When will loyalty embrace the cloud?

The advent of cloud based services model has given rise to some questions among loyalty professionals regarding the actual definition of the word 'cloud' and its impact on loyalty programmes. Loyalty programmes are offered by organisations, big and small, to attract and retain customers. Industries like airlines and hotels have been at the forefront of utilising loyalty programmes in the form of frequent flyer and frequent guest programmes.

Credit card companies and banks, following in the footsteps of retailers have adopted loyalty programmes as competition for customer acquisition and retention has intensified. Most large companies who use loyalty programmes have their own custom application systems, while others who do not, utilise specialised off-the-shelf loyalty software.

With the advent of outsourcing, many businesses running loyalty programme have outsourced the complete design, running and campaigns management to a loyalty specialist owning loyalty software. In the last few decades businesses large and small have increasingly jettisoned their own custom applications in favour of off-the-shelf enterprise systems like SAP and Oracle ERPs for automation of their backbone enterprise operations like financials, inventory management, procurement etc. Seeing the benefits of moving from custom applications to pre-packaged enterprise software, many companies are now switching from their custom loyalty application to enterprise loyalty software like Oracle Siebel loyalty.

It is important to understand the meaning of 'cloud' as everyone now calls their services or products 'cloud enabled', which may be some distance away from reality. The use of the word 'cloud' in IT originated from the depiction of internet as a cloud in diagrams displaying networks or information flow. Therefore, cloud services mean any services hosted from the internet. For example, Yahoo Mail or MSN mail or Google search facility are all cloud services. One can register, have 24/7 access from any end user equipment like a PC, smart phone or a tablet, as usage of this service requires very limited training. Users do not need to know the location of the servers, databases etc. One does not also require an expert at hand to resolve technical problems, optimise storage or the computer speed etc.

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