Starbucks uses cloud to manage innovation and disruptive technologies

Starbucks coffee chain innovates IT strategies to hone its competitive edge using cloud services, says IT director Robert Teagle

Using cloud services has helped high street coffee shop chain Starbucks plan its IT innovation strategies to maintain...

a competitive edge, said Robert Teagle, Starbucks Coffee’s EMEA IT director (pictured), speaking at IP Expo 2014.

Starbucks has been using a slew of cloud services for a long time, Teagle told Computer Weekly. The American coffee chain’s European arm uses Microsoft Office 365 for email and SQL cloud services. It also uses Oracle Siebel customer relationship management (CRM) service as its loyalty system, which is tied to the Oracle ERP platform.

Siebel, which is available as both an on-premises service and on demand, delivers a combination of transactional, analytical and engagement features to manage all customer-facing operations for retailers.

Starbucks had built its point-of-sale data warehouse on Oracle technology. It also uses Oracle Exadata Database Machine to scale and seamlessly migrate its existing data warehouse to Exadata to expand insight and facilitate decisions, even with big data, according to Oracle.

“IT innovation has to be aligned with business goals and when we are trying to manage innovations, cloud IT certainly helps.” Cloud brings in flexibility and agility and enables the IT to respond faster to business needs facilitating innovation strategies, Teagle said.

Maintenance and innovation

The coffee chain has over 2,100 stores across 34 countries in EMEA. “It is very important to keep everything running at the retail level and technology architecture underpins that objective," Teagle told delegates at IP Expo 2014.

“We spend one fifth of our income on innovative strategies,” he said. Even as online retail goes mainstream, almost 97% of Starbucks’ business happens on the streets. “Our stores are where our users enjoy our products and on average they spend 3-5 minutes if they are just grabbing a coffee or about half an hour if they are having it in store. It is a short period of time and our innovations have to be focused on making their experience a better one."

But IT innovation in enterprises doesn’t have to be of the scale or standard of Google or Apple, Teagle said. “Google Glass, Apple watches and self-driving cars are all innovative technologies but traditional enterprise environment are different,” he said. 

“Enterprise innovation need not be of that scale. It must be something that helps the business progress or creates a more competitive organisation.”

Online and mobile

Among Starbucks’ IT-related innovations are offering free Wi-Fi services to customers in its shops, launching an online business service, developing a mobile application and engaging social media (“Tweet a coffee” electronic gift card).

It has also launched a US trial of a click and collect service allowing customers to pre-order drinks on Starbucks’ mobile app and collect them later to avoid queues.

Among its non-IT innovations are selling ready-made chilled drinks through supermarket chains, loyalty cards, home products such as small coffee machines and new recipe for the UK market. “While these are business innovations, a solid technological infrastructure has been key in delivering these ideas,” he argued.

“Technology on its own won't result in great innovations. It must be placed as part of overall business processes,” Teagle advised.

Experimentation and test

Teagle also urged CIOs struggling to manage innovations to involve all business stakeholders and experiment and test a lot before going live with a new project.

But there are IT challenges and barriers to innovation, he said. “IT systems complexity is one of the biggest challenge. A new piece of excellent technology may not work well because it doesn’t fit or sync well with existing IT systems.  

“That’s why having a proof of concept and piloting the technology before investing in it is very important.”  

Another barrier is IT silo. “IT teams are usually great at innovations but what’s the use of innovating in itself and not being embedded in main business functions.” 

“Being innovative really helps and all IT teams looking to drive their businesses forward bust start innovating,” he said. “And cloud certainly helps in facilitating innovations.” 

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