Franchisees See Retail Chain CIOs As Being Out Of Touch With Reality

All retail franchisee owners have, at one point, been dying to have this conversation with their chain's CIO: “Just stop talking: you’re an idiot. How can you even keep a straight face when trying to justify a $25,000+ POS system when I know I could put in a system that does everything I would need for less than $5,000?"

And the CIO in this fantasy conference call has her own dialogue: “I wish you franchisees would see the bigger picture and understand that the retail chain needs to enable technology to help us better run marketing, operations and supply chain across all stores, owned and franchised.” This begs the question: How does an IT department successfully deliver retail technology that meets the needs of both a franchisor and the chain? Both sides need to change the way they think about large-scale IT projects.

This is a lesson that shouldn't be ignored by non-franchise chains, too, as today's reality of Web-enabled, mobile-fueled, social-network-infested high-turnover low-margin is forcing everyone to play by very different rules or to die not trying.

I've spent the last 16 years trying to fight IT issues, with the last six years focused on franchisee IT issues—first running the retail technology department for Dunkin' Brands (Dunkin' Donuts and Baskin Robbins) and now running IT for Focus Brands (Cinnabon, Carvel, Schlotzsky’s and Moe’s Southwestern Grill)—and both sides need to step back and better understand the reality of the other. In this weekly column here at StorefrontBacktalk, I'm going to try and bridge that gap as we look at all of the IT hot buttons of today, from RFID, CRM and E-Commerce to mobile, payment, PCI, self-service, kiosks and supply chain.

Imagine you are on stage in an auditorium with 3,000 different retail CEOs. Large and small, all of them are in the same industry and even the same market segment. Each one of them has different levels of experience and generally different approaches to being successful. Some have Ivy League degrees, others have learned through hard work. Some manage their business by their gut, and other’s crunch numbers a million different ways. Some of them have access to deep financial resources, and others are just scraping by. Your job is to deliver a single POS that meets all of their needs.

You start by asking them what is important in a POS strategy. You are met with a wall of sound as everyone responds with 3,000 requirements all at once. Some of the requirements contradict each other: It needs to be highly-reliable. It needs to be cheap.

From behind the curtain, there is a small mob of people whispering loudly to you. “We need access to good data.” “It has to help drive sales.” Overwhelmed, you try to outline on a whiteboard an approach that meets most of the critical needs. Each time your marker touches the board, half the audience groans: Welcome to the world of Franchise IT.

I have had the opportunity to work in a Franchise environment on several large-scale, complex retail technology projects over the years. I have to admit that these projects have been the most challenging and yet rewarding of my career. Outside of the challenges associated with typical large scale IT projects, these projects have the added challenge of having conflicting motivations between 3 distinct groups: The Franchisor Business Unit, the Franchisor IT department and the Franchisees. I have yet to run into a project where all of these organizations are in complete alignment, even when there is a rock-solid, outstanding business case that shows a quantifiable business benefit for all. At the heart of the conflict is that in many cases, the IT department is trying to find one approach that fits many different needs of 3,000 different companies! The Franchisor Business Unit is trying to do what is best for the brand, the Franchisee is mostly concerned with what is best for his or her small business and the IT department struggles to design, deploy and manage approaches that meet the needs of all. In many cases, this is a fool's errand. So what is one to do, give up, go home and schedule some counseling? No. First you need to take a close look at how you define success, and secondly you need to understand the situation and take the steps to mitigate as many challenges as possible.

First, let’s take a look at some of the common objections or obstacles that one would face when implementing a new POS for a Franchise system.

  • Some franchisees will be upset because they do not believe that they should have to purchase a new POS. “The one I have rings sales just fine. It has worked great since 1992." This is the "What I have works just fine" defense.
  • Some franchisees will be pushing for a low-cost, low-functionality approach. “We don’t need the Lexus. Just give us the Corolla." Let's dub this the "I don’t care what it does as long as it’s cheap" strategy.
  • A few of the franchisees will have received their masters degree in information technology from MIT and will inform their constituents: “It is not as hard or as expensive as he says it is. We can get a Lexus for Corolla price. It’s just that this CIO is an idiot.” This is the time-honored "I am smarter than you" method, a favorite at MIT.
  • Still other franchisees will own other concepts that have done similar projects and want you to know, “that’s not how BetterBrandThanYou did it. It was much better/faster/cheaper with them.” Let's call these the "You’re not my real dad" folk.
  • There will likely be a small group of franchisees that constantly remind you about the failed project that happened 10 years ago. Even though you were not involved, they have not forgotten or forgiven the money and the time that the rogue project cost them all of those years ago. Be nice to these "your grandfather used to cheat at poker" people.
  • Not everyone in the franchisor will deal well with the conflict. An example would be the VP of operations, who used to be an operator herself, who tries to strike a balance that will make everyone happy: “Let’s compromise. Why don’t we provide 2 or 3 different methods that franchisees can chose from? That’s what we did with that last piece of equipment, the widget maker. We approved 3 different models from 3 different vendors, and franchisees got to choose. It worked out great.” Beware of the "Can’t we all just get along?" exec.
  • As CIO, you know that there is unlikely to be IT support in the stores so you are looking for an approach that is highly reliable and, when it does have problems, is easy to address, preferably remotely. You are also trying to protect the integrity of the data, as it impacts operations, marketing, finance and supply chain. Why doesn’t anyone care about what the IT guy wants in the technology? Those aren’t small hurdles, but at least we know what to expect. I like to say that, technically, north is anything between west and east. Just because everyone in the organization is heading north, doesn’t mean that everyone is in fact heading in the same direction. The challenge in this situation is that while everyone has the same goal, all the parties involved have different motivations and are impacted differently by decisions.

    So what can be done from reducing the amount of churn in an environment like this? It really depends on what the corporate culture will accept, but here are my Top 10 Suggestions.

    Solid requirements are Priority #1 Set the expectation with leadership that detailed requirements will be gathered, documented and signed-off prior to any other project work being started. In my opinion, lack of solid requirements to start a project is the number one failure point of IT projects in general, but it is amplified 1,000 percent in a Franchise environment.

    Keep your friends close and your enemies closer. They say that a picture is worth a thousand words. Well, one word from a Franchisee is worth a thousand words from you. The Franchisee leaders in your organization, both formal and informal, carry the greatest amount of influence of the project success. Franchisees want to know that their peers are supportive of the project. A Franchisor CIO should work hard to keep these Franchisees leaders highly involved, especially those that are not supportive of the project.

    Respect the Franchisee investment. Imagine that your CEO has called you and your peers on to a confernce call. During this call he informs you that the company has decided to implement a new Career Development System. In order to fund the project, they will be reducing everyone’s salaries and bonuses. You know nothing about Career Development Systems and you are more than a little upset that you weren’t given more input into the decision to spend your compensation on a company project. Realize that this is how many Franchisees feel when approached with new IT projects.

    Determine the Franchisees role in the project. Are they advising? Are they making the decision? Are they just being informed? This will vary depending on culture and the project, however once you decide what the Franchisee’s role is, stick with it. This decision will guide your communications plan with the Franchisees.

    Scope Creep = Death. Super-critical, can’t-live-without requirements will magically appear half way through the project. Unless the requirement is a complete show-stopper, you need to move it into a later phase of the project. The number two killer of IT projects is “scope creep” and it tends to be rampant in Franchise environments. It may sound simple, but if you never finish gathering requirements, you never finish the project. Everybody loves Raymond, not you. Remember that everyone has different motivations behind this project and it is highly unlikely that the project will satisfy all of the needs. Be prepared to say “I’m sorry, but the new system will not be delivering that functionality, at least in this phase.” Just because you don’t make everyone happy, doesn’t mean you can’t succeed. It can be easy for that to be lost in the fray.

    You can tell me what to do, or how to do it, but not both. Determine up-front if you will be implementing a single vendor strategy or selecting multiple vendors that Franchisees can choose from. You also need to determine if the technology will be required, recommended or optional. These two decisions will have the greatest impact on the project structure. As a general rule, Franchisees want choice and IT people want standards. If you are going to be requiring a new single-source vendor, the entire organization had better be prepared for a significant amount of pushback.

    You buy, I’ll fly. Determine, document and communicate up-front expectations about who is paying for what between the Franchisor and Franchisee. If the Franchisor is going to pay for the test or subsidize certain components of the system once it is live, communicate that information to Franchisees early.

    My Mom doesn’t understand what I do for a living. If you are going to be “selling” the project to Franchisees, have someone from Marketing or Communications help you write your communications. Poorly communicated project information containing too much technical jargon or details will turn off Franchisees, regardless of how good the approach is. Don’t let your pride stand in the way of a successful project.

    Deliver. At the end of the day, you are only as good as your last project. The old addage of under-promise and over-deliver should be followed. And remember that nothing succeeds like success. If you start to consistently deliver quality strategies, the easier it is the next time around.

    As with most things in life, the effectiveness of the suggestions above “depends” on the environment. But I am confident that the more of these that you can implement as part of your Franchisor IT projects, the more chance of success.

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