For some companies, the majority of the year is business as usual – they sell, build and distribute their products. Business may be constant, but predicable. However, during the holiday season starting in November and going through the end of the year, most retail companies have an intense selling period where they can make up to 30 percent of their annual sales. This influx may require an increase in bandwidth capacity to accommodate an uptick in online sales.
According Forrester, online holiday spending in America will reach $129 million this year, a 12 percent increase from last year due to the convenience of online shopping, wider selection and holiday discounts. During the majority of the year, some retailers may run IT systems at 60 percent of capacity, but for this short period of time each year, may need 120 percent, and that is when bursting capabilities are utilized.
Bursting is a strategy where additional bandwidth is rented from a managed services provider to ensure capacity for a higher volume of online shoppers and transactions.
Bursting allows businesses to set high limits for the bandwidth they may need to prevent downtime and ensure there is enough storage and computing resources in the cloud to run their apps, websites and software. In most cases, a company can project much more capacity than it will actually need. When a company needs more capacity, it can burst up to the limit it sets, but if a company doesn’t reach its limit, it only pays for what it consumes. One advantage of utilizing bursting is the cost – it is minimal to leave a bursting plan in place for the entire year. Bursting is a better option than leasing or purchasing additional hardware for peak periods and it reduces overall capital expenditures. If a company doesn’t have enough bandwidth capacity, it could experience downtime, which is when apps and websites are unable to load or process transactions.
It is not cost-effective for a company to invest in additional hardware to support peak sales periods. In some cases, purchasing enough hardware ahead of a holiday season could cost a company up to $20 million per year. After peak periods most of the hardware goes unused until the following year. Other costs often include licensing software, support and maintenance. The costly hardware also can depreciate three to five years after purchase.
To manage an influx in sales during the holiday season many businesses leverage a managed service provider, like First National Technology Solutions (FNTS), to build a cloud solution that allows them to add capacity and only pay for what they use. IT experts monitor customer usage to fit a company needs, and after the holiday season, they help companies rebalance their systems back to normal capacity.
Partnering with a managed service provider removes the artificial barriers of using physical hardware and takes the guess work out of forecasting how much capacity a company will actually use. Bursting ensures retailers don’t miss out on a huge chunk their yearly revenue that comes during this very important time of the year, by saving on cost and ensuring no downtime because of capacity issues.