Modern retail is dependent on technology to deliver the type of frictionless experience consumers demand and employees need. Over and above this, seamless integrations are the lifeblood of operational efficacy and efficiency in the race to win and retain market share.
Peter Ludi, managing executive at redPanda Solutions, says that in this context, it is hardly surprising that we are seeing a growing adoption of Software-as-a-Service (SaaS) in the retail industry.
“However, getting it right requires a lot more than picking a solution and getting on with it,” he says. “There are a number of considerations each retailer must work through comprehensively to ensure its SaaS experience is successful.”
Niel Coetzee, head of engineering at redPanda Software, agrees, saying that as with all new trends, SaaS certainly has gone through its own iteration of Gartner’s hype cycle, complete with the peak of inflated expectations and the trough of disillusionment.
He says that, as the industry navigates the slope of enlightenment, the end goal is to reach the plateau of productivity.
“There are a number of reasons why SaaS has reemerged so prominently,” says Coetzee. “Retailers are increasingly turning to SaaS to address unique connectivity and infrastructure challenges.”
Ludi agrees, adding: “It’s important, at this juncture, to differentiate between pure SaaS solutions and so-called SaaS solutions that are merely open source solutions being cushioned in an organisation’s brand. In other words, it is licensing what is already available as open source. We’re referring to genuine SaaS.”
Coetzee explains that the true test of SaaS is “not about how high you can scale, but about how low you can scale”. “In other words, a true SaaS model should have an easy entry point from a cost perspective. Smaller businesses should be able to enjoy lower costs. True SaaS is transparent with all-inclusive pricing – this is the opposite of paying multiple fees for monitoring software, antivirus, and much more.”
Both agree that a great benefit of SaaS is the potential of not having to move between suppliers while the retailer grows. Ludi explains that with SaaS, you can grow the solution with add-ons and configurations, without needing to change the product.
“SaaS enables retailers to enjoy automatic updates – a good SaaS solution, or, we can go as far to say authentic SaaS solutions should enable upgrades and updates without any effort. This is the polar opposite of on-prem solutions where the onus is on the retailer and its IT teams to upgrade software themselves,” he says.
Perhaps one of the most important, even if not immediately obvious, benefits a retailer has when investing in SaaS is compliance. Compliance like GDPR and POPIA could be complicated and could place a substantial burden on businesses to comply.
Coetzee explains that many world-class vendors invest massively in security and compliance, passing these benefits on to retailers.
On the other hand, SaaS does bring with it some risks, he says. “The first is that there are businesses that sell something labelled as SaaS, but beneath the hood, it is far from that. An expert partner will be able to help retailers do their due diligence to prevent them from being locked into these scenarios.”
There’s a further risk is that if a retailer does not structure the solution correctly, it can end up paying higher costs than it should. “Subscription costs add up over time, with each increment building on the last. This is particularly important for enterprise retailers where complicated ecosystems can usher in a host of hidden costs. Working with an agnostic partner ensures independent consultation with independent advice, he says.
Ludi adds that with so many options available to retailers, it would be useful if they worked through a checklist when considering SaaS solutions for their businesses:
Evaluate SaaS suitability
“The first step for every retailer is to assess their business strategy, their budget, security requirements, their needs around business continuity and compatibility, among other considerations, and then evaluate if SaaS is the right fit for their specific needs. If it is, the right solution needs to align with the business goals to avoid disappointment,” explains Ludi.
Understand vendor dependency and multi-tenancy
Ludi says that the starting point is to recognise the risks of vendor lock-in. With that comes relinquishing control of the solution, he says, and potentially losing flexibility and control of the data – if this is not constructed in the right way the retailer can find itself in trouble if something goes wrong.
Coetzee agrees, going into more detail about what is “passed off” as a SaaS solution and a genuine, multi-tenant SaaS solution. “Simply put, true SaaS solutions should be built on a multi-tenant architecture.
“In a multi-tenanted SaaS solution, it is important for retailers to ask what happens with their data and what is shared, and where.
“This type of due diligence is made much easier when working with a specialist retail software partner, who will also bring in the understanding that while a solution is multi-tenanted, the ideal scenario is to scale certain services but to keep the base scale at a minimum.
“This is the opposite of building a monolith which could result in difficulty in scaling individual components, a higher risk of cascading failures and limited flexibility and adaptability, all of which means it may become increasingly complex to maintain over time,” says Coetzee.
Once you understand vendor lock-in risks, mitigate these and potential geopolitical risks
It is crucial to understand the potential impact of vendor lock-in and how it relates to price hikes. For instance, Ludi asks what a retailer can do if it has, say, 1000 or more end points and it faces cost increases? “We all know it’s the cost of change that causes this vendor lock-in,” he says.
“A good partner will help a retailer understand that the location where data is hosted can have significant implications for latency, reliability and even geopolitical risks, which retailers should carefully evaluate before making a decision,” explains Ludi.
Balance customisation and standardisation
Both agree that it is important to recognise that true SaaS is designed for standardisation, not extensive customisation. They explain that this is because the core benefits of SaaS, such as scalability and ease of deployment, are tied to a more standardised approach.
“With the right advice, a retailer can explore configuration options to tailor its solution for its specific needs – without compromising the core SaaS model,” says Coetzee.
The future of SaaS
Ludi gives a final piece of advice when contemplating a retail future with SaaS: “A retailer should find a partner that educates it enough to make a well thought out, academic and facts-driven decision. In other words: Seek out a partner that helps you ask the questions you don’t yet know you need to ask.