More and more companies are moving their eCommerce backend to the cloud. We explain the advantages of outsourcing and what to watch out for.Ingrid Schutzmann
Cloud computing is increasingly popular with German companies. This is apparent in eCommerce backends as well. There are many signs of increased use of public cloud infrastructure in online retail: Shop software provider Prestashop recently announced that its eCommerce solution is now also available in the Azure Microsoft cloud, for example. This preconfigured infrastructure, available via the Microsoft Azure Marketplace, automatically installs itself and is immediately ready for use. It targets companies that receive particularly high numbers of visitors in their shop at certain times, and want to respond flexibly to these peak loads. "One of retailers' main concerns when they expand their online business is the performance of their shops", explains Corinne Lejbowicz, CEO of Prestashop.
Hagen Meischner, Country Manager Germany for Prestashop, adds that customers want to benefit from the flexibility and availability of the big cloud service providers like Microsoft Azure. International shops can also improve their load time, because the IT infrastructure that the shop runs on is nearer to the users in the given markets. Meischner is convinced that the trend is strongly towards the cloud in the international eCommerce environment in particular. One of the first customers is French soccer club Olympique Lyon, which operates its online shop for tickets and merchandise with Prestashop on Microsoft Azure.
Another example is Magento, which launched the Magento Enterprise Cloud Edition this past April. It runs on Amazon Web Services (AWS). Amazon's cloud infrastructure has also been using shop software provider Plentymarkets since 2015. The demand came from the customer side, reports Plentymarkets CEO Jan Griesel, because shops can respond more flexibly to growth with Amazon Web Services. Plentymarkets customers decide whether they want to opt for a "classic" hosting provider or Amazon Web Services. Plentymarkets supports them in a shift to AWS with an automated "moving service".
Why the eCommerce backend is increasingly shifting towards the cloud is explained in a study titled "eCommerce Hosting in the Cloud Era", conducted by Crisp Research on behalf of Plusserver. Customer demands and new technology trends require frequent innovation from online retailers. IT infrastructure is a core foundation for a growing online business. Operating shops in the cloud means that new entities (computing power) can be added during peak loads. Fail-safe reliability is very high, release cycles are short and invoicing is based on use. Crisp Research analysts believe that the maturity of cloud models today makes them a good foundation for powerful eCommerce scenarios. "eCommerce companies will increasingly turn to cloud computing and managed services, to remain competitive in terms of infrastructure, security and applications", says the study.
A key reason that companies have hesitated to move data and services to the cloud until now is security concerns. Surveys show again and again that companies fear losing control over where their sensitive data is stored and who has access to it. This worry was certainly boosted by the revelation of the NSA scandal. German data centers continue to highlight the advantages of their locations over the big US cloud providers: As German companies they are subject to German and European data protection laws. But US providers have also reacted in recent years.
In October 2014, Amazon Web Services opened a "region" in Frankfurt, Germany. The Amazon cloud is spread across twelve regions worldwide. Each AWS region comprises two to five "availability zones" with one or more data centers. The Frankfurt zone is the second European region; AWS has been operating a region in Dublin, Ireland, since 2007. A third region is planned for this year in London, UK.
Amazon Web Services began ten years ago as a storage service. Today the company offers more than 70 different services, including storage, databases, analytics, servers for mobile applications and business software. Amazon.com has reported separately on Amazon Web Services in its annual report since Q1 2015. In Q1 of this year, AWS reported revenue of USD 2.6 billion. According to "The German Internet Business 2015–2019" report, AWS is the leading public cloud provider with a market share of 30 percent in Germany.
Microsoft has also been offering its Azure, Office 365 and Dynamics CRM Online cloud services since early October from data centers in Biere, near Magdeburg, and Frankfurt, Germany. Data exchange between the two data centers runs on a private network separated from the Internet, to ensure that all data remains in Germany. This local offer is called Microsoft Cloud Germany, and it targets organizations and companies in fields using sensitive data, such as the finance and healthcare sectors. Deutsche Telekom subsidiary T-Systems is the data trustee that controls access to customer data.
While German companies have primarily installed private clouds until now – operating their IT applications themselves for reasons of data protection and security, and making them available to employees via an in-house network, acceptance of public cloud services is on the rise. The "Cloud Monitor 2016" study by Bitkom Research and consultancy KPMG revealed that for the first time a majority (54 percent) of companies use storage, computing power or software from the cloud.
It is not just large companies that are moving some or all of their IT infrastructure to the cloud, and using cloud-based software applications; small and medium-sized businesses are also climbing on board this trend. The steep rise in use is almost exclusively due to small and medium-sized companies, according to the survey. "Small business has finally set aside its reluctance when it comes to cloud computing", says Axel Pols, CEO of Bitkom Research. "Last year was the breakthrough year for public cloud computing in business", he stressed. Companies clearly see the advantages that moving IT infrastructure to the cloud can bring.
Hosting providers such as 1&1 are also reacting to the cloud computing trend. The company is working on being able to offer all hosting services via a cloud-based platform, says Robert Hoffmann, CEO of 1&1 Internet SE. The challenge is to convince customers of the advantages of the cloud. "This can be achieved with the development of high-performance, secure and easy-to-use cloud solutions", says Hoffmann.
He addresses a point here that Carlo Velten, CEO of Crisp Research, also mentions: Cloud computing is perceived by many companies as too complex due to the "self-service principle". Crisp Research therefore sees the “managed public cloud” as a growing trend, where companies hire outside service providers to take care of their infrastructure and applications in the cloud. 1&1 chief Robert Hoffmann believes that the intelligent interconnection of public and private cloud, in-house and external services, will be a deciding factor in the future.