Are We Obsessed with optimization ?

Udayakumar Nalinasekaren
Dec 19, 2010

In the previous post, we saw the level of optimization that one book store chain can accomplish by setting up a private cloud for their applications. Come to think of it.. different book store chains will need the same Order Management, Supply Chain, Inventory Management and Sales support applications. It is obvious to see that these common applications for one industry segment can be set up in one place and shared. More possibilities for further optimization! Is there a straight road to that destination?

Even if all book store chains want to collaborate like that to reduce their capital investments, technology refresh and operational costs there are several barriers that need to be crossed.

First of all, the concept of private cloud is no longer possible. The applications have to be hosted in a common place on the Internet. Welcome to the Public Cloud!

Second, we will obviously need a neutral party to run the public cloud infrastructure. If we happen to run one of the book store chains, we will feel very uncomfortable to let another bookstore chain management to have any control on our IT applications. This will mean that each book store chain will now need to depend on an external party for their mission critical applications to be up and running. Welcome to the Cloud Service Provider. We saw one example of a Cloud Service Provider in an earlier post. That example was talking about a free email service. Here we are talking serious business operations involving customers. If you dont have your free email service accessible for 10 minutes you will probably tolerate it. Someone who runs a serious business cannot afford to do so. How does each business then hold this cloud operator accountable for the service or lack of it?

Third, the public cloud approach requires each book store chain to send their data out of their premises and store them away from their safekeep. This data is not like the you-must-know-I-like-reggae Facebook status updates that we freely share on the net. Your dont want your competition to lay hands on your business data. We saw the related challenges in an earlier post.

Finally, although the applications may functionally be the same, each book store has a differentiating strategy on customer experience. A simple example is when a customer wants to return a book or get a replacement. The level of empowerment enjoyed by the customer service agent in authorizing such a transaction determines customer experience. If the customer service agent at the store has to run to 5 levels of management before authorizing such a transaction, the customer experience there will be nothing to write home about. Much of these authorization and approval workflows are built into the business application programs these days. It is obvious that different bookstore chains will need to implement different policies, customized business processes and unique workflows that reflect their respective business strategy into their computer applications.

It now seems like the opportunity to optimize further is very inviting and promising and the path is riddled with significant challenges. Obviously there is no gain without pain! We will see.