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Description

Selling groceries through the cloud
in a Tier II city in India
Sanjay Mohapatra, Vikram Swain, Shriram Misra, Rohit Padhi, Subhabrata Nath Sharma,
Neelakanth Veluru, Tanaya Saha Dalal and Subhajit Deb
Sanjay Mohapatra,
Vikram Swain,
Shriram Misra,
Rohit Padhi,
Subhabrata Nath Sharma,
Neelakanth Veluru,
Tanaya Saha Dalal and
Subhajit Deb are all
based at the Department
of Information Systems,
Xavier Institute of
Management
Bhubaneswar,
Bhubaneswar, India.
In May 2014, on a fine summer evening at Bhubaneswar[1], Easy2Grocery co-founders
Vikram Swain and Ashish Padhee were engrossed in a deep discussion over a cup of tea
on a unique problem faced by their organization relating to its IT infrastructure. “Vikram we
are constantly facing problems in monitoring inventory levels in both the warehouses. There
is a lack of synchronization among the two Point of Sales (POS) applications in the two
warehouses because of which we are not able to take the benefits of economies of scale
during procurement and distribution. Further I am facing the problem of stock out and
excess inventory across stock keeping units (SKUs)”, said Ashish. Vikram realized that this
problem arose due to two disparate POS systems which caused each warehouse to work
as a different entity. He wondered whether there was any probable solution to this problem
which could be addressed in a seamless and cost-effective manner.
Introduction
Easy2Grocery.com was conceptualized as an e-tail business in Bhubaneswar at a time
when e-commerce in India was the new darling of the angel investors. Reports, analysis
and news items on e-commerce companies were found on every business daily and
magazines. But, when the founders started Easy2Grocery, their objectives were not just
limited to having a healthy top line and bottom line, but a sense of fulfilling the dreams of
making a mark for them in the society that made them passionate about the venture. Vikram
left a job in a multinational company to devote fulltime in Easy2Grocery venture. The
founders had sensed the opportunity of what in marketing parlance was best described as
a “blue ocean strategy” where they basically focussed on e-retailing of grocery items which
was not present in Bhubaneswar.
The motive behind Easy2Grocery was simple yet emotive. Free home delivery of groceries
would benefit the people in multiple ways. It would help in generating employment
opportunities especially for those unskilled youth who have been marginalized in the
society and have never been able to get education. Second, the customers would benefit
from the convenience that it provides in delivering the products at home. There were
basically four categories of customers who could benefit by Easy2Grocery, namely, the
housewives, the working executives (both men and women), senior citizens and the
differently abled. Usually, shopping was attributed to a pleasant experience and recreation
for some. But, what was overlooked was the pain associated with shopping especially for
those customers who were dependant on others to take them to the market and shop for
daily use and monotonous basic necessities such as grocery items. Factors such as traffic,
rising cost of fuel prices, lack of parking space, long queues at billing counters and most
importantly wastage of time for these people were serious issues. Housewives needed
groceries the most for themselves and their family. Senior citizens wanted a helping hand,
Disclaimer: This case is written
solely for educational
purposes and is not intended
to represent successful or
unsuccessful managerial
decision-making. The author/s
may have disguised names;
financial and other
recognizable information to
protect confidentiality.
DOI 10.1108/EEMCS-09-2014-0230 VOL. 6 NO. 3 2016, pp. 1-24, © Emerald Group Publishing Limited, ISSN 2045-0621 EMERALD EMERGING MARKETS CASE STUDIES PAGE 1
as it was difficult for them to commute in traffic, carry baggage and bargain with the local
mom-and-pop stores. The problem faced by the differently abled people was much more
profound to say the least.
There were certain kirana stores[2] who also delivered the groceries in the same locality
within 20 to 30 min, but Easy2Grocery went beyond these kirana shops. For example, while
ordering from a kirana shop over phone, a customer could not see the entire assortment of
products available; the customer had to spend long time over the phone while ordering and
might not get the discount. Any new product, if available, would not be known to the
customer, but could be seen while ordering over internet through Easy2Grocery.com.
Logistic wise, Easy2Grocery provided the convenience of choosing the time for delivery.
Even though in both the models, cash on delivery (COD) was available, the convenience of
choosing a new product and ability to see the product and decide makes e-grocery
channel a comfortable one. One could order at his/her convenience without worrying about
voice network and call drop issues (which are common in tier-II cities in India).
The founders also had another aspect in their mind which made Easy2Grocery unique in its
own way. By pooling orders from one locality and delivering those in one go, Easy2grocery
had attempted to reduce the carbon footprint in the retail business. Consider the simple
case of ten vehicles from one residential locality travelling 2 km for their grocery needs as
compared to one delivery person travelling 5 km on an average to deliver the groceries in
the locality. The carbon footprint was easily reduced by a considerable amount.
Easy2grocery’s foundation was based on the 7 Ps by Porter, but the two Ps – People and
Physical environment – which majority of the organizations ignore during their start-up
phase was what gave Easy2 grocery the competitive advantage and which became the
building blocks for its success:
The idea of an online grocery store came to me when I was pursuing my engineering in
Bhubaneswar. I personally felt that such a provision, if present in Bhubaneswar will help a lot in
easing the life of many working executives, housewives, senior citizens, and differently abled
persons who are always on the go. – Vikram Swain
Industry overview
The grocery industry had seen a dramatic change in India since the emergence of
supermarkets. Earlier, people had to travel to multiple stores for their needs, but now
everything was basically available under one roof. This trend had gained huge popularity
since the early 2000s. A new disrupting trend of e-tailing in grocery was making its way in
India. Grocery business traditionally had been a low margin avenue, which had hampered
its growth in the business world. But with people increasingly using e-commerce websites
for all their needs, an online grocery shop was a natural progress. But it is not like other
e-businesses. Its challenges are unique and the solutions were complex. Supermarkets
made shopping an experience, while e-tailers made shopping easy and less tiring.
E-grocery on the other hand found it difficult to make it an experience, as it is a routine job.
It can become monotonous and even complex. But still more and more new players
entered the market. Seeing the trend, a lot of offline stores beefed up for a share of the
online market too. Online retail was expected to grow at a very healthy pace of CAGR[3]
equal to 50-55 per cent for the next three years. This showed huge potential for the e-tailing
business. Retail sector had seen a huge jump too during the past decade. If anything was
to be learned from the USA, who had the concept of supermarket about a decade earlier
and had gone through these steps in their organizational life cycle, it could be safely said
that the online retail market will grow very fast:
We are satisfied by choosing Bhubaneswar as our base location for start-up. Bhubaneswar’s
start-up ecosystem is encouraging. – Asish Padhee
PAGE 2 EMERALD EMERGING MARKETS CASE STUDIES VOL. 6 NO. 3 2016
About Easy2Grocery[4]

1. Vision: To be a one-stop shopping destination for all your shopping needs and be the
   leading online retailer in East India.
2. Mission: To provide a superior customer service and a pleasurable shopping
   experience through high-quality products and understanding customer needs.
3. Goals:
   Sales: Achieve 50 online orders per day by December 2015.
   Operational: Deliver within 3 h of order across Bhubaneswar by December 2015.
   Website: Transform the website into an efficient and intuitive navigation structure.
   Customer care: Enhance customer service and increase customer retention by 20
   per cent at the end of December 2015.
   Marketing: Increase online marketing reach by 50 per cent at the end of December
   2015.
   Strategies
   Sales: Increase sales by content marketing and acquire new customers through
   referral schemes.
   Operational: Open warehouses at strategic locations and manage optimum inventory
   to decrease the transportation time.
   Website: Increase user-friendly functionalities in the website.
   Customer care: Reduce customer grievance redressal time by empowering
   employees.
   Marketing: Increase online presence and target customers through social media and
   emails.
   Stakeholders and their objectives
   Stakeholders are people who have interest in a company’s or organization’s affairs.
   Exhibit 1 shows different stakeholders and their objectives. This exercise was undertaken
   by promotors to understand needs of all stakeholders and provide an approach that would
   give a “win-win” situation for all and ensure sustainable growth.
   How the business worked
   The customer was given the option to submit the order in three possible ways. The first was
   the “Online Mode” which was considered to be the most preferred gateway for order inflow
   because a large number of Easy2Grocery customers had submitted the order through this
   gateway. The second preferred way of submitting the order was through the “phone” or via
   telephonic communication. In addition to that, the customers also had the option of
   submitting the order “in-store” by being physically present in person. This order was then
   forwarded for order processing.
   After all the order procurement were done, the order was bundled into a single package
   with Easy2grocery label stamped on the consignment.
   The invoice was generated for the customer against the sales order. In this process, each
   order was assigned a specific delivery person as per the geographic location of customer’s
   address and the availability of resources at that moment. The delivery led to two possible
   outcomes, one of which was a failed delivery mainly due to fraud (5 per cent chance of
   occurrence) or due to customer’s unavailability (90 per cent chance of occurrence) or
   address being incorrect (5 per cent chance of occurrence). The other outcome was that of
   a successful delivery which the company aimed at the first instance.
   VOL. 6 NO. 3 2016 EMERALD EMERGING MARKETS CASE STUDIES PAGE 3
   After the successful delivery, the goods were handed over to the customer and the
   payment was received [for cash on delivery (COD)]. The delivery confirmation was
   immediately notified to the head office, and the order was then deemed as closed.
   Issues and challenges faced by the company
4. Low internet penetration in Bhubaneswar: Bhubaneswar had limited internet
   penetration, so it had restricted the reach of the local e-commerce businesses.
5. COD is the preferred mode of payment: The low credit/debit card penetration coupled
   with lack of trust on the online payment system was the main reason people preferred
   COD for payments which were laborious and risky.
6. Logistics problems: There was very little standardization in the postal addresses format
   which created a lot of problems during delivery. This problem was compounded by
   large residential colonies with unstructured house numbering.
7. Low smartphone penetration and inferior data connection: Though the number of
   mobile phone users was high, a significant majority still used feature phones and not
   smart phones. So, this consumer group was unable to make online purchases. And
   those with smart phones faced difficulties to navigate through the website because of
   the poor data connection in the city.
8. Technical issues: The major technical issue was that of data security.
   There are three types of security threats that were identified by us:
   Denial of service:
   – spamming: sending unsolicited commercial emails to individuals; and
   – viruses: self-replicating programs to perform unwanted events.
   Unauthorized access:
   – This was meant to be illegal access to systems, applications and data.
   – Theft and fraud: The major types of theft and fraud are data theft, stolen data
   used elsewhere and theft of software through servers.
9. Telecommunications infrastructure: The poor telecommunications infrastructure
   hampered online operations and also had become an impediment in the application of
   new technologies such as cloud computing.
10. Another challenge was the lack of skilled employee shortage. The maximum skilled
    employees looked for jobs in metros and usually left their jobs within six to seven
    months. So, it led to a very low retention rate and high attrition.
    We are in the process of opening up of our 3rd warehouse. Two more warehouses are in the
    pipeline, but we were hindered by lack of skilled manpower. – Vikram Swain
    Social challenges
    Computer literacy: Computer literacy had been very low in India. The targeted group of
    customer, namely, housewives, senior citizens and the differently abled were
    particularly not computer literate in tier-II cities such as Bhubaneswar and were
    dependent on others for placing an online order.
    High return of goods: E-commerce in grocery as a concept was relatively new in India.
    There were many first-time buyers who were not accustomed to e-commerce websites.
    These customers used to transact due to hard sale and promotions but eventually
    demonstrated remorse and made a return when the goods did not meet their expectations.
    Lack of credit policy: The mom-and-pop stores and kirana stores dotting the neighborhood
    usually gave flexible credit policy to the customers based on trust which was difficult to
    PAGE 4 EMERALD EMERGING MARKETS CASE STUDIES VOL. 6 NO. 3 2016
    implement for a starter like Easy2grocery. This was a major cause for salaried people who
    preferred to clear their monthly grocery bills at the start of the next month.
    Absence of policy framework for e-commerce in India: The lack of a national ecommerce
    policy framework had led to a different interpretation of tax computations by tax collecting
    authorities, and on some occasions, it put an unnecessary tax burden on enterprises like
    Easy2 grocery:
    The lack of computer literacy among our targeted customer group coupled with the
    suspicion of first time buyers to share their plastic card details is giving us very less space
    to manoeuvre. – Asish Padhee
    How to tackle these challenges?
    Social and institutional challenges could not be tackled by one company. These were
    sometimes taken as part and parcel of the game. The owners were very clear in their
    objective, “It was a game of volume” and volume required operational efficiency and
    reduced waste. This would decrease the transaction cost of the business and in the
    process made money for everybody:
    A lot of times we limit operational efficiency with just increase in number of orders. But you can
    do only so much in logistics. The real game turner is the inventory control and better customer
    relationship management. – Vikram
    Thinking in this direction, the two partners started to find ways to control inventory and
    manage customers and found that the cloud-based IT strategy could be a solution here.
    Why cloud?
    Moving to cloud with its POS application and database, the issue of multiple databases
    could be solved, and also scaling up the business became a lot easier, as it was not
    required to purchase new hardware and software license every time a new warehouse was
    opened. This approach helped its owners to focus on their core competencies and looked
    for ways to improve its service experience for the customers rather than breaking head over
    technology.
    The cloud strategy helped to solve another issue that although was not very evident at the
    nascent stage of the business, but later would become critical when the business grew
    rapidly, i.e. when the number of hits per second increased on the website. This could be
    due to a sudden rise in the number of users following some promotional offers or during any
    festive occasion or seasonal needs. During this spike in business volume, the website
    response time increased making it highly difficult for the users. Easy2Grocery faced
    technical problems, when its number of SKUs displayed on the website went up from 1,800
    to 2,500. The response time of the server increased beyond the satisfactory level during the
    peak period of the day. This situation could be averted if the system used cloud computing;
    then it could be very easily scaled up and down depending on the requirements.
    Although cloud provided a lot of benefits in terms of scalability and cost to growing
    businesses like Easy2Grocery, the migration to cloud needed to be carefully decided after
    taking into account all the pros and cons, as the control over the system and data
    decreased on cloud, and the degree of support from the cloud partner was highly
    dependent on the service-level agreements.
    As discussed above, the company went ahead with the cloud technology to decrease the
    costs and to increase the operational efficiency. The company had used cloud
    architecture, which has been described in the next section.
    Cloud architecture
    Easy2Grocery decided to go for “a single cloud” service provider in public cloud. It had the
    billing software provided on the cloud by the service provider. It also had all its other
    VOL. 6 NO. 3 2016 EMERALD EMERGING MARKETS CASE STUDIES PAGE 5
    applications such as customer relationship management (CRM), human resource
    management (HRM), Payroll, etc., on the cloud too. This strategy had not only enabled
    Easy2Grocery to scale up its business anytime upon requirement but also brought in its fair
    share of risks too.
    As can be seen below, all the applications including the billing software had been migrated
    to a single cloud. The cloud architecture being followed by Easy2Grocery had the following
    attributes:
    open standards;
    security;
    scalability;
    control;
    disaster recovery; and
    the data not being very confidential were collected and kept in archives once in a month
    where it was used for analysis to understand customer behavior and buying pattern.
    Risk analysis for cloud strategy
    With favorable investment climate throughout the country ushered in by the new
    government, every state government was making investments in infrastructure so as to be
    more attractive for investments in their state. Odisha was not far behind either. If things
    would go according to the plan, Bhubaneswar would become a Wi-Fi-enabled smart city by
    the end of 2016. Given the strategically important position that Odisha enjoyed, it should
    win over a considerable amount of investment from the Central Government to form a
    “Smart City” (Smart cities were enabled with geographic information system-based town
    planning, and the cities would have advanced transportation system and integrated waste
    management too.). Moreover, its huge amount of natural resources empowered it with the
    probability of being one the manufacturing hubs of eastern India. This had even
    encouraged the union government to earmark Bhubaneswar as a knowledge center which
    would additionally serve as a source of skilled and semi-skilled labor for the newly
    announced Chennai–Kolkata[5] industrial corridor. The already-implemented “Jan-Dhan
    Yojna” which was going to bring in 75 crore[6]Indian Rupees (1 crore equals to 10 million)
    for the people under the banking framework of India. All these were obviously going to
    increase the consumer spending capacity of the state. Retail industry was obviously going
    to ride on an increase in the demand of goods.
    This was obviously a boon for new shops such as Easy2Grocery, but new opportunities
    brought in new competitions too. Smaller shops obviously were going to face the heat of the
    already-established retail chains such as Big-Bazaar[7] and Spencer’s[8] who had deep
    pockets and could scale-up easily. Moreover, new opportunities would bring in many small
    local players into the market who also were going to compete against each other for the
    same pie. The difference hence that was going to make one a leader would be the
    capability to scale up faster, ability to provide better and reliable service.
    E-retail obviously was something new to the market in Bhubaneswar, and the trend was yet
    to catch up with the people. So Easy2Grocery was at a stage where it had to be skillful into
    promoting the new trend among the not-so-tech-savvy Bhubaneswar people and at the
    same time find sources of investment to scale-up quickly so as to capture the huge market
    that was going to open up.
    With all the infrastructural developments being undertaken in the city, having its entire
    operations to cloud was one plus point for Easy2Grocery. Cloud brought in the advantages
    of being flexible and elastic which had solved the problem of scalability for Easy2Grocery.
    In addition to that, its multi-tenant approach (hosting multiple clients on the same server)
    had brought down the cost of operations too. But cloud brought in its share of risks too.
    PAGE 6 EMERALD EMERGING MARKETS CASE STUDIES VOL. 6 NO. 3 2016
    Risks involved with the Software as a Solution model
    Easy2Grocery depended solely on the security model of the service provider. However, a
    huge number of clients were being supported which makes the job of implementing
    security measures for both the clients’ data and application a difficult job. Software as a
    Solution (SaaS)[9] was vulnerable to improper access control, operating system flaws of
    the virtual machine, insecure storages and configurations. Having a huge client base made
    it that much necessary to have proper identity control measures so as to prohibit
    unauthorized data access. Another issue was with data isolation. Encryption was required
    to isolate one clients’ data from another, but encryption could become a problem too.
    Mismanagement of encrypted data could cause data to lose their key which would render
    them unusable. This was hard because both the client and service provider might be
    working on the same data at the same time. Cloud system did not take into consideration
    the country of origin of the data, and hence sometimes, sensitive data might be stored
    outside the border of the clients’ base country. Thus, international data privacy protections
    would be required. But this increased chances of data leaks due to ineffective security in
    different geographies. Data integrity from different clients had also to be taken into
    consideration. Proper disaster recovery plans had to be implemented to reduce the
    downtime in the business. There was a problem if the service provider was a small one, as
    most often, they are acquired by larger firms. So it became difficult to track whether the
    data had been removed properly or were being mirrored by other servers. Issues with
    bandwidth might affect the service providers, and then availability of the SaaS might be
    hampered which could cause a downtime in the business. Investigating and auditing into
    any incident would take a lot of time, as a large customer base is being supported.
    Cloud return on investment
    The benefits of cloud were mostly intangible in nature, as it helped in conducting the
    business more efficiently by bringing in data transparency and integrity due to a single
    database; it also made the business more scalable, i.e. it could easily increase or decrease
    its capacity depending on the demand. But to make it justifiable for the business, it was
    imperative to find out what financial benefits could be obtained by implementing cloud.
    Thus, through a return on investment (ROI) methodology, Easy2Grocery measured the
    benefits of cloud over “on premise” implementation in terms of infrastructural cost saved.
    Return on investment for Software as a Solution implementation
    Exhibit 2 classifies expenses for “on premise” database server as capital expenditure (CAPEX)
    and the buying of the software application licenses on yearly contracts or taking the application
    as a Software-as-a-Service (pay-as-per-use) as operational expenditure (OPEX).
    The CAPEX and OPEX costs had been extrapolated for a period of five years (Exhibit 3) to
    obtain the year-on-year savings as well as the return on investment for having moved to the
    cloud with SaaS.
    Intangible benefits
11. Ease in inventory management:
    The inventory management had become much easier with cloud implementation by
    aggregating real-time data on transactions. Through cloud, inventory data of all the
    warehouses were aggregated simultaneously and updated with each transaction.
    This had not only helped into having real-time data on inventory levels but also
    saved capital on losses due to inventory mismanagement.
12. Multiple servers to a single platform where their combined capacity could be used:
    Through cloud, the hardware and software for a service had been brought together
    which could be further used by multiple users simultaneously. It brought multiple
    servers to a single platform where their combined capacity could be used.
    VOL. 6 NO. 3 2016 EMERALD EMERGING MARKETS CASE STUDIES PAGE 7
13. Ease of use for customers in ordering. Moreover, their ordering data could now be
    harvested for analyzing buying patterns:
    Customer could login to their account wherever he/she would and on whatever
    device they had in hand. Also, the information stored in the account was harvested
    and generated through Cloud-based applications, highlighting what the customer
    had bought recently, what offers were available to him/her and things they might
    like to buy based on their shopping history. There was also a feature available to
    help with customer enquiries and complaints handling.
14. Better networked and better connected to suppliers:
    Migrating to cloud had allowed the company to become better networked and
    better connected to its suppliers. Easy2Grocery could electronically trade invoices
    and payment information in real time. Such kind of transparent scenario had
    transformed how the business manages its spending. It eliminated the paperwork
    and phone calls involved with such transactions. Also, real-time data about
    inventory and shipment helped the suppliers about the future needs and goods in
    transit.
15. Decrease in carbon foot print and energy consumption:
    By using cloud computing, Easy2Grocery used only the server space it needed,
    which decreased its carbon footprint. Migrating to cloud had reduced carbon
    emission and energy consumption by 30 per cent than using on-site servers.
    Financial benefits
    decreased CAPEX cost;
    decreased inventory loss cost;
    decreased infrastructure maintenance cost;
    decreased manpower employed and thus decrease in factor cost; and
    overall saving of 17 per cent in comparison to “On-Premises” implementation cost.
    By implementing cloud, the above-mentioned financial benefits had been realized. In this
    part, there had been a potential saving of around Rs 5,500 on CAPEX cost and around
    Rs 48,000 in decreasing the losses due to inventory mismanagement. Though the OPEX
    cost has increased by around Rs 25,500, the overall benefit due to decrease in the cost had
    been around Rs 27,870 which constitutes for 17 per cent of savings in comparison to
    on-premises implementation of the software.
    Cloud return on investment
    The benefits of cloud were mostly intangible in nature, as it helped in conducting the
    business more efficiently by bringing in data transparency and integrity due to a single
    database; it also made the business more scalable, i.e. it could easily increase or decrease
    its capacity depending on the demand. But to make it justifiable for the business, it was
    imperative to find out what financial leverages that could be obtained by implementing
    cloud. Thus through an ROI methodology, Easy2Grocery tried to measure the benefits of
    cloud over “on premise” implementation in terms of infrastructural cost saved.
    Return on investment for Software as a Solution implementation
    Exhibit 3 classifies expenses for “on premise” database server as CAPEX and the buying
    of the software application licenses on yearly contracts or taking the application as a
    Software-as-a-Service (pay-as-per-use) as OPEX.
    The CAPEX and OPEX costs had been extrapolated for a period of five years (Exhibit 2) to
    obtain the year-on-year savings as well as the ROI for having moved to the cloud with SaaS.
    PAGE 8 EMERALD EMERGING MARKETS CASE STUDIES VOL. 6 NO. 3 2016
    Mitigation of cloud risks
    In case of a cloud failure of any kind, Easy2Grocery would incur losses as per depicted in
    the “Cost of Incidence” (Exhibit 4) Tangible section was an estimate of the daily loss of
    online sales because of the “out of order” POS. Customers thus not being serviced would
    surely show dissatisfaction, and this in turn would hurt the goodwill of the firm which would
    aggravate with each passing day of improper service. However, it had been seen that a link
    failed for four days, and a ballpark figure of Rs 6,581 had been considered for the same.
    The values of intangible losses incurred were taken largely on an estimate based on
    historical transactions and number of customer complaints received.
    As a mitigation plan Easy2Grocery intended to have on premise software to service the
    “walk-in” customers at the store. To track the inventory and synchronize the same between
    the two stores, an extra person was engaged.
    Exhibit 5 shows the primary risk associated with cloud technology and its annualized cost
    to the business. It also shows the cost of safeguarding against these risks and performs a
    cost-benefit analysis. As seen in Exhibit 5, the annualized loss expectancy was being more
    than the cost of safeguarding for impact hours less than 72 h. Taking an average of all the
    cost benefit analysis values, it was seen that having an offline mode of risk mitigation
    measures would prevent the firm from having a loss of Rs 26,360 per year. However, this
    was on the basis of the present internet service facilities being provided in a tierII city like
    Bhubaneswar. Given the rapid development being undertaken in the city and the upcoming
    projects being undertaken by the telecom sector with a strong support from the
    government, the frequency of occurrence of internet service failure was bound to decrease.
    Hence, keeping the future in mind, do you think that Easy2Grocery should go for on
    premise risk mitigation measures?
    Is cloud strategy really worth here?
    Cloud strategy had been implemented to centralize the entire data and control the business
    in a better way. In short, it is a solution, but a solution which brought foreseeable as well as
    unforeseeable risks. The risk analysis showed a positive result but only after adding the
    cost of intangible loss. Mitigating this risk required to have an “on premise” software. Buy
    hey!! Isn’t that the case earlier. Exhibit 6 on “Cost of Safeguarding per year” lists down the
    cost of maintaining the risk mitigation measures.
    Notes
16. Bhubaneswar is state capital of Odisha in India.
17. Retail stores in India are called kirana stores.
18. Cumulative average growth rate.
19. www.easy2grocery.com/
20. Cities in India.
21. Crore is a unit of measurement for Indian currency. Seveny-five crore equals 750 million. US$ 1
    dollar equals 68 Indian Rupees (as on 1 February 2016).
22. Supermarket chain in India.
23. Supermarket chain in India.
24. Saas – Software as a Solution; this is a type of service provided by the cloud computing.
    Keywords:
    POS,
    IT strategy,
    Cloud computing,
    E-grocery,
    Urban India,
    Tier II city
    VOL. 6 NO. 3 2016 EMERALD EMERGING MARKETS CASE STUDIES PAGE 9
    Exhibit 1
    Exhibit 2
    Table EI Stakeholders and their objectives
    Stakeholder Objective Reason
    Customer High ROI A customer would always look to
    increase its return on investment.
    A better margin on products
    increases ROI
    Supplier High ROI A supplier would always look for
    a better ROI and quick cash
    turnover
    Employees Work–Life balance Better work – life balance and a
    good learning experience
    Promoters Increased Sales and high ROI Aim is to expand the scale of
    business and get maximum
    profits
    Table EII Comparison of cost between ‘on premises’ and ‘cloud computing’
    On premises Cloud based
    Unit Quantity Cost/unit
    Total
    cost/year Unit Quantity Cost/unit
    Total
    cost/year
    CAPEX (Initial)
    Manpower US$/resource/
    month
    3 8,500.00 25,500.00 US$/resource/
    month
    2 8,500.00 17,000.00
    Migration
    cost
    3,000
    TOTAL
    CAPEX
    25,500.00 20,000.00
    OPEX (Annual)
    Software
    (POS app)
    Nos. 2 13,000.00 13,000.00 Nos. 1 3,540 42,480
    Infrastructure
    maintenance
    % of total cost 10 3,850.00 % of total cost 0 0 0
    Cost of
    inventory loss
    5,000/
    store/
    month
    120,000.00 3,000/
    store/
    month
    72,000
    Total opex 16,850.00 42,480
    Total/year 162,350.00 134,480.00
    Saving on
    cloud
    27,870.00
    ROI In % 20.72
    PAGE 10 EMERALD EMERGING MARKETS CASE STUDIES VOL. 6 NO. 3 2016
    Exhibit 3
    Exhibit 4
    Exhibit 5
    Table EIII Cash flow statement for five years
    Year
    On premise Cloud based
    Cumulative
    saving
    Y-O-Y
    saving
    (in %) ROI
    CAPEX
    (Initial)
    OPEX
    (Annual)
    Inventory
    loss cost
    Cumulative
    cost
    CAPEX
    (Initial)
    OPEX
    (Annual)
    Inventory
    loss cost
    Cumulative
    cost
    1 25,500.00 16,850.00 120,000.00 162,350.00 20,000 42,480 72,000 134,480 27,870 17.17 20.72
    2 16,850.00 120,000.00 299,200.00 42,480 72,000 248,960 50,240 16.79 20.18
    3 16,850.00 120,000.00 436,050.00 42,480 72,000 363,440 72,610 16.65 19.98
    4 16,850.00 120,000.00 572,900.00 42,480 72,000 477,920 94,980 16.58 19.87
    5 16,850.00 120,000.00 709,750.00 42,480 72,000 592,400 117,350 16.53 19.81
    Table EIV Risk and mitigation cost
    Threat
    category
    Impact
    time
    Frequency of
    occurrence
    Annualized
    rate of
    occurance
    Cost of
    incidence
    in Rs
    Annualized
    loss expectancy
    (ALE)
    Annualized
    cost of
    safeguard
    (ACS)
    Cost
    benefit
    analysis ALE – ACS
    Link failure 96 h 3 per year 3 11,581.3 69,487.5 115,000 45,513
    72-96 5 per year 5 9,387.5 93,875 115,000 21,125
    48-72 8 per year 8 7,925 126,800 115,000 11,800
    24-48 1 per month 12 6,950 166,800 115,000 51,800
    12-24 1 per month 12 6,300 151,200 115,000 36,200
    12 hours 2 per month 24 5,000 240,000 115,000 125,000
    Average 26,360.4
    Notes: Cost of Incidence Tangible loss of Sales per Day Intangible loss depending on the number of days. For example, in case
    of Impact time more than 96 h (more than 4 days). Cost of incidence 5000 6581 Rs 11,581, Annualized Loss Expectancy (ALE)
    Annualized Rate of Occurrence Cost of Incidence. Annualized Cost of Safeguard (ACS) Total Cost of Safeguarding per year as
    shown in Exhibit 6
    Table EV Opportunity cost
    Cost of incidence
    Particulars Cost in Rs
    Tangible
    Sales/Day 5,000
    Intangible
    Day 1 1,300
    Day 2 1,950
    Day 3 2,925
    Day 4 4,388
    After Day 4 6,581
    VOL. 6

1. One member of your group should upload a zip folder that includes your report and presentation. 2. You can use the attached case as a sample writeup. 3. Your report should be about 3500 to 4000 words (one-inch margins and single-space). 4. Your report would be tested through Turnitin for plagiarism and similarity.