11 Insider Questions for Selecting Retail Management Software

11 Insider Questions for Selecting Retail Management Software

“Give me six hours to chop down a tree and I will spend the first four sharpening the axe.” – Abraham Lincoln

If you’re thinking of replacing your retail management software, a quick search online will give you a lot of alternatives to choose from. However, even after you’ve sifted through all the marketing hype on vendor websites, you’re still unlikely to find all the answers you’re looking for. A software vendor listing from a reputable publication in your industry (e.g. RIS Software LeaderboardStores Software Sourcebook or Apparel Magazine’s Buyer’s Guide) is a good resource to further continue your search.

Now, the question is, with such a multitude of offerings from each solution provider, how do you differentiate? If you can’t take the time to research each software in depth, how do you narrow down your list to the handful that are worth a closer look? This three-part series will help you navigate the retail management software landscape, including finding out about:

• Insider questions for finding the right solution
• Considerations for finding the ideal technology partner, and
• Best practices for implementation, process and cost planning

In this first part, let’s dive into the deal-breakers for the initial phase of your evaluation process. It will help you eliminate the misfits and concentrate on the true contenders.

The Insider Questions Checklist

The following 11 insider questions cover three broad categories related to retail management software: functional, technological and budget. They’re sure to get you through your initial review stage.

Functional Considerations

1. What kinds of merchandise can the system handle?
Can the system handle the full variety of merchandise you sell? All retail systems are not made equal, and not every software can handle all kinds of merchandise with equal ease. Both a system too generic or too specific can cause problems in the long run. For example:

• Furniture and home-décor merchandise can be made to order, so the system for this category must be able to manage various configurations of the same item.
• Apparel, footwear and fashion accessories have styles, colors, sizes and dimensions. Your retail management software must be able to account for – and track – the full range of variations for each item.
• For items with a short life cycle, like fashion and entertainment products, new items may share key characteristics with prior ones, but are differentiated solely by SKU or item number.
• Jewelry have serial numbers that must be tracked through the entire supply chain, from source of supply through final sale.

The differences between item categories can present special challenges for merchandise planning, replenishment and allocation, inventory control, pricing and point of sale transactions. Your retail software should be tailor-made for your sector to avoid heavy customization. To save yourself time, ask each software vendor to cite examples of retailers who are successfully using their system to manage items in all the categories you carry.

2. What retail channels can the software manage?
Your retail management software must be equipped to handle all the channels you operate in. Does the software support brick-and-mortar retailing? e-commerce? Store-in-store? Catalog? Franchising? Pop-ups?How well does the software enable you to leverage new sales opportunities across all these channels?

3. What international capabilities does the product support?
This is especially relevant for retailers who operate globally, or those who expect to expand their operations. Can the system handle multiple currencies, languages, local regulations (e.g. VAT, fiscal printers, taxation, etc.)?

4. What are the supply-chain and inventory-management capabilities of the system?
Despite the targeted configurations and specifications, many retail software functions are commodities; they aren’t likely to vary much from one software to another. The biggest and most important differences are likely to be in the areas of inventory management and supply chain. This is where the benefits of your new system will become quickly apparent. Consider the following:
• Does the system have the replenishment and allocation capabilities you need?
• Does the vendor also provide applications for demand forecasting, merchandise, location and assortment planning? If so, how well are these functionalities integrated with each other and with the larger platform?

5. What evidence can the vendor provide that the software is user-friendly?
In your search for new software, you may have noticed that almost all vendors claim that their products are easy to use. The near-universality of such statements has rendered them virtually meaningless. To truly gauge the simplicity of the software, you’ll have to judge for yourself. At this early stage in your evaluation process, it’s helpful to ask how the software vendor demonstrates ease of use. Does the user interface seem intuitive? Can the vendor provide a quick video overview?

Technological Considerations

6. What are the software-deployment options?
Is the software installed and operated on your servers, is it a hosted solution or is it a Software-as-a-Service (SaaS) application? The right fit depends on your company’s resources and needs–but understanding each model will help you choose the best option.

7. What’s the technology stack?
The “technology stack” is jargon for all the related technologies that enable a software application to run. These typically include elements such as middleware, programming languages, operating systems and database technologies. In the past, discussions about the technology stack were important because it dramatically affected the long-term cost of ownership of the software. Many technologies today are designed to operate cost-effectively with a broad range of complementary technologies, making the topic less relevant. Still, it may be worth finding out, especially if you have a big internal IT staff that’s committed to using – or avoiding – specific kinds of technology. But, if you plan to license software under a SaaS  or hosted model, the vendor’s technology stack is not likely to make much difference to you.

8. How scalable is the software?
Scalability comprises two key aspects:
1. Technical scalability is a measure of the system’s ability to process the volume of items and transactions in your business.

2. Work-process scalability addresses the degree to which the system enables you to execute your work processes with a high degree of labor efficiency.

Technical scalability. Consider the number of SKUs you carry across all your locations, your transaction volumes and the number of employees who will be using the system. Then ask: How well can the retail system manage the number of SKU/locations across your supply chain? How well can it handle the number of transactions you process each day? What evidence can the software vendor provide to show that its customers are successfully processing volumes comparable to your current – and future – business needs?

Work-process scalability. You won’t be able to assess work-process scalability until later in your evaluation process. When you get to that point, you’ll want to see for yourself how much effort it takes to perform routine, everyday tasks. For example, what’s the process for entering a new purchase order, allocating and receiving merchandise?

9. How well is the software integrated, both internally and externally?
Internal integration. Retail management systems often contain modules or subsystems like price management, allocation, replenishment, merchandise planning, distributed order management, and so on. It’s important for you to know how well the software is integrated across all the subsystems that comprise the larger application.

External integration. It’s also important for you to know how well the retail system integrates with any other software you may be running, such as applications for accounting, point of sale, loss prevention and e-commerce, among others. If you licensed any of these applications from a different provider, it’d be worth finding out about their integration methodologies (e.g. flat files, web services, database to database, etc.).

Budgetary Considerations

10. What’s the software-license fee and structure?
This early stage in the selection process isn’t the time to get very specific about license fees. But you’ll want to know the answers to a few general questions to gauge your cost projections:

• Does the vendor offer a conventional perpetual software license? Or do you buy a renewable term license, like a subscription?
• Is the license fee typically stated in five-digit numbers? Six? Seven? What portion of the license fee needs to be paid up front? If it’s a term license or a subscription, what is the typical duration?

11. What’s the estimated total cost of ownership over the expected life of the software?
Again, you’re only looking for general indications at this point. Consider not only license fees for the application software, but also the internal and external costs of buying and operating computer hardware, servers, operating systems and database licenses.
Also consider the cost of systems and integration maintenance, training, implementation, support and upgrades for the expected life of the software.

After going through these 11 questions, you should have a good idea about the general requirements to look for as you search for new retail management software. The planning phase is vital and, done well, protects you from unnecessary risks and problems in the future. So well done! With this checklist you’re through phase one of your planning. Abraham Lincoln would approve.

Now, the next step in your journey is to evaluate the system providers themselves. Curious? Stay tuned for part two of this series.

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