A conversation with_brp-the-future-of-omni-channel-retailing
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The experts discuss the future of point-of-sale (POS) and e-commerce systems for retailers. They agree that retailers should work towards an "omni-channel platform" that provides a single view of inventory, orders, and customers across all sales channels. This platform would replace separate POS and e-commerce systems. In the short-term, retailers can use a middleware layer to integrate different systems, but ultimately there should be one platform handling all transactions. Mobile POS should be an extension of the main POS system to provide a consistent experience. POS in the cloud offers lower costs and flexibility for retailers of any size.
A conversation with_brp-the-future-of-omni-channel-retailing
- 1. Question: Should POS be the transaction software of record or should it be the e- commerce platform, or should retailers have both? Kris Torgerson, Vice President: The line between the two has, and should, blur with the concepts and realities of Omni-Channel and data convergence. POS and e-commerce should be two lenses into the same dataset – business requirements and customer experience needs dictate which software lens should be provided, but each avenue to engage with the customer should come back to a common system of record which wouldn't necessarily be either POS or E-Commerce. Perry Kramer, Vice President: I think it depends on the retailers' maturity. The desired end state is a middleware layer or Enterprise Service Bus that connects all of the customer and POS touch points to a common view of inventory, fulfillment options, and back-end accounting, BI and CRM functions. That said, some retailers are slowly migrating their systems one step at a time from multi-channel to the single customer view of Omni-Channel. The more advanced retailers are taking the “leap frog” approach of going straight from multi- channel, (or in some cases a single channel), to the desired single view Omni-Channel solution. For the less ambitious retailers it is a slow journey from multiple independent customer systems, to a hybrid, to a single services-based approach. Ken Morris, Principal: The middleware/SOA layer is really a middle step for retailers - in the future there should be only one platform across all channels – “one version of the truth” – this one platform will handle POS, mobile, website, any and all channel transactions - it will be an Omni-Channel platform. This will not be a legacy point of sale or legacy e-commerce system – it will be an Omni-Channel platform for the future that connects all of the customer and POS touch points to a common view of inventory, fulfillment options, back-end accounting, BI and CRM functions. THE FUTURE OF OMNI-CHANNEL RETAILING 2 A CONVERSATION WITH BRP 1 During a recent interview for an RIS News article, a few of the consultants at Boston Retail Partners participated in an interesting discussion about the future of Omni-Channel – the conversation is excerpted below.
- 2. A CONVERSATION WITH BRP: The Future of Omni-Channel Retailing Page 2 of 4 Q: Or should retailers have a software layer that resides above all transaction applications in the organization that integrates them through SOA architecture? Kris: Again, this is a business capability question. In larger retailers, effectively addressing the growing complexity of an integrated retail experience often requires SOA or at minimum, an ESB type integration layer. Less complex business models may not choose this approach and leverage point-to- point integrations instead. However, the thrift orientation of retail IT often leaves a patchwork of legacy systems required to support core business functionality. It is rare that an effective SOA type approach to integration doesn't ease the progression of IT delivery as well as lower the long-term TCO of an organizations system portfolio. Ken: I think the reality is that retailers aren’t going to throw away legacy systems all at once - moving to the Omni-Channel platform will take years. The bridge to get to the Omni-Channel platform is the middleware/SOA layer that works in a “publish and subscribe” environment – applications “publish” their interface to the middleware layer at either real-time or near real- time frequency and the other applications “subscribe” to the middleware to access the data. With the future being the Omni-Channel platform – the middleware layer works as a stopgap for now so that retailers can still utilize legacy systems. Q: Should mobile POS be a separate application or an extension of the existing POS application? Kris: Mobile is most effective if answering specific strategic business needs. When defined and measurable, a mobile oriented implementation can enhance service to the customer, increase efficiencies of store personnel, provide enhanced customer-facing electronic shopping experiences in store – alternatively, it can be a line-busting solution on a tablet. Both models have utility to a given subset of business scenarios and are each potential strategy for a retail customer. Either, depending on your business model, can be something to increase customer stickiness, enhance propensity to buy, increases margin, etc. - again, business strategy will drive the type of mobile experience needed. Providing the infrastructure and appropriate application experience is the challenge for your partner or IT team. Integrated solutions are good because they provide a more seamless experience for store personnel. This is generally easily deployed with a POS or as an accent to the existing POS quickly and reasonably easily. The drawback is that you remain constrained by the POS system’s capability. Effective mobile requires a mobile-oriented mindset and customer focus with a different set of success factors – speed of checkout isn't paramount, the customer experience, cross- selling, up-selling, rich media-enabled retail experiences all can greatly enhance the shopping experience. A custom approach with integration is far more effective at addressing the unique capabilities and demands of a mobile POS experience. “Retailers need one version of the truth” – Ken Morris
- 3. A CONVERSATION WITH BRP: The Future of Omni-Channel Retailing Page 3 of 4 Perry: Again, I believe the ideal state is that the Mobile POS application is an extension of the one POS system. The system will be smart enough to know when it is running on a mobile device and dynamically enable / disable features, functions, and presentation format based on the form factor. This helps reduce IT and QA costs by having a single application to manage, patch, deploy, train on, test, etc. The drawback of a single application is that some older POS applications are not capable of being fully adapted to mobile and as such must be rewritten or replaced entirely. When this is the case many retailers take the smaller step of adding a mobile POS application as a separate application. This can lead to an incomplete and dissatisfied customer experience and increased operating costs. Ken: I agree that the ideal state is that the mobile POS application is an extension of the existing POS system with the system smart enough to know when it is running on a mobile device and dynamically enable / disable features, functions, and presentation format based on the form factor. Q: Should mobile POS replace all fixed POS cash wrap stations in stores or simply serve as an addition? And what are the considerations for retailers? Kris: Absolutely not – there are business models where it makes no sense. Making the call demands an assessment of your brand image, the retail experience desired, sales process workflow, and opportunities for technology based improvement. There is less opportunity for a mobile POS in grocery (yes, I know we see it, but it's less common); it can make HIPAA and PII compliance harder in pharmacy (though it has shown great success in hospitals). Retailers need to remember that despite the rampant growth of mobile and honestly - a difficulty coming up with a retail model that can't benefit from mobile - there still remains challenges with management and security. These devices represent a significant investment and the mobile nature make them a much higher risk level to security, data loss, as well as hardware loss. This gap is closing quickly, however, it remains a challenge. Perry: I see mobile POS replacing the vast majority of fixed POS stations in the retail environment. In the specialty store environment it might be all but one. In the department store it might be less, in a front line checkout environment it will eventually be a hybrid with some fixed stations and mobile stations that can be used to dock mobile devices during peak “Retailers of any size will benefit from POS in the cloud – the future of point of sale is virtualization.” – Ken Morris
- 4. A CONVERSATION WITH BRP: The Future of Omni-Channel Retailing Page 4 of 4 times at the front line. The considerations for retailers include: a much different TCO than traditional retail-hardened POS, changing support model, RF infrastructure, bandwidth, monitoring tools, non-POS transactions (accounting, BI inshore reporting scheduling etc.), and most importantly - meeting the increased set of customer expectations. Q: What about POS in the cloud? Is it a better option for smaller retailers or can retailers of any size benefit? Kris: I believe that POS in the cloud is not the question - the question is public or private cloud. Infrastructure is increasingly a commodity. As such, we should have it in the most cost effective location that addresses business requirements. Public cloud is less secure and as we've seen with both Microsoft & Amazon, can be less reliable. Private cloud represents many of the benefits of cloud without the exposure. Technology is often seen as cyclical and utility computing is again on the rise. Historically POS implementations represented a material investment, with cloud services; it is far less a barrier to entry. That said, private cloud brings more flexibility, greater security, and at least for now, better reliability. This is true for all retailers and will become increasingly apparent in the coming years. Perry: POS in the cloud is already a reality and it will continue to grow. The benefits include a much lower operating cost, a much shorter change and deployment cycle, and the ability to quickly flex and grow at peak seasons or during acquisitions. The drawbacks are that if a company does not already have multi-tiered applications and applications in the cloud there is a development and operational learning curve that must be accounted for. This type of POS can fit the largest and the smallest retailers if designed properly. Ken: Retailers of any size will benefit from POS in the cloud – the future of point of sale is virtualization. Virtualization will happen once we rethink the current decentralized environment that has been the reality in retail for the past 40 years. Network advances have changed how we should think about systems – the old decentralized environment is out-of-date – current network availability changes the way retailers should think about centralization and the cloud is an important piece of this. The future of point of sale is beyond traditional point of sale or mobile POS; it’s real-time retail – the Amazon experience at the store. Boston Retail Partners is an innovative and independent retail management consulting firm dedicated to providing superior service and enduring value to our clients. Boston Retail Partners combines its consultants' deep retail business knowledge and cross-functional capabilities to deliver superior design and implementation of strategy, technology, and process solutions. The firm's unique combination of industry focus, knowledge-based approach, and rapid, end-to-end solution deployment helps clients to achieve their business potential.