Do you know what question I hate? “If I can go buy a basic cash register for a couple hundred bucks that does everything that I need, why on earth do I have to spend $10,000 on a POS?” Someone has asked me this question almost once a week for the last 4 years. Do you know why I hate it? Because after 4 years, I still don’t have a good answer.
I typically say something like, “It is our requirements that drive us to that price point. Adding centralized menu management, polling, integrated inventory management and labor management into the mix requires that we buy this type of system. You can’t do that stuff with a cash register or basic POS.”
Typically, the response I get is something like: “So? I don’t care about all of that complicated stuff. I just need to ring sales.” It’s no wonder franchisees think that retail CIOs are out of touch with reality.
Here is the really crappy part. When you add in all of the other costs, such as high-speed broadband, hardware maintenance, software maintenance, help desk, installation, inventory management, labor management, training and various upgrades along the way, that $10,000 POS is probably going to cost franchisees $20,000 over five years--not to mention that they wrongfully expect the system to last 7 to 10 years.
As Pizza Hut CIO Baron Concors said in an E-mail with a colleague here the other day, times have changed when it comes to getting a decade's use out of these money-taking boxes. "Technology has become more of a business enabler for every industry and QSR/Casual Dining is no exception," Concors said. "The days of keeping hardware around in restaurants for 8, 10 or 12 years is gone."
Vendors are constantly adding functionality to keep up with trends and massively over-complicating the systems. As the costs of technology decrease, instead of making the same systems cheaper, vendors use new features to justify growing hardware requirements (and growing costs).
I think that the retail technology providers should follow Intel’s lead, taking its ATOM chip as a prime example. Intel figured out there is a huge market for chips that serve the basic needs of simple machines. It turns out that not everyone needs a rig capable of supporting a World of Warcraft convention. Some people just want to surf the Web and read E-mail. As a result, Intel successfully segmented what was typically a two-tier market--“Gamers” and “Everyone Else”--into a three-tier market by adding a “Simple and Cheap” tier.
Sometimes it is this need for “Simple and Cheap” approaches that drives business partners to look at third-party options.
In an effort to help the retail technology providers gain traction down this path, I have developed the following guidelines for vendors that are looking to provide “Simple and Cheap” options:
- If a piece of functionality does not deliver at least one percent of quantifiable sales increase or one percent of quantifiable cost decrease, it should be eliminated. In an effort to help the retail technology providers gain traction down this path, I have developed the following guidelines for vendors that are looking to provide “Simple and Cheap” options:
- If a piece of functionality does not deliver at least one percent of quantifiable sales increase or one percent of quantifiable cost decrease, it should be eliminated.
- If the instructions for a piece of functionality take up more than a single page in a 12-point font, it should be eliminated.
- If any process on the system requires more than 5 buttons to be pressed, it should be eliminated.
- If a specific piece of technology has an annual return/repair rate of 15 percent or greater, it should be eliminated.
- If it costs more than 10 percent of the initial purchase price to provide support for a technology on an annual basis (all-in), it should be eliminated.
- If a piece of technology consistently generates more than 5 percent of all help desk calls, it should be eliminated.
- If the customer has more than 100 locations, any centralized service should not be priced on a per-store basis (a personal pet peeve of mine). For example, if there is a central database collecting data from each system and the customer has more than 100 stores, they should not pay $X per store. Instead, they should pay a flat rate for the system.
- If a single person cannot easily manage the menu on more than 5,000 terminals from a central location, it should be eliminated.
If you are a technology provider trying to implement these guidelines, the most important thing to remember is this: If you are unable to meet one or more of these guidelines because of specific customer requirements, you have an obligation to inform the customer about which requirement(s) is causing you to miss the mark.
It is very important that retailers be able to make a business decision to keep or drop a requirement that over-complicates their system. On too many occasions I have had to explain to my business partners that the reason a system is so complex (or expensive) is the result of one requirement that eventually was dropped or deemed no longer important. It may have been critical at the time of design or purchase, but that requirement isn’t important now. And yet the complexity (and costs) remain.
If the provider does a good job disclosing requirements up front, it forces the business to consider how important each requirement is--and if it is worth adding complexity and cost. I have implemented questions into our vendor selection process that now cull out these types of issues, and I feel that it is dramatically improving our requirements and our ability to get something “Simple and Cheap.”
What do you think? Love it or hate it, I’d love to gain some additional perspectives. Leave a comment, or E-mail me at [email protected].