Sunday, October 6, 2013

The Point of Sale Cloud vs. "Smoke"

It seems like nowadays, every time you turn around some new vendor is claiming to have a Cloud based point-of-sale solution, and based on all the hype, you can’t help but wonder if you’re missing out on something.  Well, as a software engineer involved in point-of-sale my entire adult life,  I can give you the big picture on how these solutions stack up to more traditional offerings.
Let me start by saying that Cloud technology has really taken off in the last several years, and for good reason.  Cloud is kind of a vaporous term, so for those of you who aren’t clear on what Cloud really means, let me explain.  In the bad old days, you would have to have your own rack of servers, your own UPS to keep the power going during blackouts, you would have to make sure those computers in the rack were all running properly, and had a steady internet connection.  It was a significant investment to maintain all those components.  So the Cloud solution really consists of renting those services.  Amazon, for example, a major provider of Cloud services,  has warehouses full of computers with guys whose only job is to ride around on Segway’s and replace bad harddrives and make sure the whole thing is running smoothly.  
This economy of scale makes web hosting more cost effective for all involved.  So think of Cloud as someone else managing/mitigating the headaches that every company with a rack of computers had to do on their own previously.  From a consumer perspective, storing data in the Cloud is probably the most cost effective way to store and also safeguard your data.
So if Cloud storage is great, then this new generation of tablet based “Cloud POS” must also be great, right?  Well, not exactly.  While these tablet based POS systems have hitched their cart to the Cloud, which is a great business move, the decision to base the system solely on a tablet is a very bad decision.
Don’t get me wrong, the tablets definitely have their place, but like any tool, they need to be used properly.  I’ve been very excited by the capabilities of these new devices, not to mention the “cool factor”.  That being said, I’m also a professional “Devil’s Advocate”, and it’s my job to separate the practical applications from the bad ideas.
If you’re thinking of implementing handheld tablets in your business, here are some things to consider.  While iPods(tm) are cheap, they really don’t have enough screen real estate to be terribly useful.  Full sized tablets have much better screen resolution, but for mobile applications, they don’t fit in a server’s apron, and I’ve often seen servers opting to store them by stuffing them down the back of their pants.  I don’t have to draw you a picture as to why you don’t want a food handler storing their order entry device in such a place.  So for the mobile segment, I believe the sweet spot is somewhere in the 7” range.  They’re small enough to fit in the palm of your hand, and also to be stored in the front of the apron instead of a much less sanitary place.
If mobility is not your priority, and you plan to have a stationary POS system, do the smart thing and avoid the tablets.   I can remember when terminals had 12” screens, and then they went to 15” screens as the industry standard.  I can’t for the life of me think why anyone would want to go with a 9.7” screen and probably pay almost as much as they would for a 15” screen.  Beyond that, you are getting a far less powerful computer.  Less storage, less CPU, and nowhere near as rugged as a standard POS terminal.  Yes, it’s a way to cut upfront cost, but you will pay a serious price down the road.
So this brings me to the “what’s wrong with Cloud POS” part of my article.  They seem cheap to own upfront, and the tablets sure are sexy.  What you don’t realize is that these companies have been in business for only a couple of years, and their POS software was developed by people who know virtually nothing about what a POS system needs to do.  One thing they typically do to cut cost is eliminate the in-store file server.  This is a horrible idea from a computer networking perspective.  Your POS system MUST be looked at as a mission critical system.  When it’s down, you are losing money – PERIOD.  It’s one thing to rely on a computer in your office, which might break every few years.  It’s entirely different to roll the dice on your Internet connection staying up.  To that point, some of these Cloud POS’s offer offline mode when the Internet is down – one that I saw can run for a whole hour without an Internet connection.  Do you really want to bet your entire business that your Internet won’t be down for more than an hour?  Seems like a pretty foolish risk.
Further to the point of Cloud POS being almost entirely “amateur hour”, I attended the Retail Solutions Provider’s Association’s RetailNow event in Las Vegas recently.  One of the people who spoke was a representative of a Cloud POS company who spoke about his most challenging install.  When I heard that his biggest challenge was a 9 terminal install that they barely got to work, I had to laugh out loud.  Want to hear about my most challenging install?  It was a 66 terminal stadium that hosted basketball games during March Madness.  Just think – at the end of every period, everyone in the stadium buying food and drinks.  The Windows server was literally hammered during those times, and items rang up quickly, and credit cards were run though at a breakneck pace – and it all worked!  Do you want to run your business with a POS system that will fall over at 9 terminals, or can run reliably with 66?  Chances are you’ll never have 66 terminals, but you just might get to 9 someday.
The subject of credit cards brings up another very important point.  Many of these tablet POS companies are just credit card providers in disguise.  You may get some ridiculous deal – free, or $50 per month – something that just doesn’t add up.  There’s a reason for it.  In the fine print, there’s a strong possibility that you’re being locked into credit card processing for the next 5 years, and at the worst rates imaginable.  Suddenly that free POS system might be costing you $2K per month.  Don’t laugh - there are class action lawsuits going on right now surrounding such predatory Cloud POS sales tactics.  Like my Grandpa used to say, “Free stuff always ends up costing more.”

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