The Enterprise Software Money Pit

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Written by Kevin McAdam, One Step’s Senior Retail Technology Consultant | October 31, 2017 | Photograph by Freddie Collins (Unsplash.com)

Technology.

It’s very much a word at the core of our society today.

What do you think of when you think of technology?

Is it a cool new gadget like the next iPhone?

Is it a new app that makes life easier?

Maybe a better way of doing something than how it was done in the past?

Oxford has defined Technology as: “The application of scientific knowledge for practical purposes, especially in industry.  ‘advances in computer technology’”

Interestingly Oxford also has defined New Technology as “Technology that radically alters the way something is produced or performed, especially by labor-saving automation or computerization.”

There is no doubt technology drives our economies today across just about any industry.  It’s changed our world and our lives.  As new technologies emerge they have the ability to change whole industries, upset the status quo, cause the fall of industry titans, and create the emergence of new titans.

Take the building industry and the technology of pre-fabrication as an example.  Prior to its emergence, construction had to occur onsite using raw materials and labor which needed to be built on site.  Then emerged the ability to consolidate labor and raw materials together, fabricate the pieces and parts needed in construction, and then, transport those pieces to the site to be assembled.  Time and cost were driven down immensely and the world changed.

This same impact can easily be found in many industries but I won’t bore you with more analogies; instead, let me get to the point.

Why then, despite new technologies like cloud and mobile devices, are enterprise retailers still being convinced that they have to spend millions of dollars on old software systems? Systems that require software builds that may take years before they are ever operational and have any effect on the business?  Where is the ROI in that?

Software technology companies are great at making their products look new through rebranding, the merging with bigger names to then rebrand some more, amazing marketing, crafty sales pitches, impressive presentations at trade show events, etc., etc.

Unfortunately, in far too many cases, once the glitz and excitement of the press release wear off and it comes time to implement; we find that the software development to achieve those visions now becomes the responsibility of the retailer who now needs to pay for it through painful builds that never quite get there.  By the time the software is actually ready to deploy, it is already outdated, in some cases no longer supported by the developer, and an expensive upgrade is already in store for the retailer.

Let me back this up a bit with some anecdotal stories I’ve had in the past several months.

One retailer, I talked to, selected a technology based on the excitement of a new merger, between two enterprise software companies, that was going to create an amazing new integrated solution for them.  Two years and 2 million dollars later they have yet to pass a conference room test script. Worse, all of the IT professionals who originally selected the system somehow moved on.

Another retailer made what they considered a safe choice. They selected a system that everyone knew was great (and couldn’t get fired for selecting it… of course).  Eighteen months later, I again spoke with them and well… they don’t really have a build yet ready to deploy in stores but they think they are very close.  Again, millions of dollars spent and the word used to describe that software is a “build”.  That means they are building the software onsite for the retailer just like the old ways of construction prior to prefabrication.

A third retailer was also a couple of years into the build and integration of a system that had taken so long to implement, the developer had been acquired by another company and the software, they had invested in, was no longer supported.  In my contact’s words, they were faced with the problem of “becoming a development house”.  What retailer has the time and money to become a software development house much less the desire to take on the risks and headaches that go along with it?

But I get it, that’s the safe bet and no one wants to be the first to take the risk on something new, right?  And well, we’ve already invested so much time and money at this point, we can’t back away now?  I say, can’t you?  When is it just a money pit?

Isn’t the retailer under enough pressure from the changing industry landscape out there with the decline of in-store and rise of online shopping?  Can you imagine selecting a software that you hope to deploy by next year that was built to compete with the Amazon of 2 years ago?

When is enough, enough?  When does this become the proverbial money pit?

Well, from what I can tell with my ear to the street, it’s going to be after this holiday season.  Many retailers have been under siege for the past couple of years fighting off declining sales by creating promotional or accounting strategies. However, the truth of the matter is they are struggling and scared of what this holiday season will bring.  If the season proves to be another upset, then massive change is going to come.

Retail must focus on the core assets and cut the fat.  What is the number one core asset you have as a retailer?  Your customer.  Yes, your inventory is critical but that’s a given today.  If you can’t have systems that provide the tools to manage your inventory and do it in real time, I mean we are talking a decade or more, ago right?  But now the customer is able to buy that product in a lot more places whether through their phone, their computer, or your competitor.  Why should they buy it from you?

It starts by simply knowing who they are.  It’s like the old Cheers song, “where everybody knows your name” …  know your customer. Have a single, universal CRM profile of each of your customers that is the same online, in-store, on mobile, etc.  How?  Well, this is that new technology thing I mentioned at the beginning.

Cloud and mobile technologies have established enough of a footprint in retail that companies have now developed new systems with enough power and functionality deployed straight-out-of-the-box to displace the traditional enterprise systems of yesteryears.  Cloud CRM is included in the same retail system that does POS and order management, all integrated to online and mobile channels. Yes, it took a while for cloud and mobile technologies to build from the ground up to get to where they are today.  But, the legacy platforms that have decades of code to work with, just won’t ever get there.

By deploying out-of-the-box applications you do the same thing as pre-fab construction and only have to tie the pieces to the existing structure to get the finished product.  Costs go WAY down and timelines to implement real improvements go right with it.  I worked with an enterprise retailer that did this recently and yes it took them 3 years to just make the decision to do it but when they finally did they took 8 months or so to integrate to ERP systems and test and then converted 80 stores in 6 weeks.

That’s the fundamental change we are talking about.

Stop throwing money in the pit please.  Open your mind to a new technology in the enterprise retail software world and put those millions of dollars you saved into finding out better ways to adapt to the changing retail landscape instead of more marketing funds for the classic software players.

 


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