Hunting for Computer Software

( Continue d from prev ious pag e ) monthly or annual profit/loss statements and balance sheets). Be certain the program conforms to generally accepted accounting principles and have your accountant review the package.

Point-of-sale software resides on the cash register or PC cash drawer to collect data about sales, returns and lay-a-ways; handle non-sales transactions such as transfers and receipt confirmation, and facilitate credit or charge card sales. It may also have some inventory look-up, barcode scanning and item or price look-up capabilities.

"POS is very important. It must be good and accurate," said Brown. "But you typically do not make the decision of what system to buy based on POS software, because most available software for POS is good and it is not the complex end. The complex end is the host or primary system. Typically you're going to make the decision on what software to buy based upon the host system, the merchandising side of it."

1 . Support - What are the vendor's hours of operation? Is emergency help available?

E Statitity of Vendor - Has the provider been around for some time? Is the vendor respected in the industry as a leader in solutions for your type ofbusiness? Is the vendor financially sound?

3 . Equipment - Does the software run on hardware that is industry standard, as well as readily available and serviceable?

{ Suitaninty of Software - Even though there are many packages avail- 'able for your industry, your business is different from the one down the street, and Software Package A may be a little better fit than Software Package B.

5 . Hardware Maintenance - Is service available when you need it, by an organization with the resources to get to your location in a timely fashion? Are you tied to one service organization or are there options?

L . Commitment to Research & Development - Computers are quickly changing (he world. Are the changes taking place being made available to you on a timely basis?

? . References - You must talkto others who are using the product. Not only will you get an idea of the suitability for your purpot-", you will also hear about what you can expect in the way ofsupport.

0 ' Training - Your system will only be as good as your ability to learn it. Make sure there's a well-defined, proven curriculum to get you off on the right foot.

I. Advanced Training - No matter how well you grasp the system in the first few months of training, today's computer systems offer levels of sophistication that take months and years to master. Plan on it and make sure your vendor takes an interest in seeing that advanced training classes are offered.

LB . Knowledge of Industry - It's not keeping up with technology, but keeping up with what's important in the industry that's important. Technology must be applied to this industry, and only those who live it day in and day out will know where to place their resources for research, development and training.

- By Randy Fais President Dimensions, Inc.

The host or primary merchandising system is the core software that retailers should concentrate on. Functions include sales audits (purify and split data from various sources and send it where it's supposed to go); purchase order management (creation, modification, cancellation, purchase order reports); sales analysis at the item (SKU), class (department), and vendor level; inventory at the item, class and vendor level; transfers; price changes; warehouse distribution and tracking; stock replenishment, and open-to-buy.

Brown said the open-to-buy function is not always included on systems but should be. "It's very important but very misunderstood," he explained. "It tells you how much inventory is needed to support expected sales and turns. It's your checkbook." He thinks many available open-to-buy programs are inferior because they were developed by programmers not retailers. He suggests asking if retailers developed the software.

Common options are customer marketing (to track sales by customers from POS for direct marketing purposes), report generator, wholesale order entry (internal electronic catalog), stock ledger, returns to vendor, and self diagnostics program (recommends courses of action).

Sometimes all the systems may be integrated andsold together. "Wherever possible, buy a turnkey system, where you're buying everything from one house, the hardware, software, POS, host, financials, modems," suggested Brown, who knows many retailers with components from different vendors. "When there's a problem, the vendors blame each other. In a turnkey purchase, you call one person. The trade-off is buying turnkey is usually from people who sell larger, better but more expensive systems."

If components must be purchased from various vendors, address during contract negotiations what happens if everyone says it's not his fault. What do computer systems cost? "That's like asking how much do shoes cost," said Brown. "It depends! Are you putting a black and white tv in a one-room house, or color, large screen, stereo tvs in a l2-room house? Software only could start as low as $10,000 or go to over $100,000."

Software prices are determined by:

(l) The sophistication of reporting that the company needs. Do you require sophisticated or bare bones information?

(2) Company's size (sales volume, number of stores, number of users, number of SKUs).

(3) Software elements required.

(4) Quality of the software.

(5) Hardware platform supporting the selected software.

(6) How much is bundled vs. how much is optional or extra.

(7) Level of software integration.

As a general rule, the cheaper the software, the less integration. Nonintegrated systems have components that are not connected. There is no flow-through of data, so multiple rekeying of information is required. Interfaced systems are connected, but data must be sent manually, not automatically. In fully integrated systems, the data flows all the way through basically without you doing anything. For example, after a shipment is received, keying that information into a fully-integrated computer would: relieve on-order, update open-to-buy, update on-hand, and set up a payable in the accounts payable system.

Retailers should evaluate the software companies as well as the software. You're buying a business partner. Compare software vendors on financial strength, years in business, stability of top management, level of research and development (how often updates are released), number of customers and installations, documentation, user group meetings, customer support staff, days and hours of customer support, their physical facilities, quality of other users, and people chemistry (do you get along with them?).

You cannot learn what you need to know about a vendor and software from a brochure. Visit the vendor for a day or two. As a less desirable alternative, a salesman can call on you and provide a demo disc. Yet a disc only allows you to look at what the company wants you to look at.

When you have narrowed the field to a small number of possible vendors, talk to other retailers running their software. "Unfortunately, if people have a problem due to bad implementation or operation, they tend to say it's bad software," said Brown.

Finally, when analyzing systems, look ahead five years. Configure a system for future growth.

- Information in this article is in part from the instructional video "How to Select Computer Sofnvare for Retailers." A brochure on the entire l2-part series is free from R.L. Brown & Associates, Box 2563, East Peoria, Il.616ll; (309) 6983728.

l, . Management commitment

? Get professional help - seek advice from a consultant or someone else who doesn't have an ax to grind

3. Calculate system payback

- Will sales go up? Will average inventory go down?

q . Define reporting and system requirements on paper

5 . Build software and hardware company evaluation documents - compile a grading sheet h Narrow software target companies - get down to three to five valid candidates

? . Complete vendor site visits or view demo programs

I. Review hardware options

I. Get hardware and software quotations

LB. Make final selection based upon the cost/benefit relationship