If you're lucky, your company will replace its merchandising software only once or twice in a generation. This is why many retail executives have little experience in choosing new merchandising systems.
But don’t worry. Even if your company hasn’t replaced its merchandising software for as long as anyone there can remember, this article is here to help. It shares the collective insights of our sales and consulting teams at Jesta I.S., whose members have sold and implemented merchandising software dozens of times. The insights come from working with more than 200 retailers of varying sizes and lines of business.
You can make a better purchase decision by asking yourself 12 questions before you begin your search for a new system. Your answers should help you make an informed choice that will serve your business well for a long time.
Don't obsess over features and functions—yet
What first made you think about replacing your merchandising software?
If you've been frustrated with the functional limitations of your current systems, it's natural to begin your buying process by listing your functional requirements for new systems.
But in our experience, that can be a mistake. Your functional needs are important, but they'll probably change with your business needs and processes.
First answer the 'big questions' about your business
We suggest you answer these questions first:
1. What results do you expect to achieve by implementing new software, and by when?
2. What are your internal resources and capabilities?
· Do you have the in-house expertise to develop, maintain and support your own systems?
· Are you more likely to achieve the flexibility and agility you need by developing your own software, or by licensing systems from software vendors?
· If you choose to license a merchandising system rather than build your own, do you have enough experience and insight to choose the best system? Could you benefit from the help of a consultant?
3. What is the current structure of your business, and how might it change during the life of your new merchandising software?
Most of us-including the "experts" in any field-often have a terrible record for predicting the future accurately. For example, who thought in 1992 that the Internet would change most of retailing in just 20 years?
Above all else, seek flexibility in processes and systems
Considering the inevitability of unforeseen change, here's one reliable lesson you can draw from past experience: It pays to anticipate the unexpected.
Maybe you can't say with confidence what you should do now to be ready for the future. But it's a safe bet that it will pay for you to build flexibility and agility into your company culture, your business processes and systems.
Take stock of your business
Take time now to assess your current business. Then consider how it may change during the life of your merchandising system.
The following questions can help you determine the scope of capabilities you'll need in a merchandising system. The questions will also help you anticipate the processing volume your system must be able to handle.
· How much revenue do you generate now? How much do you expect to generate five and 10 years from now?
· What is your line of business? (Do you sell food? Do you sell soft lines, fashion, apparel, shoes or accessories? Hard lines? Specialty items? Entertainment products?
· How might your line of business change or become blurred in the future?
· What geographies do you serve? Which do you plan to serve?
· How many locations do you operate? How many do you plan to operate?
· How many employees do you expect to use your merchandising systems?
· In what languages do you expect your employees to use your system?
· In what currencies do you expect to do business?
· How sophisticated are your employees?
· What is the structure of your supply chain? How many stores, distribution centers, and sources of supply are in your network?
· How many items do you carry in each inventory location?
· How big are your transaction volumes?
· What sales channels do you expect to serve? (For example, do you and will you sell through brick-and-mortar stores, e-commerce sites, or wholesale distribution?)
· Do you expect to operate on the cost or retail method of accounting?
4. What is your current technical infrastructure, and what is your future direction?
· What operating systems, programming languages, databases and computer hardware do you prefer?
5. What other software applications must you integrate to your merchandising software?
· How much money and effort can you afford to spend on creating and maintaining custom integration?
6. What is your comfort level with change?
· What current business processes do you want your new merchandising software to support? What weak processes do you want to improve?
· How much change can your organization absorb?
· What change-management capabilities are you likely to need?
7. How much can you afford to spend on a new system?
Consider all the costs of software development, documentation, operational support, training, licenses and annual maintenance fees for application software, hardware purchase and maintenance costs, and database licenses and maintenance fees.
8. What is your tolerance for risk?
· Are you open to taking chances with software whose performance has yet to be proved in many companies like yours?
9. How soon must you have a working system in place?
· What is the timeline for your decision process?
· How much time can you allow for system implementation?
10. What kind of relationship do you want with your software providers and implementation partners?
· How much support do you need or expect?
· What kinds of relationships are likely to be the best fit for your corporate culture?
· Are you open to working with your software vendor to co-develop functional enhancements?
· How comfortable are you in working with separate vendors for software and implementation services?
11. What are your needs for reporting, analytics and business intelligence?
· Do you have your own data warehouse? Or must you build or buy one?
· What standard reports and analytics do you expect? What ad hoc reporting and querying capabilities do you want? How much custom reporting are you likely to need?
· What are your preferences for third-party analytical tools or technologies?
12. What are your specific functional requirements?
· What's the best way to gather a list of all the software features and functions your organization is likely to need within the next two years?
Your answers to these questions should help you determine whether merchandising software from Jesta I.S. or any other software provider is likely to fit your needs.
Where to go from here
We're at Jesta I.S. are here to help you make a good decision.
For more resources to help you choose the right merchandising system, please select the links that interest you:
For information about the Jesta I.S. Vision Merchandising system, please go here.
What have you learned from your past successes or mistakes in choosing merchandising software?
Which questions did you find most helpful to avoid problems in choosing a system? What additional information do you need? Please share your comments.
- Michael McGinn