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:

Definitions:

• 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

Costs:

• 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.

Cloud Based Point of Sale Systems: Things to Keep in Mind

2015 has really been the year for cloud and mobile point of sale systems for retail stores, restaurants and museums. About 65% of the businesses and organizations that contact me are only considering point of sale systems that work on mobile devices and are cloud based.  A few things to keep in mind if you are looking at the cloud based point of sale systems like Clover, Vend, Lavu, Shopkeep, Lightspeed, or Silver...

1. In most cases the cloud based point of sale systems will only cost around 10%-30% less than a point of sale system that you lease to own or purchase outright (eg: Retail Pro, Sapphire, NCR CounterPoint, Retail management Hero, Etc.).  This assumes that you plan on keeping your point of sale system for 5-7 years and that you pay an ongoing monthly fee to use a cloud based point of sale system (which normally also includes support and updates).
2. You lose some control when using a cloud based point of sale system. Best example is that a traditional point of sale system puts all the hardware, software, and data onsite within your business or organization. If a router fails, you simply replace it.  With the cloud based point of sale systems you have no control if their router breaks or if their server goes down. Look at the reviews for any cloud based point of sale system and see that users mention outages lasting several hours. The point of sale companies tout off line modes or similar features but the reality is that system wide failures are possible and there is nothing you can do about it when it comes to cloud based point of sale systems.
3. Ownership: most cloud based systems are rented so you never actually own anything - very easy on your budget but you have to be comfortable with this pricing structure.
4. Hidden fees and contracts: I've been very disappointing with several of the cloud based point of sale systems who require long term contracts with early termination fees and limitations on who you can use for your credit and debit card processing services. As with any point of sale system, due diligence is required on your part when it comes to reading and signing any agreements or contracts.

Now, this may all sound somewhat negative but I actually do feel that some of the cloud based point of sale systems are great solutions (I've previously used, sold, and supported several).  However, they are only good solutions in one or more of the following situations:

• Single location or less than 10 locations with annual sales of less than $800,000 per location.
• OK with never owning the actual software but paying an ongoing fee each month.
• Low technology needs: OK with canned reports and don't have complex  inventory needs.
• No internal IT person or "computer geek": cloud based systems are generally very easy to learn and use and do not require internal IT resources.

Are you  in the US and in need of no cost retail point of sale advice?  I'm happy to help and can be reached on my cell at 208-340-5632 (I am on Mountain Time) or via email at kevinantosh@gmail.com. There is also a contact form to the right that can be used to reach me.