Retailer solves growing integration hurdles with one technology provider.
When Rachelle Osborn’s point-of-sale (POS) supplier said it was rebuilding its register to better position the company for the future, her heart sank.
The supplier’s move would mean 60 days of programming work on her end to get the registers to interface with her business-intelligence software. Another 60 days would be added to that three months later when the supplier intended to release yet another updated version.
“As [suppliers] have gone off their legacy systems, they’re all building [new ones using] different platforms, so integration is tough to keep up with,” says Osborn, director of technology for WESCO Inc., Muskegon, Mich. “It’s more work every time a new fix or new version of software [emerges]. We have to go through the pain of seeing what’s changed and then make sure everything it imports or exports supports those changes.”
The situation set the 51-store chain on a journey toward integrating its core technology systems, a bumpy road of researching new providers and resolving best-of-breed issues that led it to, for the most part, sign on with a single supplier. In this case, it was Plano, Texas-based Retalix USA.
Going with a lone supplier went against Osborn’s initial instinct as a longtime advocate for choosing “best of breed” technology. In other words, she had always been a proponent of getting the best POS system, the best back-office software, the best loyalty solution, no matter which vendor made it. But while experiencing the pain of integration issues, she found attractive arguments for going with one vendor, some of which included the following:
Advances in technology. With building-block technology getting cheaper and more robust, many suppliers have developed new modules that provide best-of-breed attributes, making them “one-stop shops” for retailers.
Advantages of integration. Going with an integrated solution would mean new versions or updates of software wouldn’t require someone to create an interface.
ROI. To Osborn’s surprise, the elimination of multiple maintenance contracts and other expenses led to a “hard cost” return on investment (ROI) of four years—to her, a reasonable and tangible timeframe.
“I’ve preached ‘best in class’ for years and years; now everyone’s caught up,” Osborn says. “[Before], everyone had a niche and now the software has developed long enough that there are few who have caught up in all areas.”
WESCO had been a leading-edge company in terms of technology, having introduced back-office and homeoffice platforms in 1991. In 1993, it went from “hard-wired” or nonconnected electronic registers to PC-based models, implementing scanning the following year.
Data became much more integrated, but in order for those pieces to work, anyone WESCO partnered with also had to partner with each other. At the time there was no standardization of computer protocol and no file integration. Even with the movement that would evolve into NACS’ technology standards efforts (dubbed PCATS, or the Petroleum Convenience Alliance for Technology Standards), the problem was considerable.
And the number of new partners continued to grow. In early 2000, the company took on a centralized creditcard system and implemented a creditcard change that brought in another vendor. Then in 2005, the company added a loyalty program and, at the same time, an in-house business intelligence system.
WESCO’s technology needs were growing, as was the need for a qualified information technology (IT) staff. By the end of the decade, the need for more integration and programming from Osborn’s team grew exponentially. As new features or new ideas bubbled up, her team had to become involved in those integration projects.
When then economy took a downturn, one of the company’s providers, which was originally integrated in at least two areas, POS and loyalty, was sold off in two parts. One piece went to one buyer and the other went to another. So Osborn was looking at working with yet another vendor on any future innovation.
Osborn and her team broke down the new search into multiple stages. First, they focused on pieces that were core to running their business. Then they looked at the age of what they currently had and identified systems that were becoming “inflexible” to them.
“We also looked at where our biggest headaches were and identified that,” she says.
At that point, they brought in all the suppliers with strong pieces of the larger puzzle and had them demonstrate their products.
“We saw that everyone can ring up items. Everyone can scan. Everyone had a centralized pricebook. Everyone can export into a general ledger,” she says. “The deciding factor was asking ourselves, ‘What can we implement that will give our customers the greatest value?’ ”
The answer was loyalty.
The loyalty system from Retalix, she says, delivered more options than WESCO’s current system and offered an analytical tool built upon customer buying habits. It was also configurable to their needs and what they believed customers would expect going forward, especially as more and more grocery stores partner with fuel providers for pump-rollback rewards.
WESCO already had Retalix’s warehouse and computerassisted ordering solution. Next it will now implement the company’s home-office, pricebook, back-office, POS and centralized loyalty systems. ‘
As respected software suppliers achieve parity in core areas, benefits such as having high-quality modules that cater to different aspects of c-store retailing and not having to work with multiple partners to write interfaces rise in importance, says Doug Fick, vice president of sales for Retalix and its StorePoint product.
“At least on a corporate level, someone has to be integrating, so it could be the vendor or the [retailer],” Fick says. “With one partner, you have just one throat to choke, or one person to blame if something goes wrong. You also reduce overhead, but [that vendor] also has a higher liability.”
In the multiple-partner scenario, “integration could be good or not so good,” Fick says. Another critical factor in helping providers get to a more up-to-date stage is advances in the general field of technology. Communications, servers and “thin” client technology are all more accessible and cheaper to implement than in the past.
Yet another consideration regarding integration is the pull a c-store chain may or may not have in compelling a vendor to create an interface with a new supplier. Osborn says her company’s warehouse and supply-chain involvement has given the modest 52-store chain some clout with vendors.
Just as WESCO found itself in the position to overhaul its systems, Osborn believes many c-store operators will be in the same place very soon. For example, the company for years has maintained its own private credit-card transaction system, or “switch.”
But with the credit-card companies’ move to create and enforce standards via the Payment Card Industry (PCI) Security Standards Council, running the switch has become a liability. PCI, integration issues and the quickened pace of technology advances are putting the entire industry on notice. “C-stores are going to have to look at all pieces of what they’re supporting and get ready for what’s next,” she says. “Everyone is reviewing their integration points because what was best-of-breed 10 years ago isn’t any longer.”
Step by Step
WESCO Inc., Muskegon, Mich., took a stepby- step approach in deciding on a new automation provider for its key systems:
- Focused on systems core to its business.
- Reviewed the ages of what it had and identified systems that were becoming “inflexible.”
- Identified where their “biggest headaches” were coming from.
- Brought in suppliers with strong pieces of the larger puzzle to conduct demonstrations.
- Asked, “What can we implement that will give our customers the greatest value?”
Competing Theories: An Integration Roadblock
No one needs to tell Rachelle Osborn why integration is important for a c-store operator. Osborn, director of technology for 52-store WESCO Inc., Muskegon, Mich., sees it first-hand, especially as software providers develop new versions of their products.
One significant example lies in the theory of how a pricebook should be set up. Some vendors look at the item singularly and some look at it as a package. Take cigarettes, for instance. One software vendor may count a pack, while another, a carton.
“If all systems don’t believe it’s packaged the same way, you have to switch back and forth [between] software solutions,” she says. “You can even be a victim of how you configure it because you don’t know how your [decision] will affect another system.”