Open Source and the Imperative of IT Integration for Retailers

Cloud computing and open source are changing the IT economics of the retail industry, enabling retail chains of all sizes to achieve an integrated view of their business.

Traditionally many retailers have been primarily concerned with the deployment of point-of-sale (POS) systems focused around efficiently processing customers at cash registers and accurately managing the cash and stock levels at stores. Historically, stock information calculated within a POS system was also used as input for inventory counts and tactical stock replenishment for each store.

Forward-looking retailers in recent years have also used POS systems as a “remote sensor” to capture in near real time the performance of stores, detect changes in the consumption habits of customers, increase their agility in responding to such changes and propagate information throughout their supply chain.

Further trends increasing the need for sophisticated IT solutions within the retail industry include the following:

• The increasing complexity of retail chain economics, often composed by a mix of fully owned, franchised and fully independent outlets, introduces the necessity to respect the autonomy of store mangers and to empower them to manage each store as an independent business unit.
• On the other hand, the ever-increasing importance of brands reinforces the need to centralize and control the image of a retailer and its products.
• The proliferation of customer access points — e.g., brick-and-mortar stores, e-commerce sites, mobile sites and apps, social media — amplifies the need to ensure a consistent customer experience.

Solutions to these problems have been available for some time to the larger retailers and brands. Today, cloud computing and open source bring best-in-class solutions within reach of every retailer and brand, no matter the size. Consider the following:

• Open-source ERP solutions provide the ideal IT backbone for retailers’ back offices.
• Cloud-ready and multitenant, these solutions enable retailers to provide each store with an independent management system, ensuring at the same time the autonomy of store managers and franchisees and the central control and protection of the brand in terms of business processes, pricing and promotions.
• At the same time, cloud-ready solutions enable very short deployment times, which allow retail chains to expand their presence and grow with minimal efforts and costs.
• Integration with POS systems ensures both local control of each transaction and central visibility for planning purposes.
• Integration with e-commerce solutions, also available as open-source software, enables retailers to implement a multichannel distribution strategy.

In this context, the back office plays a central role brokering the information that flows from and to each point in the system — from each POS to the back office of each store to the central decision makers of the retail chain and across all channels.

This results in the following five benefits for retailers:

1. consistent customer interactions, resulting in higher customer satisfaction and brand loyalty;
2. increased empowerment of the local management of each store;
3. increased visibility into the performance of each store and product in every location;
4. reduced costs and time to introduce new products, pricing and promotions; and
5. increased business agility and ability to respond to changes in the market and consumer habits.

Paolo Juvara is CEO of Openbravo, an open-source ERP company. Paolo can be reached at paolo.juvara@openbravo.com.

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