of Cloud Computing
Cloud computing is only used for periphery services at this fashion retailer because employees have a relatively good understanding of browser-based software, but the infrastructure required to make the transition has not been installed. Sometimes, employees will use Dropbox to manage and send files, but this is often not powered by the organisation.
The company also thinks of cloud computing as a means of storing its information rather than an opportunity to expand its possibilities. Whenever there is a power blackout or some form of data disaster, the company is assured of accessing its data safely through any internet connection. This acts as a form of disaster relief for the company as it makes it immune from physical attacks on its information (Balagopalan, 2010).
There are a number of reasons and drawbacks for Magneta to handle its data from the full use of cloud computing. First, the company is concerned about the issue of security and compliance with information security standards. The retailer has many sensitive information including information about the customer’s credit card or their history of payment. If a cloud provider does not meet the same standards as the retailer, transactions can not be secured.
Magneta is afraid of putting all their trust in an application that they have minimal control over. One might say that the cultural paradigm shift needed to embrace these technologies is yet to occur (Xero, 2014). It is not certain about the regulations, data sovereignty or the ability of the cloud provider to meet their trust and privacy requirements. These worries stem from numerous reports in the media about instances of crooks hacking passwords from cloud networks. Even unwanted third parties have been able to access private information simply through shared links in popular cloud services such as Box. The company is apprehensive whether the benefits of cloud computing are really worth the risk.
Inability to access a personalised IT service is a challenge for Magneta as well. One of the selling points for most cloud computing vendors is that companies can save money by scaling down their IT staff. However, this also means that there could be challenges with ease of access to emergency assistance. A third party that manages one’s IT operations is less loyal than an employee, and the entity is also difficult to access when a problem arises.
Relying on cloud computing implies that a replacement project may have to be implemented at Magneta. The company already has some legacy applications that support its core business and this can be quite disruptive to the firm if they are altered. Additionally, the legacy applications are often stable, so they require minimal operating costs; their complexity makes them relatively challenging to alter, as well. The company thus finds is difficult to construct a case for change to cloud applications as the latter may not be compatible to the batch-processed legacy systems. It has thus been difficult for champions of cloud computing to find a support for alteration of the current systems owing to the above-mentioned traits.
Integration challenges are a particular point of concern for the company because it is highly complex within the cloud. On-premise software has better capability than the cloud in integrating data flows with different applications. This is mostly because the applications are too mature or their characteristics prevent such seamless integration. Therefore, Magneta has had to think twice about going full throttle into the cloud computing world (CBIZ, 2015).
A number of other challenges have also caused the organisation to refrain from adopting any such system. First, during negotiation processes, cloud service providers have the upper hand and will sign contracts that only depend on their conditions. If Magneta requires certain features, it is highly unlikely that the cloud provider will change their terms to accommodate them. Furthermore, cloud makes one depend on 100% internet connection; if one experiences periods of no internet connection, then access to vital files is impossible (CBIZ, 2015). Such a problem is common for employees on the move who may not be in an environment with reliable data connection. Finally, vendor outages can also occur on occasion when access to information is highly critical, so these challenges have caused Magneta to think twice about the issue.
Potential Benefits of Cloud Computing
Magneta, just like several fashion retailers, is yet to alter its products, processes and even its services in tandem with cloud computing. Therefore, the tools for change are there but the business processes in use are still the same. For instance, cloud computing enables firms to carry out transactions with buyers in various parts of the continent or region. It can remove geographical barriers, which will allow the organisation to increase its reach as well as its efficiency.
The organisation is yet to collect sales data through cloud computing as it currently uses traditional software methods. Loyalty cards, as well as discount coupons can be an effective way of collecting information about consumers. This data can then be connected to the server networks of the organisation, which are then linked to the supply chain stakeholders all over the world. Magneta can then work with its cloud computing provider to establish the performance of a certain product or brand. Once this is known, then the information can be transmitted to store managers so that they can stock up on what it is demand.
An organisation called Zara is already doing this for its supply chain management system. It has a highly innovative business model that merges information from specific retailers on current fashion trends then uses the data from each of the sales staff in its stores to inform designers who then supply the merchandise in a short period of time. Cloud computing for Zara often comes in when the organization needs to transfer the information to its designers and when the sales personnel need to transfer sales numbers to the headquarters (Nelson, 2013). Without cloud computing, it would be difficult for all the stakeholders in the supply chain to have real time data on things that are selling and those that are not. Therefore, responding to consumers needs would be challenge; Magneta is yet to get to the same level as Zara because it has not yet become agile towards its buyers.
Studies illustrate that several fashion retailers are underutilising their sales data because the systems they rely do not have the capacity to process the volume of data that they handle. Not only is the analysis of sales data currently time-consuming at Magneta, but it also does not provide the stakeholders the much-needed insight needed to understand buyer behaviour.
Cloud systems have the capacity to analyse data in a relatively short amount of time or in real time without requiring Magneta to invest a lot of capital on such a process. Therefore, cloud computing for sales analysis can be quite helpful in cost saving as minimal resources would be required in carrying out operating costs (Nelson, 2013). It can also improve profit-making because it will enable the firm to meet consumer needs faster; this will cause more of them to return. Cloud providers have the capacity to create and apply analytical models in retail industries (Accenture, 2014). This will enhance decision making for the company as it will be able to forecast consumer behaviour and thus plan in accordance to those patterns. In response to these predictions, Magneta can then have a better marketing, pricing, loyalty and merchandising strategy to draw more business.
Challenges to do with stock outs or excess supply are also common in the fashion retail industry. For this reason, cloud computing can be used to enable this company to improve the inventory management processes. Magneta can have the opportunity to minimise cases of stock outs by using the cloud to inform its suppliers as well as the other partners about its needs and requirements. As a result, only the right quantity of inventory will be made available by the company as time progresses (Accenture, 2014).
Potential Security Issues Associated with Cloud Computing
A number of challenges exist in cloud computing that can prevent organisations from embracing the technology (Lutz, 2013).Sometimes the provider can lack the ability to provide security measures and this can compromise the confidentiality of the data. Alternatively, when other organizations purchasing services from a cloud computing vendor attack the said organization, their integrity can be compromised. In the cloud computing organization itself, employees can sometimes be malicious, and this could lead to information loss. Legal and regulatory issues may also arise when personal information is sent to the cloud.
In certain circumstances, the customer purchasing a cloud computing service may already have their own security system. This can clash with that of the service provider thus leading to failure in integration. (Lutz, 2013). The overall result is exposure of the information to unwanted third parties, so confidentiality will have been minimised. Data leakage as well as loss can sometimes occur when there is no seamless integration between the cloud provider and the client. This can diminish information availability as there would be no way of accessing the lost data (Lutz, 2013).
In some instances, the cloud computing service provider may have challenges with its interfaces as some application program may have interfaces that are insecure. This could compromise on the integrity of the information and thus affect the organisation seriously. Furthermore, the fact that technology is being shared already exposes the company to certain vulnerabilities that cannot be denied. The data may concern the organisation itself or it could be about its customers or suppliers. When the availability, integrity or confidentiality of the information is affected, it will be difficult for Magneta to function. It should be noted that the business process under consideration is inventory management as this involves collection and sending of information to organisational planners who then involve the designers and manufacturers as well. All these stakeholders could be adversely affected by outcomes if they are not careful about security (Lutz, 2013).
Proposals for the Secure Implementation of Cloud Computing
In order to ensure that the proposal is secure, Magneta will work with a cloud computing provider that restricts access to client information. This ensures that the security risks associated with malicious insiders in the cloud provider’s organisation are addressed. Furthermore, this proposal will also focus on clarifying the security standards of the provider. Failure to adhere to regulatory standards can create a series of problems for Magneta since it already has its own compliance systems. It will be imperative for the organisation to ensure that the service provider adheres to external audits or certifications which focus on security (Tiwari and Mishra, 2012).
This proposal will involve the use of a cloud computing service that stores data in a different jurisdiction from that of the UK. Since some nations are not particularly vigilant about this matter, it will be essential to consider those providers that select relatively strict jurisdictions so as to ensure security compliance (Tiwari and Mishra, 2012).
There will be data segregation processes in this solution so as to ensure that data leakage or any other occurrence that hampers the integrity of the system does not occur. Some of the ways that the cloud provider will avail these options is through encryption schemes. A disaster recovery verification system will be utilised in order to ensure that all the data from the organisation can be accurately restored. This is especially necessary when disasters occur within the provider’s premises (Tiwari and Mishra, 2012).
The company under analysis represents most of the challenges that retail vendors in the fashion industry encounter. Many of them have not embraced cloud computing because of these security concerns as well as the difficulties in transition. This is true despite the fact that cloud computing can create immense opportunities for the sector. The proposed solution predominantly focuses on inventory management in the industry. Main security risks associated with the cloud for this sector include data leakage, unwanted third party access and attacks by malicious individual. In order to safeguard against these challenges, the concerned cloud provider will have encryption codes, compliance mechanisms, and restriction processes.
- Accenture, 2014. A new era for retail cloud computing changes the game. [pdf] New York: Accenture. Available at: http://www.accenture.com/sitecollectiondocuments/pdf/accenture-a-new-era-for-retail.pdf [Accessed 19 March 2015]
- Balagopalan, A., 2010. The future of retail industry is in cloud computing. [Online] Available at: http://www.fibre2fashion.com/industry-article/29/2883/the-future-of-retail-industry1.asp [Accessed 19 March 2015]
- CBIZ, 2015. Cut costs and increase productivity: Work in the cloud. [Online] Available at: http://www.cbiz.co.uk/industry-fashion-cloud-computing-for-fashion.html [Accessed 19 March 2015]
- Lutz, E., 2013. The cloud addresses challenges in the clothing industry. [Online] Available at: http://www.cbiz.co.uk/industry-fashion-cloud-computing-for-fashion.html[Accessed 19 March 2015]
- Nelson, L., 2013. Cloud computing and fashion giant Zara .[Online ] Available at: http://blogs.sap.com/innovation/cloud-computing/cloud-computing-and-fashion-giant-zara-029092 [Accessed 19 March 2015]
- Tiwari, P. and Mishra, B., 2012. Cloud computing security issues, challenges and solution. International Journal of Emerging Technology and Advanced Engineering, 2(8), pp.306-311.
- Xero, 2014. The digital revolution: Benefits of cloud computing. [Online] Available at: http://www.theguardian.com/small-business-network/xero-partner-zone/2014/nov/18/digital-revolution-benefits-cloud-computing [Accessed 19 March 2015]