Technology

How Innovative Retail Architecture is Boosting Profits at ASOS

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Outstanding and outperforming businesses often challenge conventional industry architectures. Such organisations innovate and develop new business models on their way to above-average profits. The online fashion giant ASOS (as seen on screen) has exact…

How Innovative Retail Architecture is Boosting Profits at ASOS

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Outstanding and outperforming businesses often challenge conventional industry architectures. Such organisations innovate and develop new business models on their way to above-average profits. The online fashion giant ASOS (as seen on screen) has exactly done this. In one of firsts of the industry, ASOS intends to make free global shipping a “permanent” part of its business model after international sales growth fuelled a 63 per cent jump in sales in the first quarter to £107m. International sales grew 160 per cent to £59.6m in the three months to June 30, and now make up 57 per cent of overall sales. Singapore, Russia and Australia are among the fastest-growing markets. This is impressive compared to UK high street bellwether Marks & Spencer which narrowly beat City expectations recently by declaring a 13% increase in profits in its last financial year. But ASOS business performance looks blockbuster when it is compared to other retail results. For instance the gravity of the high street downturn is spelled out in new research which shows UK retail chains have been closing stores this year at a rate of about 20 a day. The latest figures from accountancy firm PricewaterhouseCoopers show 375 retailers went bust in the second quarter of 2011, a 9% increase on the same period last year. 

So what makes ASOS special? ASOS targets internet-savvy 16 to 34-year-old women looking to emulate the designer looks of celebrities such as Kate Moss, Sienna Miller and Alexa Chung, but at a fraction of the price. While many retailers have struggled against tough macro headwinds, ASOS has prospered, benefiting from a young core customer base and the migration of spending from the high street to the Internet. The firm has a Facebook store and mobile applications. “This is about the shopping experience coming to you. That could be via apps, on your mobile, on Facebook,” said the CEO. “This is the next shift in terms of how we perceive shopping online. Rather than websites that you go to I think it becomes much more part of your personalised web experience.” Compare and contrast this with the fact that, despite huge outlays in the past, the new Marks & Spencer boss is to spend an extra £600m on its UK chain. 

But the unsung hero behind ASOS flight according to me is the innovation which ASOS IT department is bringing to the business. ASOS has crashed the conventional retail reference architecture and brought innovation leveraging the technology advances such as Cloud Computing, Social Media and Consumer Devices. For instance ASOS is assessing how Microsoft’s Azure cloud service could be used to expose mobile data application programming interfaces, which would enable it to extend its reach through mash-ups. Daniel West, IT director, ASOS, has established an IT strategy to build for the cloud first, rather than on-premise. “We look at the cloud first and build if nothing is available.” Daniel West said: “My technology design is to support our international growth. So we need to look at delivery through the cloud.”

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Innovative Retail Reference Architecture (Revised V2)

See my revised Retail Reference Architecture above which reflects ASOS innovation. (Ref: The original Retail Reference Architecture). The ASOS APIs which power the mash-ups empowers young ASOS customers to bypass traditional Retail Touch Points and Work-flows and access the ASOS catalogue directly. It has merged social networking and shopping by launching the first European fully integrated Facebook Store. ASOS customers are able to buy, save, share and comment on items without needing to leave the social networking site to obtain full e-commerce functionality.

ASOS successfully demonstrate that Industry Reference Architectures are a sound and solid foundation but they are not sacred and should be chopped, changed and innovated to bring dynamic benefits to the business. I am not claiming that innovative Retail Architecture is the only reason behind ASOS success. Smart branding, clear customer segmentation, effective supply-chain and visionary leadership have clearly contributed to ASOS success. However, the contributions from ASOS IT team can not be underestimated in the analysis of ASOS success.

Cloud Computing "Silver Lining" – Business Value Matters. Technology Not!

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Microsoft and The Telegraph hosted the “Cloud Computing” Silver Lining event earlier this evening in London. It was a good mix of panel discussions, round-table and networking event. It was hosted at one of the City’s most prestigious landmarks – The Gherkin which with its magnificent views from the 40th floor across the London skyline, was the perfect location to discuss the matters of “Cloud” computing. I was one of the fortunate 50 people who received the invite to listen and engage with a panel of Microsoft, Telegraph and other Industry speakers. I am trying to summarise some of the key thoughts from the evening in this blog post. The headline message which I would like to give here is that, “In Cloud Computing, Business Value Matters, Technology Does Not”


Cloud Computing is about Business Innovation – John Jester of Microsoft noted that, Cloud Computing is turning a new corner in 2011. CIOs, CTOs are no longer adopting Cloud Computing purely for cost savings purposes. Increasing number of organisations are now turning to Cloud Computing to gain new capabilities to make business successful. Cloud Computing is leading to new customer engagement models externally while also boosting new ways of employee engagement internally. He cited example of Global Microsoft CIO Summit to drive home the point. While in 2008 most CIOs reported CEO mandate of Cost Reduction, in 2010 most CIOs reported that, now their CEOs are demanding IT to play an Innovation Role. CEOs are now demanding CIOs and CTOs to drive revenue generation and maximisation opportunities. And Cloud Computing is a leading enabler of these innovative business models.

Cloud Computing Liberates IT Consumers – Dr James Bellini, Author and Futurologist commented on how the Cloud Computing paradigm is working on end user computing levels. He likened the Cloud Computing phenomenon as an enabler to free employees to become individuals again and approach and use IT as tool which which liberated not locked them in. He predicted that, “Work prisons of 20th century will disappear by 2020 thanks to the Cloud Computing phenomenon“. But Cloud Computing is not something entirely new. IT industry has seen a number of variations and forms of this over past decades. Close to my heart, the Airline industry has been a pioneer of Cloud Computing for a number of decades when it started to consume the Airline Booking processes per transaction model. Large mainframe operators such as IBM and Unisys served the airlines per Mips based on their consumption. On consumer level, Microsoft Hotmail Service has been in place since 1996 which is prime example of email and collaboration service in cloud. This was one of the question which I posed to the panel. 


So What is New about Cloud Computing Now? – Probably nothing is new in terms of concept. As I outlined in few examples above, the paradigm is around for decades. The major difference driving the adoption (and to some extent Hype) is that Industry has finally caught up with Technology, Tools and Instrumentation required to make Cloud Computing work at mass scale. We agreed at the round-table as well as during networking session that two factors have contributed in a major way to drive the Cloud uptake and popularity. 

  • As John Jester of Microsoft noted, “Anyone is now Connected Anywhere“. The power of network makes cloud consumption easy for large end user computing as well as B2C markets

  • Secondly, as I theorise, the Mobile and Tablet devices have finally crossed the threshold of affordability, intuitiveness, usability and desirability which has enabled business models which demand mass consumption of IT services of various forms on the go

  • Thirdly as  Phill Robinson, CEO, IRIS and Alan Lee-Bourke, CIO, The Wise Group noted the Cloud Computing is a better economic model for enterprises. It allows CIOs and CTOs to pass on the worry of say Server Management, Patching, Wiring, Cabling, Backing up etc to the likes of Microsoft and Fujitsu while they focus on tasks of higher business value for their organisations. Alan for instance noted emphasis on Data Modeling, Reuse and Effective Churn of Information to help business move forward.  

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    Major Cloud Computing Adoption Challenges – Matt Warman of The Telegraph noted and the panel and round-table acknowledged that, Security and Data Integrity are some of the biggest blockers for free-flowing Cloud adoption. Access and Control of Information is a major source of wealth creation of 21’st century hence it is little surprise that data and information assets are targeted by hackers and groups with not so noble intent. But we believe that collectively as industry and individually as responsible organisations these aspects will be sorted with priority. Some of the message from Microsoft Cloud Forum demanded Industry players to work closer together on security standards. While there are now also demands for Government to work a lot closer with Industry on boosting Public Sector Cloud Adoption. 

    The other notable issue raised was difference between commercial models for applications in cloud computing environment vs the collaboration services in cloud. For instance operational, governance and commercial model for making Microsoft Azure and Amazon web services work are of different complexity than say making Office 365 work for enterprise. Both present respective set of challenges but operating model for Cloud in these instances are different. 


    To summarise, momentum seems to be gathering around the fact that Cloud is now seen to enable business rather than just technology development. A great debate at a great location. Many thanks to Matt Warman of the Telegraph and John Jester of Microsoft for hosting a fantastic event!

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