By Brett Stoddard
CFO, One Step Retail Solutions
There exists in the world of retail business certain challenges that are as prolific and universal as profit and loss - indeed they are found in one degree or another in every organization, big or small. Yet in the last decade, few have become more pervasive or difficult to predict, quantify, and contain than the total cost of information technology. As retailers strive to solve age old questions regarding marketing, inventory control, and staffing, the answers inevitably result in some form of IT investment.
Consequently, financial officers are playing a lead role in assessing the value of information technology investments and then measuring the impact of them on their businesses. Yet few CFOs are by nature "technologists," at least not in the purest sense of the word. IT projects can be complex and expensive. And the more complex they are, the more expensive they can become... thus making the ROI seem as elusive as a corporate tax refund.
With ever tightening budgets in an increasingly competitive economy, many CFOs are looking for IT solutions that side-step the ROI robbing entanglements that can lead to scope creep, missed targets and budget overruns. Application-specific retail systems, built on proprietary foundations that require significant customizations, detailed business analysis and high-dollar hardware are giving way to the latest evolution of "shrink wrapped" or "off-the-shelf" (OTS) software solutions. Such solutions are developed for maximum market compatibility while maintaining critical functionality and they run on less costly Windows-based servers.
These solutions are generally not only less expensive to purchase and implement, they are also much less expensive to maintain. As is the case with any application specific product, economies of scale dictate price. The more "specific" a software solution becomes for an individual business, the less scalable it becomes for other businesses. This limits opportunities for the developer to amortize the costs over a sufficient number of customers, resulting in steep individual development and maintenance fees.
However unlike their unwieldy counterparts, best in class off-the-self solutions organically provide the vast majority of retail feature requirements and they are relatively inexpensive to customize should the business need to add specialized custom features, either initially or at some unknown point in the future.
This inherent functionality along with inexpensive customization flexibility allows the developer to keep the costs down on the core product while at the same time permitting other modifications to be made by 3rd party business partners without increasing software maintenance fees.
In this way best in class OTS solutions have, among other features, incorporated truly integrated and competitive EFT and gift card functionality as well as main-stream accounting interfaces that deliver sales and inventory data to the P&L—features that can add tens of thousands of dollars to traditional systems but in OTS solutions they practically come for free.
Other key benefits of these solutions are that they make use of user-friendly touch screen interfaces that minimize the learning curve and lower the cost of training. In addition they ship with a host of incredibly useful retail-centric reports... and if that proves insufficient... most make use of either Microsoft SQL or Oracle database engines which power a myriad of reporting tools that makes it possible to economically slice and dice data into virtually unlimited business intelligence structures without the need of proprietary training or additional staff.
Of course in today's web-enabled, twittering, Blackberry and iPhone addicted business world, any truly useful retail solution must also contemplate ecommerce. With everything from apparel to steak being purchased online, an electronic storefront that ties directly into the premise-based POS is essential. SAP, Epicor and other upper tier products have been doing this for years... but once again that scalability vs. cost thing pops up. OTS software solutions are making significant inroads into this arena and doing it in a fully-integrated and budget oriented way that the big boys can't compete with.
The total cost of ownership of retail IT solutions involves a host of considerations ranging from initial purchase to minimizing obsolescence. This can be a daunting task for any CFO. However, if the primary objective is to deliver a feature-rich point of sale with integrated ecommerce, powerful reporting and business intelligence engines, economical customizations, reduced maintenance/support fees, touch screen driven interfaces for reduced training costs, seamless EFT and gift card capabilities and compatibility with true accounting systems... looking to off-the-shelf solutions may just be the best way to control the total cost of ownership without giving up critical functionality in the process.
