Retailers are reluctant to rip and replace the IT systems they’ve invested in, but some are doing just that and switching over to an all-in-one approach.
The growth in multichannel retail means businesses now have more information at their fingertips than ever before, but managing this data flow is a complex process and retailers need to ensure they choose the right IT solution to improve efficiencies and reduce costs.
IT systems represent a significant investment that retailers have often built up over many years with any number of service providers. As new sales channels have opened up, they have simply bolted on new solutions to their existing IT infrastructure, creating a complex web of data management systems.
Stephen Henley, business development manager at retail software company SAP, says that across Europe there has been a movement towards retailers wanting increased visibility of data across all channels and formats, and that this has encouraged a reappraisal of the best-of-breed point solution process – individual systems for different areas of the business – towards integrated solutions. “This is leading more and more retailers to address the issue of needing an integrated solution that covers all the functionalities across the whole organisation,” he says.
Making the switch
Fully integrated enterprise resource planning (ERP) solutions, or ‘all-in-ones’ as they are known, draw together a range of functions including EPoS, stock management, merchandising, ecommerce, HR and logistics, reducing the number of service providers retailers need to pay for and allowing them to gain a single view of how the entire company is operating.
Womenswear chain Hobbs switched over to retail technology firm Prologic’s all-in-one multichannel CIMS system, because the two systems it was using before were causing issues around data management.
“We could never be sure the store stock we were reporting at head office was in fact the stock we had in our stores. That has an effect on everything from replenishment to possible sales. So fixing that was our key focus,” says Hobbs’ head of business development Emma Osborn.
Henley says this view helps businesses reduce costs by informing retailers’ planning, buying and merchandising, allowing them to align themselves with customer demand. “[An all-in-one system] provides a business with the opportunity to start to become more responsive in a joined-up manner,” he says.
Richard Pascoe, senior director of enterprise resource planning (ERP) solutions at Zetes, which sells, implements and supports SAP’s software
and counts young fashion chain Jack Wills among its customers, says best-of-breed point solutions only benefit certain areas. “You can get ‘silos of excellence’, which are brilliant at what they do, but don’t actually help the company move forward as a whole. One of the big advantages of an all-in-one solution is that you get the most efficient use across the whole enterprise,” he says.
Osborn agrees and says that in order to deliver a competent multichannel offer, retailers need to have one view of their business. “If you don’t have a clear view of what’s happening in each stream or channel then you’re not effective in any way, shape or form. Being able to run all the streams of your business off one system is about driving efficiencies,” she says.
Implementing an all-in-one system means retailers will be able to save money by reducing the headcount in their IT department, because they won’t need specialists in each system. This was one of the reasons Hobbs switched over. “The nature of having bespoke systems that need complicated interfaces means you have to build up your team to manage that process,” says Osborn.
However, while all-in-one systems tend to be good all-rounders for multichannel retailers, some experts believe they can’t match best-of-breed point solutions in specific areas.
Tony Bryant, head of business development at retail systems firm K3, whose clients include lifestyle retailer White Stuff, says often retailers prefer to work with companies that specialise in each function, and concedes that even K3’s all-in-one system lacks the functionality of certain best-of-breeds.
“It’s about a choice, and saying to yourself how much of that best-of-breed am I going to introduce versus another all-in-one solution,” he says.
Deryane Tadd, owner of womenswear indie The Dressing Room in St Albans, currently uses two systems: Doc.net for her website and Touchretail for stock management, but is considering switching over to an all-in-one with her web provider next year.
However, she has concerns about the cost, how long it will take to implement and a potential loss of functionality. “There are two sides to it. It will make running the website easier, but it might be to the detriment of how we manage the store stock, because it won’t provide as much detailed analysis,” she says.
Tom Baxter, ecommerce and development manager at premium menswear and womenswear indie Jules B, which has three stores in the Northeast, says it has no plans to switch over to an all-in-one system. “In our opinion there is never going to be a company that could specialise in both online and
PoS systems, due to the nature of online development.
“However, utilising a PoS system structure online as well as heavy integration is essential. It is this link that enables a fluid movement of online sales with effortless fulfilment,” he says.
Retail technology firm Eurostop offers an all-in-one solution, but sales and marketing manager Philip Moylan agrees that all-in-one systems can’t compete with best-of-breeds in their given fields.
“The biggest problem is that when software companies develop software they would have to ensure they have the extensive knowledge required [in each area],” he says. “The development time and customer roll-out is extensive and costly which is reflected in the price.”
Cost is a significant deterrent for many, but Henley says all-in-one solutions can be implemented gradually, and that retailers don’t have to change over everything immediately: “Over time retailers can gradually replace their point solutions one by one as the company matures, grows and develops based on business trading conditions.”
Returns on investment
While gradual implementation might be the answer for some, Pascoe warns that this means retailers will see a slower return on their investment. “If you introduce it module by module, then you’re not going to get the integration benefit until the last one’s gone in,” he says.
Rather than thinking about the initial cost, Bryant says retailers should consider the longer-term savings that implementing an all-in-one could bring. “If you weigh up what the total cost
of ownership of a point solution is compared to an all-in-one, you’ll find that the longer-term cost of ownership is less. That’s because you’re not dealing with all of the silos of solutions, which all have a management structure around them,” he says.
There is no clear winner when it comes to choosing between an all-in-one or best-of-breed point solutions approach. Rather, the choice comes down to a trade-off between overall efficiency versus excellence in certain areas, meaning retailers must select the option that is most appropriate to their own needs.