Is real-time processing a must-have for retailers?

Discussion
Dec 15, 2017
Bob Amster

Through a special arrangement, presented here for discussion is a summary of a current article from the RTG (Retail Technology Group) blog.

Credit authorization is the oldest example of indispensable real-time processing in retail. But in the new world of unified commerce, most aspects of running the business now require real-time processing.

These include real-time:

  • Inventory availability to support “endless aisle” and BOPIS;
  • Geofencing to support in-store offers;
  • POS and loyalty to bring bonus offers at checkout to best customers when certain purchase thresholds are met;
  • Price-change management capabilities to tap dynamic pricing;
  • Electronic shelf labels and RFID data to minimize stock-outs.

One challenge for enterprise resource planning (ERP) software solutions occurs when some of the business functions on which a retailer relies — such as third-party logistics services or an e-commerce platform — lie outside the boundaries of these software suites.

While most of the leaders have a platform that enables communication between internal and external applications in real time, some may be running applications in real time while other modules depend on “batch” or scheduled interfaces between mixed systems. A third group may just be running their POS in real time and that’s it. The options to reaching the goal vary as well.

One option is the dreaded rip-and-replace approach, wherein the retailer does away with the disjointed parts that make up the portfolio of applications and replaces everything with a single-source or multiple-source set of real-time-ready applications. This option is costly, disruptive to the business and risky, but once implemented successfully, more efficient.

The other option is to methodically replace some or all of the old “batch” applications with current, API-capable applications. APIs enable applications to interface with each other so they can read and update their databases in real time, thus tightly coupling modules from different external software-or-services providers.

In either case, the planning and strategy come first, the evaluation and selection of the appropriate solutions come next, and the installation and thorough testing come (over time), just before implementation.

Is retail ready?

DISCUSSION QUESTIONS: What’s the best option for small to medium-sized retailers to get up-to-speed with real-time information processing? Do you favor the “rip-and-replace approach,” the discriminate use of API-capable applications, or some other approach?

Braintrust
"A real tipping point is the customer demand for services like click and collect which require real-time inventory."
"In today’s disruptive and competitive retail environment, real-time retail is quickly becoming table stakes..."
"Proper support for real-time data isn’t a question of “if” it’s a matter of “when” for all retailers."

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8 Comments on "Is real-time processing a must-have for retailers?"


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Mark Ryski
BrainTrust

There isn’t a single approach that is best for all, but the importance of taking action on this should not be understated — this is a nasty hairball that all retailers need to address in a meaningful way. While “rip-and-replace” is the most traumatic and risky, it would probably yield the most complete, fastest approach. That said, there’s nothing wrong with Band-Aiding your way forward assuming that some of the existing systems are reliable.

Charles Dimov
BrainTrust

Bob, I completely agree with you that for most retailers, rip-and-replace is a terrible option. This is often the pitch from a vendor which has a suite they want the retailer to purchase into. The problem is that like a chain, the suite is only as good as its weakest link… which could land you right back where you started, with a system that isn’t really performing very well.

Regardless of the retail application, ERP, POS, OMS, WMS, retailers should select best-in-class focused technologies that do a particular job exceptionally well. Then they should make sure that the technology can do real-time processing, and does a brilliant job at interconnecting and integrating with the systems they need. Frankly, today’s API technologies (look for this), and microservice communication systems (middleware), do an excellent job of quickly tying these best-in-class technologies together seamlessly.

If any vendor suggests a rip-and-replace strategy, or that their suite of pre-integrated solutions fulfills all your needs — thank them politely, then look for another vendor.
Think too about a trusted consultant or systems integrator.

Lee Kent
BrainTrust

Absolutely Charles, and it all starts with a good strategy. You do need to first look at the whole in order to tackle the parts effectively. For my 2 cents.

Chris Petersen, PhD.
BrainTrust

For me the intriguing question is in the title of the discussion — “is real-time processing a must-have”? For some smaller, independent retailers, the answer may be no, or no, not yet. A real tipping point is the customer demand for services like click and collect which require real-time inventory. For small and medium businesses facing a must-have scenario, the challenge becomes capital investment.

While rip-and-replace might yield the greatest long term ROI, the practical solution for most is strategic implementation of APIs that solve greatest pain points.

Ken Morris
BrainTrust

There is no question about the importance of real-time retail to optimize the customer experience and inventory efficiency. In today’s disruptive and competitive retail environment, real-time retail is quickly becoming table stakes and retailers that don’t take action will struggle.

The best option, rip-and-replace or stepped approach, depends on the current IT architecture of the retailer, their ability to handle potential business disruption and their financial resources. Rip-and-replace is typically more feasible for smaller retailers that have less complex IT systems and aren’t saddled with very old legacy applications that are difficult to transition to a unified commerce platform.

My only advice is to do it as fast as possible and move as many applications as possible to the cloud. Just do it!

Ed Dunn
Guest
1 month 2 days ago

Real-time processing is possible through QR payment using tokenization. The processing power shifts to the customer mobile device and the cash wrap only needs the token authorization to process quickly. I believe the Macy’s crash may have had a lot to do with Macy’s POS processing too many logical flows on Black Friday weekend.

Ricardo Belmar
BrainTrust
Proper support for real-time data isn’t a question of “if” it’s a matter of “when” for all retailers. Some smaller retailers may be able to wait to complete the transformation required from older systems, but let’s not forget that many small and medium retailers are younger brands and that usually means fewer old, legacy systems to replace. For larger retailers that have longevity behind them, most likely they have a much greater challenge in enabling the real-time applications they need. All of the applications listed are great examples of what’s needed, but I would add one more critical element every retailer needs to evaluate to properly support real-time data apps — their store network infrastructure. I’ve seen many retailers try to deploy new apps after dealing with the legacy issue but by forgetting about their network the app still falls flat on its face and the benefits expected are never realized. It’s critical retailers re-evaluate their network connectivity and consider what the performance requirements are of these new real-time data applications. Upgrading bandwidth in most… Read more »
Peter Luff
BrainTrust

It’s always a balanced answer. If the retailer can do an API approach and the future allows for a seamless modular replacement of said items then go for this, but if it requires lots of bespoke code to make it all work creating a tangled mess to get out of later with a growing support overhead, go for “rip & replace.” Before anything is started, check what the business outcome will be of moving to real time and make sure it gives a solid return to the bottom line.

wpDiscuz
Braintrust
"A real tipping point is the customer demand for services like click and collect which require real-time inventory."
"In today’s disruptive and competitive retail environment, real-time retail is quickly becoming table stakes..."
"Proper support for real-time data isn’t a question of “if” it’s a matter of “when” for all retailers."

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