Magazine Article | July 1, 2001

Enterprise Technologies Unite

Source: Innovative Retail Technologies

Web-based applications paired with centralized networks are key for a tightly integrated retail enterprise.

Integrated Solutions For Retailers, July 2001

Most retailers would agree that the most mission critical aspect of their business happens at the point of sale (POS). However, it is becoming increasingly important for retailers to look at how their entire enterprise works together before making technology decisions. "Technology has evolved over the last decade to bring tremendous control and influence to the front end of the store. But if retailers don't get the opportunity to control their business in the beginning, then it is difficult to see any benefits on the back end or the supply side," said Barry Blumberg, VP of marketing at Tomax Corp.

This enterprise-wide control needs to come from integrated systems that do more than simply interface between applications. In the past, retailers chose to work with a variety of systems or applications that had best-of-breed capability. Retailers who implemented the best POS system as well as the best inventory management system might have thought this would create the best overall operation. That is, until the cost of building and maintaining the connections between the different systems became more troublesome than profitable. Although the best-of-breed strategy may work for larger tier retailers that have extensive IT staffs and experience, the small- to mid-sized retailers are more interested in an enterprise-wide solution. Although an all-inclusive retail solution does not yet exist, Blumberg thinks vendors are working toward this goal to ensure integrated rather than interfaced systems.

Web-Enabled Networks Connect Supply Chain In Real Time
One tool that aids in enterprise-wide integration is the use of Web-enabled network applications and thin client servers in retail stores. "Web-based technology provides a better collaborative retail environment for employees, consumers, and retailers, allowing the organization to communicate with its entire supply chain," said Rich Harmatiuk, VP of product management at GERS. Web technology is supported by a centralized host, which allows anyone associated with the retailer to access the same data at any time. An example of this would be a retail store communicating with its corporate headquarters. Traditionally this has been an offline batch process that occurs at the end of each day. A transfer of inventory, price, and sales data occurs between headquarters and stores. Now the Web provides a low-cost, real-time network environment for all communications from sales information to employee handbooks.

"People used to be comfortable with operating separate systems in the warehouse, the stores, and in the corporate office," Harmatiuk said. "Now the Web reduces integration expenses, provides faster communication across the enterprise, and allows for more overall efficiency."

Blumberg noted that a centralized network also alleviates some of the complexity found in the standard grocery computing environment. Typically grocery chain networks are so disconnected that there is an average of seven servers, 12 applications, and three types of networks. Retailers are eliminating this situation by installing thin clients in the stores, connected to the corporate headquarters via a WAN (wide area network). "Browser-based technology also enables retailers to extend beyond brick-and-mortar sales by integrating kiosks, handheld devices, and e-commerce over the same network," Blumberg said. "Suddenly it doesn't matter how your customers communicate with you, it is only the user interface that is different depending on what channel they access."

ROI Really Is Measurable
Anytime a retailer anticipates a technology change or implementation, the key acronym discussed isn't POS or WAN, as much as it is ROI (return on investment). If retailers look at its operation across the entire enterprise, there are various places where technology improvements can be translated into profitability. Ravi Bagal, industry analyst at Tomax Corp., separated ROI measurement into two categories: hard (quantifiable) and soft (qualitative) benefits. "A reduction in the time it takes to process a transaction is easily quantifiable - compare current system performance versus a projected improvement based on past empirical data. This can be converted into labor time saved," Bagal said.

The soft ROI measurements can be more imprecise, but perhaps reveal more substantial results. An example might be using a labor scheduling program to indicate overstaffing levels. The results of this finding might be a reduction in head count, or an increase in customer facing activity by retail employees, such as suggestive selling. "An innovative retailer should use its retail enterprise solutions to reduce cost and drive sales," Bagal said. "ROI analysis can demonstrate some of the advantages of thin client or Web-based solutions through reduced implementation, training, and maintenance costs."

Overall, retail enterprise vendors should be willing to work with retailers to develop an enterprise solution that will fit the retailer's needs. Following the installation, the vendor should also assist the retailer in measuring its ROI and be willing to adapt to its expectations.

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