By Suresh Venkatachari, Chairman, 8K Miles Software Services
Headquartered in the U.S., 8K Miles Software Services strives to help business of all sizes to integrate Cloud, Identity and Big Data into their IT and business strategies. The entity offers specialized expertise in matured verticals such as Retail, Media, Travel, and Healthcare.
Globally, the e-Commerce industry is growing at a rapid ‘click’. Forrester the U.S. Online Retail Forecast predicts it to reach about $279 billion dollars by 2015. The industry is seeing huge growth due in large parts to the growing number of new online customers (who accounted for 30 percent of the sales in 2010) as well as the increase in the average spend by existing online consumer base.
The e-Commerce market is typically a ‘High Volume, Low margin’ business with about 60-65 percent of the annual online sales happening during holiday seasons, when e-Commerce sites see an average of four to six times the normal traffic. The increasing number of online consumers and the unpredictable and sharp demand spikes during holidays create a unique set of challenges for IT infrastructure planning. It is high time Indian ecommerce companies used cloud-based services in an effective manner instead of relying on their own technology subsidiaries for holiday-sale preparations.
IT Challenge 1: Capacity Planning during Normal Times
IT challenges faced by e-commerce companies are myriad. A typical e-commerce application will have multiple layers (web server, application server that may be running the catalogue, storefront, fulfilment, content management and other applications, ERP system and data storage having both structured data like RDBMS and unstructured data) each running on one or more servers. All of these require server capacity that has to be planned efficiently.
Some of the key IT challenges usually faced while managing an e-Commerce application are:
Demand to an e-commerce website varies throughout the day. On a typical day it picks up steam as the day begins and will handle hundreds of transactions through the day and will subside as the day comes to an end. This variation in the traffic load leads to lot of inefficiencies. On an average about 40 percent of the compute capacity gets wasted because of overprovisioning. Prepare the IT infrastructure for the holidays: A Quick start guide to taking e-commerce to the cloud
IT Challenge 2: Scaling and Capacity Planning during Peak times
During peak times such as Thanksgiving and holiday season, capacity planning becomes even more complicated. These periods usually see a surge in traffic due in large part to the offers and promotions offered by the retail companies. In the traditional approach (with in-house or Data Centre-hosted), the only way to handle such huge loads is by forecasting the maximum traffic and providing surplus capacity to handle this. However, this leads to huge inefficiencies because all this extra capacity goes waste when the demand doesn’t match supply.
IT Challenge 3: Unexpected Demand Surge
Unexpected demand spikes can happen any time (fire sale or a super-hot product getting released) and planning for them in a traditional IT model is next to impossible. Not being able to meet demands at these times can have an adverse effect on revenues and top line in the short term and loyalty and brand name in the long run.
Traditional infrastructure requires ordering the physical server boxes from the hardware vendors, taking delivery, the real estate and controlled environment for housing, configuring and bringing up these servers. This is a long drawn-out process involving the co-ordination of multiple departments (IT, finance, purchase) and can take anywhere between one-three months. Even in the case of leasing it is no different. Setting up the required configuration and bringing it up live can take at least two-four weeks and they typically mandate a minimum lease commitment of a quarter. All these result in cost and time inefficiencies. In summary, the key challenges are scalability, high availability, performance and cost optimization.
Cloud-based e-commerce applications let companies to respond quickly to market opportunities and challenges. Such applications enable e-Commerce firms to evaluate new opportunities without large upfront investments as well as provide them with flexibility and scalability at a reasonable investment. Having said that it is essential to evaluate the total costs involved in implementing a cloud solution including: integration, customization requirements, and costs of migration, e-Commerce seasonality and peak loads and scalability. IT managers should also understand the merits and demerits of cloud-based ownership models in order to select the right solution for their needs.
Another crucial factor relates to ownership options. For instance, an organization can use an Infrastructure-as-a-Service (IaaS) model to run its custom e-Commerce software or application package. Another option is to go for the Software-as-a-Service (SaaS) model. All these options have to be in conjunction with the organization’s technology needs and financial resources. IT heads should evaluate the functions and features they need for their organization’s online selling initiatives and have to come up a solution that backs their firm’s long-term online sales objectives. Outlining the present and future online sales needs is also of paramount importance. The IT heads should also evaluate its ROI by evaluating the TCO (total cost of ownership) of their cloud model versus the traditional licensed approach for a pre-set period of time