By Brian Kilcourse, Managing Partner
10/6/2009
Back in May 2009, we reported on a panel discussion on the subject of “virtualization” that occurred at the IBM Store Systems User Group conference in Las Vegas. To recap the gist of the argument against virtualization of point-of-sale (POS) systems – and especially IBM 4690 POS – it’s simply this: “it ain’t broke, so don’t fix it.” At the Las Vegas session, Bill Noonan, who is responsible for IBM’s retail software and is a long-time IBM Store Systems veteran, explained that although VM for the 4690 is on IBM’s roadmap, a quantifiable ROI from virtualization of the platform (which at least from the “terminal” – or register, perspective, is already “virtual”) could be very hard to realize for existing customers.
The fact is that store POS platforms continue to function pretty much the way they did when they were first installed in the late ‘80’s/early ‘90’s. And so it’s not surprising to see IBM and NCR systems in some stores (to repeat a joke) that are “old enough to vote.” Although Microsoft-based POS solutions have gradually gained widespread adoption and Linux based systems continue to have their supporters, the transition has been more one of “attrition” than because of any new breakthrough value proposition that has compelled retailers to turn their attention once more to the checkout stands.
To quote the Bard himself, “what is past is prologue.” And so, to get an insider’s perspective on the future of POS, RSR interviewed Dave Courtney, the president of EDJ Enterprises. EDJ specializes in enhancements to the IBM POS platform, and has been in existence since 1992, when IBM teammates Ed Atkinson (“E”), Dave Courtney (“D”), and Jane Keirnan (“J”) left Big Blue to form their own company and extend the functionality of the platform and “tie together the pieces of technology provided by the hardware vendors.” The threesome were part of the IBM Store Systems “magic team,” a group of developers that defined the architecture and application that became the industry standard POS solution by the mid-‘80’s.
In spite of what many thought leaders (including RSR) have said about “network centric computing” as the go-forward model for IT value delivery in the future, it’s Courtney’s assessment that POS at least will continue with a “store-centric” architecture, especially for high-volume operators. “There’s a dichotomy between what the manufacturers are trying to do and what the retailers are trying to do,” says Dave. “The manufacturers of point-of-sale hardware and software need to have a continuous flow of product because they can’t just build it once and go away. They have to find new reasons to go back to particular customers and cause them to refresh. Technology moves on; when we first started this thing it was a 6 MHz 286 chip and the big debate was whether we needed a half of a megabyte of memory in the register or a whole megabyte – we weren’t sure what we could really do with all of that memory!”
As for retailers: “retailers are in the business of moving merchandise, not keeping point-of-sale vendors in business. Point-of-sale is a ‘necessary evil’. You have to have it to keep track of the inventory and the dollars and everything else, but it’s just a tool. Once you’ve got the tool in place, there is very little incentive to change it if it works. Retailers think, ‘if after seven years it’s still going and I can still tweak it to add a couple of functions without needing to go through a complete refresh – I’m going to do that! Because I know what a problem it’s going to be to rip the guts out of the store, put the new thing in, retrain all of the people, and then start fixing all of the breaks in the new system.’”
But what about ‘network centric computing’? EDJ’s president asks, “what happens when the network goes down? If you can’t do debit or credit, you’re not going to make the sale. Retailers ask themselves, ‘what if I can’t take the money?’ Basically, it comes down to ‘we want the customer to come to the register, give us money for goods, leave the store – and repeat the process as often as possible. We don’t want to entertain the customer – we just don’t want them to be impeded by the process.’” In other words, POS isn’t strategic except when it doesn’t work, when it can put the retailer at a strategic disadvantage.
Over the past decade, some retailers have tried to make the POS system a kind of information kiosk with flat screens displaying promotional and product information, supposedly to entice the customer. But what a customer is doing at the checkout is checking out. Courtney reflects what many have come to accept – that POS’s only customer function is a quick and efficient checkout, and that customer facing technologies that inform and incentivize belong on the selling floor – not in the checkout lane. Says Dave, “there was an effort to redefine ‘POS’ as ‘point of service’, but that really didn’t take off, because retailers said, ‘I want to customers to give us the money, and I want them out of the store.’“
According to the POS veteran, all of this argues that the POS system must support Item Master and Pricing files in the store and local to the store, that the registers can get to that information very quickly and whatever server technology is in-store is bulletproof. “It’s ironic,” says Courtney, “that in the last year or two customers have been coming to us with the same arguments that we used in the mid ‘80’s, except now it’s Windows – it has to be bulletproof, it has to come up and stay up every single day. They may not be able to get their laptop to do that or their home system to do that, but they can’t afford for their POS not to do that.”
IBM continues to invest in the 4690 platform, and its current version is 6.2. Courtney expects that IBM will continue to deliver on a three-year cycle. “They may be bringing out a new version every year,” says Dave, “but supporting the prior version for two years beyond that, because quite frankly, retailers can’t keep up with all the rollouts for either new functions or a new operating system.” But that’s a price that retailers are willing to pay, according to the technologist. And part of that is because the operating system is so reliable. “I know of a certain large chain which is still running 4680 version 4 in some of their stores – which was made obsolete by IBM back in 1993! But everyday it still comes to work.”
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