In today’s digital economy, every B2C and B2B organization is expected to deliver excellent commerce experiences to their customers on every touchpoint and channel. These customers are accustomed to instant gratification, where every interaction with a brand is fast, personalized, and commerce-enabled. In this environment, online sellers must become as agile as their customers with technology built in the cloud.
However, the old paradigm for cloud has worn out its welcome. Legacy applications that have been “lifted and shifted” to the cloud lack the agility, performance, and ease of use that merchants need, while hosted SaaS applications lack customizability and control. Cloud-native digital commerce, where the technology stack has been containerized and optimized to work across any cloud environment, has arisen as a strong choice for online merchants looking to futureproof their digital commerce operations.
What is Cloud-Native Commerce and Why Does it Matter?
Digital commerce was revolutionized by the introduction of cloud computing over two decades ago. Cloud provides merchants with obvious benefits, such as not needing to invest in infrastructure or maintenance, greater scalability, and a shift towards OPEX over CAPEX. Over the past two decades, the underlying technology powering the cloud has seen enormous improvements. One of these changes started at the bottom of the stack, where infrastructure-as-a-service (IaaS) providers like Amazon Web Services, Microsoft Azure, and Google Cloud Platform have made it easier for their customers to leverage distributed computing across geographies and even across different providers.
Containerization has enabled software providers to develop distributed and scalable architectures that can work across any cloud infrastructure. APIs, at the foundation of modern, cloud-native applications, afford interoperability, so commerce systems better integrate with other critical front- and back-office systems. This is the thesis of cloud-native commerce, which is purpose-built to leverage cloud technology while providing merchants control of where and how they run their store(s). Cloud-native applications are possible thanks to containerization. Unlike virtual machines used by cloud-enabled applications, which run a full operating system, containers are able to run separate instances of an application in a shared operating system. This means less overhead and faster processing. In addition, containerization takes less time to add components/users/customers than in multi-tenant SaaS solutions.
Cloud-native refers to how applications are built and run using the cloud as a delivery mechanism. As the name implies, cloud-native applications have been purpose built for the cloud, allowing them to derive more value from cloud infrastructure than they could otherwise. What separates cloud-native from simply cloud-enabled is the underlying approach to creating applications. Cloud-native applications also benefit from underlying IaaS services – such as artificial intelligence baked into AWS, Azure, or GCP – as opposed to datacenter solutions that are modified for the cloud environment. Cloud-native applications uniquely have distributed and scalable architectures, which can adapt more quickly to a constantly changing environment.
Top Benefits of Cloud Native
In addition to the underlying characteristics mentioned above, online merchants we have interviewed have seen the following benefits from using cloud-native digital commerce applications:
Agility: Cloud-native applications provide merchants with technology agility, which affords them business agility in turn. For example, merchants can rapidly spin up curbside pickup. New services can be added, and containerization minimizes the need to add infrastructure. APIs are key to facilitating this agility, as they enable the flow of data between outside systems and commerce services.
Differentiation: As opposed to other cloud delivery models, such as multi-tenant SaaS, cloud-native commerce applications enable enterprises to differentiate at their own pace and not the pace of everyone else. While merchants should expect their digital commerce platform provider to provide them with a strong foundation to succeed, merchants should actively consider how to customize the platform to act as the face of the brand and a competitive differentiator.
Scalability: Merchants rely on their commerce platforms to perform flawlessly during peak traffic times; this was especially true in 2020, where many merchants saw Black Friday-like traffic every day. Cloud-native architectures, such as the open-source Kubernetes platform for managing containers, enables merchants to process massive amounts of traffic by shifting lower overhead and faster containers to where they are needed most.
Portability: Cloud-native commerce applications enable businesses to easily move their applications to different cloud environments. The technology enables complete ownership of an application and associated data combined with the ability to deploy commerce on an IaaS that works best for each service, including hybrid cloud deployments across multiple providers.
Velocity: Cloud-native affords merchants the ability to rapidly innovate. Cloud-native platforms make it easier for businesses to create or purchase new innovative features to drive growth. New services quickly can be snapped into the architecture, giving a potential edge to enterprises as they strive to not only meet, but stay ahead of, the needs of their customers.
IDC anticipates that the shift towards digital commerce will only continue in the decades to come, meaning that organizations of all sizes and across every industry must re-evaluate their digital commerce strategy. To win customers of the future, all merchants need to ensure that they have a digital commerce technology stack that is futureproof and supports innovation. Seamless mobile experiences, new shopping channels, and innovative commerce partnerships will define the future of digital commerce. To satisfy these requirements and adapt to future market changes, merchants should prioritize agility, velocity, and ability to differentiate. IDC recommends that enterprises look at the next generation of digital commerce solutions based on cloud-native architectures, such as HCL.
This post is the first of a three-part blog post series on the benefits of cloud-native commerce. The next two posts will focus on specific tools that merchants can use to reap the most benefits of cloud native technology for their commerce operations.
To see more of Jordan’s research and insights around the benefits of cloud-native commerce, read his recent research report – Powering Agile Commerce Experiences with Cloud-Native.