operations - but one seemingly small element gives chief operating
officer Euan Upston the greatest number of headaches.
"Our retail operation would be the most time-consuming part of all our
software," says Upston, who recently worked with long-time partner
Nexus to manage a major server consolidation designed to pave the way
for a coming museum expansion that incorporates an extensive IT
The retail application made the jump to a virtual server without a
hitch, but stability problems have caused more than their share of
headaches as Upston works to keep the MCA's $1 million-a-year sales
operation functioning seven days a week, 12 months a year.
Those headaches come from small incompatibilities, which often plague
point-of-sale systems when their developers fail to keep up with
software upgrades and hardware changes that break the carefully
refined integration between till, barcode scanner, touch-screen
interface, printer, Eftpos machine and the controlling PC.
The problem is often an issue of scale. Many POS vendors are
relatively small, with limited resources to test and update hardware,
which leaves their solutions vulnerable when changes are made.
"The problem is you get a lot of downtime because upgrades are always
coming through," Upston says. "[Yet] shops are a significant revenue
driver for most galleries and cultural institutions."
Any shortcomings have direct bottom-line implications. Nexus
principal Sean Murphy says that although the POS system is one of the
MCA's smaller applications, it consumes as much of his organisation's
resources in a week than all the other museum applications require in
"Even the museum's digital asset management system is easy to manage
compared with the retail system," he says.
"The device count for retail systems is four times that of any other
executive function, and this means you end up with a bunch of big grey
These require constant care and feeding to keep working.
The MCA's experience is hardly unique. Thanks to years of
fragmentation and competitive infighting, the coherence of the retail
systems industry is still far from ideal. A preponderance of smaller,
local POS developers established a footprint through the 1990s,
meeting immediate needs but lacking the resources to keep up with the
pace of technological change - often creating support nightmares for
companies that just want to keep their businesses afloat.
Upston, for one, recalls a disagreement with another POS vendor that
sold the Sydney museum an integrated bundle of retail software and
printers that didn't work as intended.
The vendor told Upston he had bought the wrong printers, even though
the museum had ordered the devices from that organisation.
For retailers who just want to sell their products, dealing with
niggling driver issues and the impact of operating system patches is
well outside their comfort zone. Yet keeping technology still is ever
harder these days, especially with vendors pushing the merits of Web
2.0 technologies and interactive retail applications such as digital
signage, wireless hand-held information terminals, internet
protocol-based security cameras, and the like.
Applying these technologies to your average retail environment can
deliver significant improvements to the customer experience, making IT
an intimate part of the shopping experience. Enhancements such as
video conferencing and multicasting make it easier for merchants to
deliver product training directly to sales staff across a large number
of branches, while multimedia security systems leverage IP networks in
novel ways to help companies improve stock handling and react more
quickly to security breaches they may face.
Some merchants recognise the possibilities. Gerard Florian, chief
technology officer with Dimension Data, says most of his company's
discussions gravitated to the possibilities of the network,
specifically with wireless and video.
"Often [retailers] have had a phone but it hasn't been able to do
anything else," he says. "The wireless device needs to go beyond being
a basic voice handset, to doing a bunch of other things like
maintaining data and enabling quick look-ups on back-end inventory
However, although retailers may see promise in new technologies,
introducing them into mission-critical front-of-shop environments is
A recent Forrester Research survey suggests one reason why. Overall,
retailers are trimming their expenditure on new technology. More than
half (58 per cent) of surveyed businesses in the United States
projected their IT budgets would be lower or similar in 2008 compared
with the previous year. The proportion among slightly more bullish
Asia-Pacific region retailers was only 46 per cent.
Less of this budget is going to new initiatives: in 2008, Asia-Pacific
region respondents forecast that 44 per cent of their budget would go
to new projects, down from 47 per cent a year earlier. Also
significant among Forrester's findings was a low level of interest in
collaboration technologies; a "disproportionate" attachment to legacy
applications; two-thirds of companies spurning IT architecture
redesign; a propensity towards industry-specific packaged solutions;
languishing mobility initiatives; and tighter control of maintenance
But in the end, reasons for spurning new technologies may well be more
utilitarian than anything else. Once they have a working platform, the
potential risk of a POS outage are so significant most retailers are
loathe to change platforms any more than they absolutely need to.
John Bartlett, IT retail systems manager with beauty products
merchandiser The Body Shop, is well acquainted with the potential for
disaster that comes from retail solutions.
Charged with keeping more than 200 registers in 80 stores running
continuously, Bartlett knows a weak link in the retail solution is a
recipe for disaster down the track.
This is especially the case in The Body Shop's outlets, where POS
computers sit in dusty, hot cabinets, and staff often try using
touch-screen terminals with long nails and fingers smeared with the
store's trademark lotions and creams.
Such working environments led to some interesting testing. During an
effort to revitalise the shops' appearance, Bartlett drove the
updating of the chain's reliable but antiquated NCR POS terminals,
some of which had been in use for 13 years.
"We have a pretty thorough test environment," he says. "We'd hit the
touch screens with pens, bring down girls with sharp fingernails to
try it out, and try it with lotions and dust.
"My job is to get something into stores that will work, and I don't
want to field calls in the middle of the night from someone saying
their printer is broken."
But even after testing was complete the rapidly changing IT industry
proved incompatible with Bartlett's need for consistency and
Despite the initial supplier's assurances it would provide 100
identical PCs, only the first 20 systems were eventually the same.
Bartlett ended up with five different motherboard chipsets, each
introducing its own set of compatibility issues within the retail
That environment - running POS software from Retail Directions, Epson
TM-H6000 printers, Elo touch screens and Datalogic barcode scanners -
now runs under Windows XP-based Power POScomputers from DigiPoS.
Bartlett is planning to revisit the environment again next year as
part of The Body Shop's regular four-year replacement cycle, but he's
going to keep the same hardware, and stick with Windows XP.
"Operating systems are one of the things I don't change lightly," he
says. "We stuck with Windows NT 4.0 until I was forced to upgrade,
then went to Windows 2000. When you're talking about POS, the
operating system of the box is very important. The POS system is
written to run on a specific OS, and you can't just change them
"There are tweaks and changes to make [every time you change a
device]; it's not just something you roll out. It takes a lot of
change management to work out how you do that."
Some would argue the POS industry has dug its own grave by building
inflexible systems that are highly sensitive to change. Others believe
escaping from this past provides an opportunity for vendors to improve
"[There are] some real problems in the retail software industry, and
anyone who grabs hold of it and brings up its base code to the level
of understanding that [retail] is an operating-system thing, will make
a motza," Upston says.
SAP, Oracle and other major business application vendors are pushing
their integrated retail suites quite heavily, but the complexity of
their implementations has kept them well out of the reach of the
smaller outlets that comprise the majority of the consumer market.
Not surprisingly, Forrester Research surveys confirm that most
retailers stick with focused vertical retail applications.
One vendor trying to push into the lower end of the market is
Microsoft, which will update its Retail Management System offering
Although many local POS vendors focus on delivering tightly integrated
solutions, Microsoft is building on its base of back-end applications
- for example, the Dynamics family of customer relations management,
finance and other systems - to push a story that shies away from bells
and whistles, focusing instead on cold, hard facts.
Given the economic difficulties of late, the director of business
applications with Microsoft Australia, James Simpson, believes
businesses may be particularly receptive to POS systems that work with
back-end applications to deliver better views of overall sales
"Times of downturn and challenge are when retailers talk to us about
invigorating their infrastructure," he says.
"We see a deepening of the sophistication at the POS terminal, a
broadening of the scope, and a growing demand for real-time analytics.
Retailers want the terminal to update the back end as transactions
flow through the register, and granularity of data is critical."
This greater granularity enables better data analysis by helping
merchants spot purchasing trends that may help them improve future
performance, for example, which products are often bought together,
and which ones are usually bought at specific times of the day.
Simpson sees particular value for improved sales systems in franchise
operations. For example, franchisors can offer franchisees detailed
analytics capabilities as part of the franchise arrangement.
With such capabilities on tap, he believes franchisors can add value
to the overall brand, enabling branches to use the analytics to become
more successful without requiring ongoing head office support.
"There's definitely a differentiation in providing franchisees a
sophisticated view of the transactions going through their store, but
without the franchisee having to get involved with the technology,"
"In the long term, those stores that do not have the capability to
analyse the business will ultimately perform worse than those that
But retail technology isn't just about improving revenues. Multiplier
effects in sales activities mean that small improvements in technology
- even something as pedestrian as installing faster printers - can
deliver big bottom-line benefits by reducing operational costs,
minimising lost sales and processing customers through store checkouts
Over time, this adds up to a significant figure. One US retailer
Forrester surveyed estimates it can add $US1 million to its bottom
line from every second it shaves off each POS transaction.
Body Shop's Bartlett is equally optimistic. "Our new printers are a
lot quicker than the previous ones," he says. "If we save five seconds
on every receipt we do, that adds up to a significant figure."
If the battle for retail IT is being fought by the visionaries and
realists, Anne McDiarmid falls somewhere in between.
As CIO of fabrics and craft outlet Spotlight, she recognises the importance of a robust retail and
analytics system. The company operates nearly 1000 POS terminals
across 121 stores throughout Australia, and in New Zealand, Hong Kong
This makes Spotlight an enormously complicated enterprise in which the
desire for hardline POS adherence needs to be tempered with
recognising that new architectures offer significant benefits.
"When I joined the company, we had no documentation, architecture or
business process documents," McDiarmid says. "It was time to say, 'I
think I know where we want to be'."
McDiarmid has worked with IBM to centralise all processing for the
region through the retailer's Melbourne data centre.
Spotlight works closely with industry, process and IT experts to shape
a common vision built around an evolving SAP infrastructure within an
IBM WebSphere service-oriented architecture.
Spotlight focuses on sales action
Fabrics and craft retailer Spotlight's point-of-sale upgrade was only
one part of a major implementation covering a broad range of back-end
functionality - yet those terminals became a focal point: a gauge by
which the success or failure of the project could be measured.
By building that project around a full-blown service-oriented
architecture, the company's chief information officer, Anne McDiarmid,
believes the upgrade - with accompanying back-end infrastructure - has
put Spotlight in excellent shape to continue its expansion, adding new
stores and offices with relatively little incremental effort.
Equally important, the comprehensive business process review that came
as part of the project has helped clarify Spotlight's long-term
information technology direction, and the processes that will get it
Yet while the project may have reinforced Spotlight's identity as a
retail organisation, McDiarmid is quick to point out it wasn't all
wine and roses.
Old business and IT fault lines were encountered, evaluated, and
crossed with sometimes interesting results.
"All of a sudden, the project was bringing the technology gurus into
the world of buying and selling," she says.
"This was a real eye-opener for us.
"There are a lot of nerds in the dungeon [laughs] who like to play
with the technology but don't necessarily want to worry about whether
it's a true end-to-end process.
"But IT is now business IT, rather than being IT in a business.
"And we have an absolute understanding of each part of our business
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