As the retail and consumer goods market continues to evolve and adapt to market disruptions and customer demand, many companies in this space are investing in cloud technology to improve operational models and deliver digital services.
However, most organizations are not able to take full advantage of what the cloud has to offer due to operational challenges around costs, security, and compliance. In fact, research shows that 80% of organizations overshoot their cloud IaaS budgets, 50% will accidentally expose data or services, and 47% do not continuously optimize cloud workloads.
In this article, we’ll discuss the primary cloud management challenges retail and consumer goods organizations face around cloud costs, security, and compliance, along with best practices and solutions to solve them.
Cloud cost management challenges
Distributed operations and lack of visibility
Retail and consumer goods companies are typically tasked with managing inventory warehouses, production facilities, offices, and various distribution channels, including online, in-store, and third-party resellers—all of which rely on cloud resources to deliver products and services.
While a distributed business model can help in terms of customer convenience and accessibility, it can be overwhelming for organizations to monitor resource costs and usage across all these channels and ensure they’re operating efficiently.
To face this challenge, there are two primary actions businesses should take:
- Establish a Cloud Center of Excellence: A Cloud Center of Excellence (CCoE) is a cross-functional team that brings together key cloud stakeholders across the organization to support, execute, and govern its cloud strategy. The CCoE is responsible for uniting a distributed business model with cloud technologies and tools, and driving adoption of best practices across cloud financial management, operations, and security and compliance.
- Gain complete visibility into your cloud resources: To effectively manage any cloud environment, it’s important to have a unified view of all your cloud resources, covering public, private, and on-premises environments.
While cloud service providers offer native tools for cloud management, these are often too limited to provide a full view of all activity in your environment, and can become especially problematic for organizations with a multi-cloud or hybrid cloud infrastructure.
Consider what information your organization needs to know in order to make informed decisions. For effective visibility, CloudHealth customers often segment data based on the groups that are most relevant (e.g. product line, store location, region, and department) so they can track budgets, spot anomalies, evaluate usage and spend trends, and identify optimization opportunities.
Seasonal demand fluctuations
In addition to distributed operations, retail and consumer goods organizations also face the challenge of seasonal demand fluctuations. Black Friday and Cyber Monday are good examples of this. When the focus is on ensuring constant availability, service quality, and communication with customers, retailers often spin up more infrastructure than they normally would to prepare for a big influx of incoming orders.
But what happens in a few months when you don’t have that same level of demand? Retailers often fail to tighten their cloud infrastructure after an event like this. Even those that do, often fail to establish an ongoing process to prevent this type of waste. The reality is that these businesses will likely spend more than is necessary, exceed their budgets, and ultimately restrict profitability.
This is why organizations with a CCoE can be so valuable. Established cloud optimization practices enable your teams to evaluate the best approaches to activities like rightsizing, elimination of zombie infrastructure, management of reservations, Committed Use Discounts or Savings Plans, lights on/lights off policies, and low-cost, short-lived compute options like Spot Instances/VMs or Preemptible VMs. The CCoE’s core responsibility is ensuring these processes are being carried out effectively and in line with the organization’s primary KPIs.
Automation is another critical factor for scaling these processes effectively. While many of these optimization activities can be done manually, this can be very time consuming to do on a consistent basis. especially for those with more complex environments (e.g. large amounts of data, hybrid, multi-cloud, on-premises environments, etc.).
CloudHealth customers simplify cloud cost optimization by leveraging rightsizing recommendations and discount management:
- Rightsizing recommendations: CloudHealth’s rightsizing functionality makes it easy to quickly identify underutilized infrastructure and get recommendations for downgrading or terminating assets. You can set performance thresholds specific to your business and filter by dynamic business groupings, regions, products, etc. You can also build policies to govern provisioning and proactively monitor your environment for opportunities to optimize resources.
- Reservations and discounts management: CloudHealth takes the hassle out of Reservation management by providing the amortization and modeling tools needed to help you make purchasing decisions confidently.
Security and compliance challenges
Retail organizations often fall victim to security breach headlines, such as Target’s 2013 data breach that exposed more than 40 million credit and debit card records or Home Depot’s 2014 data breach that exposed 56 million credit and debit card records. As retailers take more of their operations and services to the cloud, security concerns will only increase.
Research suggests a majority of security threats in cloud computing come from misconfigurations. For deeper insight into the types of misconfigurations that exist, we looked at a sample dataset of 6.9 million misconfigurations across a large number of cloud accounts. Among the common high-risk violations, we found typical mistakes such as unencrypted data volumes, unsecured network port settings, and lack of multi-factor authentication requirements.
Although fixing one of these mistakes might seem simple enough, identifying and fixing the volume of issues at scale across a distributed cloud environment makes cloud security more challenging.
Similar to cloud cost management, visibility is a critical first step for security as well. Our customers use visibility into resource configuration across their multi-cloud environments to establish custom security rules and automated policies, prioritize issues based on quantitative risk scores, and investigate issues with visual context.
Adhering to regulations
Along with healthcare and financial services, retail is one of the most regulated industries in terms of compliance. To keep operations afloat and maintain a positive business reputation, retail and consumer goods organizations need to continuously monitor their cloud environment to ensure they're meeting rules and regulations.
One of the best ways to do this is to set policies using in-band and out-of-band guidelines and guardrails to help every user be an active participant in governance and compliance best practices.
Here’s a sample access control policy: If any accounts have root account API access, then send an email notification and execute a Lambda function to revoke user access. Other governance policies to consider are in our guide: 6 Policy Types for AWS Governance
Once policies are created, you can then begin to automate remediation actions. Governance and automation uses both in-band and out-of-band guardrails to automate routine tasks and maintain desired state with minimal human intervention.
Retail and consumer goods organizations may also want to consider using custom compliance frameworks with CloudHealth Secure State, which allows users to continuously monitor resources through the lens of industry compliance standards. You can also customize and create standards that align to the company’s unique security and regulatory requirements.
HARMAN is a global leader in connected car technology, lifestyle audio innovations, design and analytics, cloud services and IoT solutions. Every division within HARMAN uses the cloud extensively, but they didn’t have a central place or team managing the cloud infrastructure and enforcing policies and governance.
Using the CloudHealth portfolio, HARMAN was able to achieve 100% visibility into cloud spend (compared to only 10% before), and save more than $1M a year as a result of rightsizing recommendations and other optimization features. You can learn more about how they accomplished this in the full case study here.
Regardless of industry, size, or stage in their cloud journey, we help organizations take their cloud management maturity to the next level. Our five-minute assessment will show how your cloud management capabilities stack up against peers in your industry, along with specific recommendations to help you take the next steps in your cloud journey. Get started today!