The retail industry is in the midst of a transformation. Online commerce has emerged as a force to reckon with, commanding close to $6 trillion in market opportunity by 2022. With so much at stake, nearly half of all retailers are looking to the cloud to improve customer omnichannel experience and retail store performance. And retailers utilizing SAP solutions are no exception: 75% of retailers surveyed by the Americas’ SAP Users Group (ASUG whitepaper) expressed plans to increase digital investments in the next two years by at least 10% in order to accelerate digital transformation. Of those surveyed, 1 in 4 intend to increase investments significantly, by 50% or more.
Retailers know what they need to offer to evolve today: a customer-focused, data-driven, seamless customer experience. But that journey is filled with technological roadblocks that are leaving even the largest retailers in limbo. For retailers innovating with SAP technologies, these roadblocks can present difficulties while migrating, deploying, and running new software that’s expensive and challenging to scale on legacy, on-premises infrastructure. Central to making the transformation journey a success is leveraging the public cloud and choosing the right public cloud service provider (CSP) — remember that not all clouds are created equal. Here at Google Cloud, we’ve helped SAP customers and retailers achieve transformation success by:
Providing a scalable and elastic infrastructure to rightsize your applications and instances.
Minimizing downtime with automated infrastructure maintenance with our Live Migration offering.
Let’s take a look at how three retailers using SAP on Google Cloud were able to face their technology challenges head-on and bring their visions for digital transformation to life.
Omnichannel: MediaMarktSaturn’s road to customer-centricity
Customers in the digital age expect personalized, seamless omnichannel experiences—from browsing online or via mobile to in-store and checkout. Most retailers are eager to deliver on this expectation, especially with rising technologies like AI, ML, and predictive analytics promising seamless omnichannel experiences. But contrast retail’s future tech landscape with today’s reality: 75% of SAP retail solution customers who participated in our recent ASUG study qualify as digital newcomers that are still in the early stages of transformation. In order to successfully offer personalized, customer-centric omnichannel experiences, retailers must generate customer insights in real time. However, this requires massive compute resources that are beyond the capabilities of most current on-premises infrastructures leveraging SAP.
MediaMarktSaturn Retail Group, one of the world’s leading consumer electronics retailers, recently encountered data pipeline challenges that prevented the company from modernizing its omnichannel and retail strategies. MediaMarktSaturn was looking to unify its large data sets and infrastructure across its SAP solutions to generate accurate and relevant insights for both its business and its customers. However, MediaMarktSaturn’s legacy hardware infrastructure was not only incapable of handling the data volumes required to realize its omnichannel goal, but it was also unable to scale up and then back down again to accommodate varying levels of traffic without disruption.
To overcome these technical and infrastructural hurdles, MediaMarktSaturn chose Google Cloud to help modernize and migrate its SAP workloads into the cloud. Together with Google Cloud, MediaMarktSaturn decided to leverage Google Kubernetes Engine (GKE), BigQuery, and BigTable to store, mine, cleanse, and analyze data to generate real-time, personalized insights that would better serve customers across all channels. The effort has so far yielded a 30% increase in conversion rates, due to optimizing their search technology and high-performance data handling. Looking to the future and equipped with the tools to modernize its retail strategy, MediaMarktSaturn has started to build analytics tools that explore price elasticity and price prediction based on multiple variables.
Store operations: How Loblaw is delighting customers with seamless experiences
Building on the omnichannel experience, retailers are also rapidly modernizing store operations, outpacing the agility of their on-premise SAP infrastructure. With optimized express checkout, on-shelf and intelligent inventory management, and dynamic assortment planning on the retail tech horizon, it’s becoming increasingly critical that retail businesses have the foundation to build, test, and deploy the emerging technologies that are critical to compete. Retailers that delay infrastructural modernization in favor of layering new swaths of code on top of legacy systems risk creating a highly complex, coupled, and unscalable monolith that’s prone to downtime and data inaccuracies.
Loblaw, Canada’s food and pharmacy leader and the nation’s largest retailer, recently encountered data pipeline issues similar to those at MMS while leveraging SAP Hybris in traditional on-prem environments. It had the goal of enabling personalized product recommendations on ecommerce platforms, but the technology was missing the mark, as the quality of suggestions and response latency had room for improvement. Loblaw also wanted to enable marketers to run promotions at any time, without requiring conversations with IT to prepare ecommerce systems.
Loblaw decided to leverage public cloud because achieving its vision on-premises would require expanding its data centers and creating dedicated IT maintenance and operations teams. Rather than investing even more resources to support dated, inflexible technology solutions, Loblaw picked Google Cloud:
“We thought, ‘Why don’t we offload all that effort to someone who’s doing it at scale, making the appropriate investments, and staying ahead in technology so that we can really focus our efforts on driving value to the customer,’ ” says Hesham Fahmy, Vice President of Technology at Loblaw.
The first phase of Loblaw’s migration to the cloud involved its online grocery store, QuickShop, that leverages transaction data from SAP Hybris. Google Cloud offers a certified infrastructure for SAP Hybris, removing the administrative burden required to create an architectural foundation for modernization. Loblaw also uses BigQuery to run real-time analysis of customer data across the buying lifecycle to serve customers with more relevant offers.
As a result of the partnership between Google Cloud and SAP, Loblaw has experienced a four-fold improvement in QuickShop’s performance, a three-fold increase in site capacity, and a 50% time savings for its Site Reliability Engineers, allowing the company to focus on further innovations in customer experience.
Logistics, fulfillment, and delivery: MultiPharma’s path to serving customer needs with automated warehouses
They may not get as much attention, but back-end operations are critical to retail success. Real-time, accurate, automated warehouse management is one of those workloads. From robotics and RFID tagging to on-demand inventory management, warehousing systems require a vast amount of data from all across a retailer’s ecosystem, both online and in-store. Much like the issues that come with developing omnichannel and store operations innovations, modernizing a company’s warehousing can strain legacy, on-prem infrastructure, causing inaccuracies, downtime, and unfulfilled orders.
For pharmaceutical retailer MultiPharma, a key value proposition is prompt delivery of medication orders to pharmacists, even during periods of high demand. This required heavy investments in warehouse distribution, robotics, and automation—technologies that need scalable, elastic, and extensible infrastructure. MultiPharma originally satisfied this need with a legacy back-end SAP system and its own private cloud. But issues with cost and flexibility prompted the company to leverage SAP HANA and move to the public cloud.
While the company considered several cloud services providers, MultiPharma selected Google Cloud for its superior VM solutions, flexible sizing, and pricing structures. MultiPharma phased the migration of SAP workloads into Google Cloud, the first of which involved creating a development environment for teams to conduct agile testing before finishing the product environment. Within the first phase, MultiPharma is already reaping benefits, including greater flexibility and increased resources that allow it to concentrate on further business innovations, such as optimizing ecommerce and customer-facing applications.
As the retail industry continues to transform, retailers that embrace cloud technologies are increasingly positioned to take advantage of emerging opportunities. But in order for increased investments in digital transformations to pay off, retailers leveraging SAP need to ensure their infrastructure and data pipeline are ready for upcoming innovations. Although many enterprises may be tempted to temporarily solve this challenge by layering software in legacy, on-prem architecture, doing so almost certainly guarantees an inflexible, unscalable, inelastic, and costly monolith incapable of continuous modernization. Like MediaMarktSaturn, Loblaw, and MultiPharma, forward-thinking retailers should consider leveraging the cloud’s many offerings and managed services to not only remove the burden of infrastructure and data development and maintenance, but also to enable the best performance from their SAP and technology investments.
To learn more about Google Cloud’s work with retailers utilizing SAP technologies and get key takeaways, read “Google Cloud Strategy Guide: 5 Learnings for Your SAP Retail Workloads.” You can also learn more about our SAP and retail industry solutions.