Why retailers can all learn from Marks and Spencer’s recent problems


There’s been a lot said in the media recently about the poor performance of Marks and Spencer’s new ecommerce platform. A reduction in online sales by 8.1% is certainly a headline grabbing number; but behind those figures is something that has not made the headlines, which is very pertinent for users of cloud computing services and, in particular, any business that uses the public cloud for its critical business systems.



This blog by Dan Sutherland, CEO of Carrenza first appeared in Internet Retailing on Friday 18th July 2014.

There’s been a lot said in the media recently about the poor performance of Marks and Spencer’s new ecommerce platform. A reduction in online sales by 8.1% is certainly a headline grabbing number; but behind those figures is something that has not made the headlines, which is very pertinent for users of cloud computing services and, in particular, any business that uses the public cloud for its critical business systems.

When I say the ‘public cloud’, it’s probably useful to explain what I mean – the ‘public cloud’ is where a service provider, like Microsoft Azure or Amazon Web Services, makes compute services like data processing, software or data storage available over the internet via a subscription model. The public cloud is very big business and has attracted some major players. Many well-known retailers like M&S have chosen to go down the public cloud route, rather than build their own private or hybrid clouds.

Access to a public cloud can look like an appealing prospect, particularly to retailers, as it’s cheap, flexible and scalable. Many businesses also initially see using a public cloud as an ideal solution while their teams test and develop their systems. The problems can come when test and development turns into production.

The due diligence and change impact assessments you might want to undertake for Test & Dev are very different from those for Production, and it’s all too easy to slip from one to the other with a simple to consume public cloud. Before you know it your Databases are hard to move, your application is reliant on services you can’t remove without re-writing the app and any significant change can’t be achieved elegantly. At that point you are stuck – or telling the boss that the business is going to be offline for 3 days while you migrate.

M&S had a partnership to deliver their ecommerce platform as part of a wide-ranging outsourcing deal with Amazon until the start of this year (2014) when they moved to a new£150 million in-house system. In short, until this year, the main difference between Amazon’s ecommerce offering and that of M&S was the logo on the box. Amazon was selling M&S’s goods as if they were Amazon goods on behalf of M&S as part of a far reaching service level agreement. Mark Bolland, M&S’s CEO and his team, decided to change the strategy.

However Mr Bolland and his team found what many users of public cloud often find, namely that extracting yourself from a system reliant on a ‘Services’ driven public cloud is often not as simple as you might think. Those services are designed to be sticky, it can be very difficult and expensive to move away to another provider or over to an in-house, private cloud.

In M&S’s case, it appears that it was not possible for the business to move the millions of customer accounts it had in the old Amazon system over to their new system, customers had to re-register for existing accounts and sign up for its ecommerce service again. As the Guardian reported, in a shareholder meeting to discuss the latest results M&S revealed that just half of the six million users of its old website had registered for the new site. It’s also highly likely that all the business intelligence and data that had been gathered about those customers would have gone with their old accounts, meaning that the user experience for those re-signing would have been poor compared to what they were used to.

Ultimately M&S was starting from scratch, and by all accounts they compounded their problems by delivering a brand new web experience, which appeared to jar with their customers’ previous experience of shopping with the brand. Given that perfect storm, it is actually a bit of a surprise that sales only fell 8.1%.

The lesson here is simple. Cloud services should be quick to set-up, simple to deploy and easy to use, the stickiness of the relationship should come from the quality of the service, not the difficulty of extracting yourself. Make sure your technology supplier, whether they are providing cloud services or not, is open. Make sure your systems are vendor-portable, and invest in enterprise technology from vendors with experience of solving the business problems that face you. Lastly, don’t sleepwalk into a relationship that it will be very complex to extract yourself from. It will cost you.

Carrenza is a Cloud service provider that blends IaaS and PaaS capabilities to make businesses better. We believe the Cloud has the potential to drive business transformation and that technology should enable businesses to focus on what they do best. We are proud to count Cineworld, Comic Relief and Government Digital Service amongst the organisations who rely on us to deliver their business-critical applications.
CONTACT
Andrew Mellish
andrew.mellish@carrenza.com
0845 3370827
  Company Website
  Facebook
  Linkedin
  Company Blog
  YouTube
  Newsletter