Retailers’ two top focuses are to cut operating costs and provide a superior customer experience. A lack of internal IT resources to maintain supporting home-grown and multi-vendor systems, however, can hinder both objectives.
By shifting to managed service vendor programs, retailers are gaining world-class best-of-breed solutions, as well as tech support that is only a phone call away. Senior editor Deena M. Amato-McCoy discussed the proliferation of this trend with Tad Shepperd, VP of U.S. retail, for Wincor Nixdorf, Austin, Texas.
Chain Store Age: Many retailers are transitioning from homegrown systems to more packaged solutions. What is driving this trend?
Tad Shepperd: By focusing more on open systems, the industry is moving away from proprietary ones. Chain retailers have invested a lot of time and money to build proprietary applications. However, as companies bolt on enhancements, over time these solutions become susceptible to failures and problems.
Proprietary systems also make chains dependent on one or two core IT people who know the application inside and out. If they leave the company, chains experience new challenges to maintain these systems.
Retailers need a combination of a cost-effective technology platform, a long-term vision and a larger base of people who understand applications.
CSA: Are retailers opting for a one-stop-shop partner or multi-vendor best-of-breed installations?
Shepperd: Chains, both large and small, started adopting multi-vendor strategies for a number of reasons. In the past, tapping multiple vendors was the best way to put together a best-of-breed solution.
However, retailers faced challenges and complexity when integrating these elements into existing hardware and software, and maintaining these disparate components.
Also, it was difficult from a maintenance standpoint to keep all fixes and changes in sync to ensure all pieces work together.
Finally, retailers found it difficult to manage a variety of individual road maps and life cycles for all hardware and software solutions.
CSA: How are retailers and vendors rethinking this strategy?
Shepperd: There is a new trend that is helping retailers gain the best of both worlds.
Some companies, including Wincor Nixdorf, offer managed services that feature multi-vendor systems and maintenance packages. Through this strategy, retail-technology companies create strategic partnerships with world-class providers so we can offer retailers end-toend, best-of-breed, front- and back-end solutions.
For example, Wincor offers a strong point-of-sale software suite. However, we are not best of breed in every category. Thus, we partner with companies that are, so we can give retailers more IT options and the chance to extend the life of their current technology investment.
CSA: What role do you play in these programs?
Shepperd: As their partner, we are responsible for managing the maintenance and support, as well as revision and life-cycle management for the retailer’s multi-vendor platform. We do due-diligence testing for our retail partners, so they just have to place their order. We take care of all logistics, packaging and integration, as well as ongoing maintenance and support. Post-installation, we oversee and handle all solution upgrades to the next generation when their life cycle ends.
Our goal is to make it as painless as possible for retailers to gain value-added solutions.
CSA: How does this transition affect internal expenses, employee retention, and of course, long-term revenues?
Shepperd: Since a professional company is managing solutions directly at a lower maintenance cost—and with fewer hassles—retailers’ operating costs are lower than when dealing with multiple vendors.
Training time and costs are also reduced, since we, and our partners, deliver training that ensures retail associates know the functionality of the store system. This also contributes to a higher employee-retention rate.
CSA: What will the landscape look like within the next two years?
Shepperd: Retailers view technology as an enabling tool that supports business operations and provides a better experience for the customer. That said, retailers evaluate technology solutions based on whether it can reduce operating costs, streamline operational processes or improve the customer experience. And, of course, there has to be a strong ROI.
To achieve these goals, retailers will begin embracing more managed service programs and more non-intrusive technology. Retailers don’t want to be constricted by their technology infrastructure to conduct business.
Ultimately, it is all about providing a better experience for the shopper. Consumers don’t care about technology unless it helps them get into the store, find what they are looking for, and check out in a faster, easier manner. That’s the mission.