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The Warehouse Group is migrating the bulk of its operations to Microsoft Azure in a multi-year project aimed at saving millions of dollars over the next three years.
The move comes after The Warehouse deferred millions of dollars of digital investment in 2023. Despite those savings, $18.6 million of software investment in 2024, helped propel the retailer to a $54.2 million loss.
With more than 750 on-premises servers, and infrastructure reaching the end of its useful life, The Warehouse faced substantial ongoing costs for maintenance and replacement of technology.
The NZX-listed retailer has now partnered with cloud migration specialist LAB³ to move its applications to Microsoft’s public cloud, meaning the company will no longer have to manage its own infrastructure, providing predictability around cloud costs as well as greater resilience and security.
“It’s great for our stores to be able to rely on 24/7 accessibility, and no longer be reliant on a single datacentre on our premises,” said The Warehouse Group general manager of group technology operations Ankit Gupta.
“Risk reduction is paramount, and if anything happens to a location in the public cloud, our connection will automatically switch to an alternative site, giving us better resilience and keeping our systems going,”
LAB³ and The Warehouse Group designed the migration process to be staggered over a 12 month period, minimising disruption to stores.
“Microsoft recommended LAB³, which enables us to use AI-powered migration tools like Dr Migrate, which uses automation to identify key applications to move to Azure first and achieve the best cost savings, rather than reinvent the whole process ourselves,” Gupta said.
This was much faster, easier and cheaper, he said.
Gupta said the key objective was to ensure the business’ more than 12,000 employees didn’t notice any difference throughout the project.
The Warehouse will also be able to take advantage of LAB³’s expertise and intellectual property to accelerate the use of Microsoft’s product suite, including its latest AI technology.
The company is already piloting Azure MLOps machine learning to optimise product pricing, as well as generative AI to reduce manual updates to its master product database.
“The cost predictability associated with its cloud transformation in Azure will help The Warehouse Group optimise retail pricing and securely adopt innovative AI technology, putting it in an extremely strong position for the next decade and more,” said LAB³ CEO Chris Cook.
Microsoft’s New Zealand North cloud region would also be up to 98 per cent more energy-efficient than standard on-premises infrastructure, and LAB³’s Dr Migrate tool would allow the retailer to monitor the carbon footprint of its cloud use.
“Right now, every business, especially in retail, is being challenged to do more with less, understand their customers better, keep up with the rapid development of AI and be more sustainable,” said Microsoft NZ managing director Vanessa Sorenson.
The migration process is happening in stages, with around a third of the group’s applications already moved ahead of the local Microsoft cloud region opening later this year.