Friday, January 20, 2017

Cloud/No Cloud? Purchase or SaaS?

Which some of the "big gun" retail point of sale programs like Microsoft Dynamics moving to cloud and subscription based models, everyone may think that the future of point of sale technology is going to be only cloud and subscription based and not something that is purchased outright and deployed locally. This is not the case at all - both models have distinct advantages and disadvantages.

Part of why I am writing another post on this topic is that I'm constantly being told that the industry is moving towards mainly SaaS Cloud based solutions. My daily contact with retailers indicates a nearly even split in demand - in fact I've had several retailers tell me that they are migrating back to locally deployed point of sale systems after having poor experiences with SaaS Cloud based systems.  Point being - there is a need for both types of systems and its clear that many vendors will provide both for the foreseeable future.

Read on for more details:

  • Cloud: point of sale software is fully or partially hosted (and run) over the Internet
  • SaaS - Software as a Service: Continued use of the software requires payment of an on-going fee which is normally monthly
  • Subscription Based: same as SaaS for this particular blog post
  • Deployed: how the software is delivered to you/installed
  • I've run multiple different costing models factoring in over 20 different point of sale software programs as well as different sizes of retailers. The reality is that the long term costs are similar in most cases. By long term, I mean a period of 5 to 7 years.
Read No Further - if the following applies to your business, you can rule out the Cloud-based point of sale programs in most cases:
  • Internet access in your area is limited, spotty, unreliable, or not available
  • You are in an IT role and want to keep your job/stay busy supporting the POS system
  • You have existing equipment in place (servers, hardware, etc) that are less than 3 years old and have no interest in replacing this equipment
  • The idea of always having to pay an ongoing fee to use the system is unappealing to you
  • You want full control of your data locally
  • Business equipment tax deductions are setup in a way that requires an outright purchase
Factors to Consider:
  1. Your business has limited funds - SaaS Cloud POS systems have lower initial costs
  2. You like having a set budgeted amount for POS software - SaaS Cloud POS systems have a flat amount that normally includes software updates as well as support
  3. You have limited or no IT staff - SaaS Cloud based POS systems are generally less intense to learn and use and include support in the on-going fee
  4. You have a high volume business like a liquor store or convenience store - My real world experience is that only POS systems that are run fully or partially locally at the store can provide the speed that high volume businesses require 
  5. Multiple location chains - I've found that the complexities of what chain business require generally dictates that a locally deployed POS system is used. This may change over the next 3-5 years.
  6. You require customization - there seems to be nearly equal availability for customization's and third party add-ons for both models. The main differences are how the customization or third party add-ons are paid for (upfront or on-going) 
There are always other factors but my main point is that you should not let anyone lead you down the wrong path when it comes to selecting the best point of sale system for your business.

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