The Gap Pioneers Retail Heart-and-Lungs Transplant in the Cloud
When you are a mega-retailer, such as The Gap, you think long and hard before starting a heart-and-lungs transplant, which is what retailers call replacing such core systems as merchandising and inventory management. You think longer and harder when the plan calls for migrating them to the cloud.
Several key senior IT executives at The Gap revealed details about their potentially risky cloud journey at last week’s Oracle Industry Connect event in New York. In the process, they provided a look under the hood into the crucial decision-making process that led them to go on this digital transformation journey.
There is always an element of risk when retailers replace critical applications that govern such core operations as merchandise management, inventory management, and database management systems. The level of risk is underscored in the oft-heard description by CIOs that projects such as these are like doing a heart-and-lungs transplant while racing at 100 mph.
For The Gap, this project was even more risky because of the scale involved. The Gap is a $16-billion retailer that operates 3,100 company-owned stores (as well as hundreds of franchises) in 90 countries across a handful of brands including Banana Republic, Athleta and Old Navy.
And then there’s the minor matter of cloud migration. Cloud computing has been a part of the retail landscape for at least10 years, but most cloud projects have typically involved discreet applications, such as payroll, human resources, workforce management, salesforce management, task management, customer service, and other targeted functions.
The Gap, because of the scope and scale of its cloud project, represents a unique example for the rest of the industry to study and learn from.
Cloud Migration Tips and insights
The following key points about The Gap's cloud transformation project were culled from three separate sessions at Oracle Industry Connect, which took place April 9-11 in New York. The event was attended by more than 230 retailers and a total of 2,000 IT executives across a broad range of industry verticals.
Here’s an inside look at key elements, strategic tips and tactical learnings that were highlighted by Gap executives that worked on its 2017 cloud migration project:
- Test small but big enough to matter: Instead of going “all in” for a massive cloud rollout across multiple brands, The Gap selected one mid-size brand, Intermix, to become its cloud migration pathfinder. Intermix, a luxury boutique concept, was acquired in 2013 and was not using an Oracle platform as were the company's other brands.
- One major component of the project was to promote a ‘universality’ strategy that was aimed at achieving external and internal benefits, according to Connie Santilli, vice president enterprise systems and strategy at The Gap. Externally, the company wanted to achieve a converged commerce approach that enabled consumers to shop across all brands and channels seamlessly. Internally, it wanted to optimize productivity, save money on maintaining multiple platforms, get to market faster, bring automation to analytics, and streamline a path to innovation.
- Moving to a cloud architecture also enabled The Gap to reduce data center costs. In the six data centers operated by The Gap, “an incredible amount of overhead was spent on scaling up for about 10 minutes of high volume per day,” said Santilli. She recommends, “Think cloud first and get out of the data center business.”
- Instead of a single global instance of core applications across the enterprise, The Gap opted for “a single code base” from Oracle, a decision that ultimately made it the first retailer to go live with an Oracle SaaS deployment, which included such functions as merchandising, insights, store inventory management, and a SaaS integration layer that helps synchronize end-to-end merchandising processes.
- Putting the right team in place is critical. The rules of engagement need to be clearly defined. Communication is essential and so are tech evaluations and business assessment.
- Network planning is essential to minimize latency. It is “critical to limit the hops in routing between cloud providers,” said Santilli.
- To save budget dollars “move fast and avoid double costs while operating both on-premise and in the cloud,” Santilli added.
- There will be additional latency in the system, according to Paul Lamoureaux, senior director information technology at The Gap. Coders will have to manage this latency using a different mindset.
- Also, “SaaS is not an all-of-nothing deployment,” says Ramesh Nagarajan, senior technology manager at The Gap. “You still need on-premise touch points and third-party touch points. You have to identify what you own, what you assign, and what you share, which parts will be Oracle, The Gap and shared between both.”
- In the SaaS model you must be clear about your understanding of what internal processes do and don’t do. “You may not be able to customize your SaaS applications or databases a whole lot,” says Nagarajan. “You need to bake as much in at the beginning."
- “We needed a short list of what I called 12 dirty dozen changes in the code base, which required a lot of work from Oracle,” says Lamoureaux. But few major modifications were requested after the dirty dozen were delivered.
- Never underestimate change management, which seemed like it occupied half the project and half the budget, according to Lamoureaux. The Gap brought in an outside firm to deliver consistent communication to the organization. In addition, many trouble shooting guides were created.
- One big goal of the change management effort was to get users out of the mindsets they currently have. “They have to accept the new system like they accept using a new iPhone,”says Lamoureaux. “You just go with it.” Alcohol and torture were considered as part of the change management effort, but rejected as ultimately counterproductive.
The Gap’s cloud transformation project took less than a year to go live, a time frame does not include many months of pre-planning, which were required and recommended. As Santilli notes, “It takes a lot of time to make this kind of journey, more time than you think.”
The go-live date was September 1, 2017, which was the first day of The Gap’s fiscal quarter. “Anyone who goes live with a major system upgrade goes live at the end of a month at the end of a quarter,” says Lamoureaux.
No plan is in place for The Gap to migrate its other brands to a cloud platform, at least at this time, but the seeds were sown with the Intermix project and the pathway to success discovered.