Evan Schuman's StorefrontBacktalk

"I typically say something like, 'It is our requirements that drive us to that price point. Adding centralized menu management, polling, integrated inventory management and labor management into the mix requires that we buy this type of system. You can’t do that stuff with a cash register or basic POS.' Typically, the response I get is something like: 'So? I don’t care about all of that complicated stuff. I just need to ring sales.' It’s no wonder franchisees think that retail CIOs are out of touch with reality. Here is the really crappy part. When you add in all of the other costs, such as high-speed broadband, hardware maintenance, software maintenance, help desk, installation, inventory management, labor management, training and various upgrades along the way, that $10,000 POS is probably going to cost franchisees $20,000 over five years--not to mention that they wrongfully expect the system to last 7 to 10 years.”Read more...

The almost daily reports of consumers and retail employees using either weak passwords or the same passwords in multiple places—or both—is being met with yawns by retail security executives. But the kneejerk response—forcing consumers and associates to be smarter about security—has had little effect, beyond being counterproductive.

For example, a company can automate rules for choosing passwords and require that they be changed periodically. But the stronger the password, the more it will fuel its own failure. Let’s say the rules require that passwords be at least 11 characters and include numerals, characters and non-traditional characters (&, %, |, @, #, ~, etc.). Add to that requirement that no character or number be repeated and that each password must pass a dictionary search. Sure, you’ll get a strong password, but you’ll also almost guarantee that that password will be written near the computer in plain sight as well as typed into a desktop file in clear text. As Newton’s IT director said, “To every password action, there is an equal and opposite stupid user reaction.” This is the topic of this week’s StorefrontBacktalk column on the McAfee security blog.…

Although retail sites are obviously very fond of cache, a new report from Forrester Research states that many developers are focusing only on one type of cache and leaving a lot of potential performance boosts in the ether. The report talks about server cache versus browser and edge cache. “Forrester has found that many companies do not take advantage of all three levels of caches in their architecture. Application development professionals often focus on optimizing the server-side cache while ignoring the browser cache or optimize their Web-page design to take advantage of browser caching only to be stung by geographic latency because they don’t know that they should use a content delivery network.”

Forrester stresses the importance of factoring in geography when making cache decisions but points out that IT shouldn’t confuse a dense population of customers with the company’s best (read: most profitable) customers. “Caching nearest to your users goes without saying, but most companies must allocate their caching dollars carefully, and your biggest investment should be close to your most profitable customers. Your most profitable customers may not be located in your highest concentrations of customers. Work with your marketing department to analyze customer profitability and location, and then review this data at least annually.”…

"You will need to reconfigure your call center application to stop recording the security codes. This point is where I start to have some problems. If your application can’t do this, you need to upgrade or replace it with one that automatically interrupts recording when, for example, the payment screen is displayed. And forget about using manual interrupts, at least if I’m your QSA. In practice, they can be too easily missed, forgotten or ignored. Large retailers will make a business decision and budget for the investment. But what about smaller merchants, charities and universities with call centers?"Read more...

Intel and Microsoft are working on what is truly the next generation of digital signs. These devices will be able to share content—both ways—with phones. But they could also use facial recognition to identify repeat customers without the benefit of loyalty cards or RFID. The cameras embedded within the displays would simply recognize faces the system has captured before, ultimately having the potential to identify those consumers.

The camera software will initially be designed to differentiate between genders and to detect products the customer has touched. That information could signal a coupon to be sent to that consumer’s smartphone. None of these options is rocket science. But they do show a concerted effort to leverage the kind of data that is accessible in-store and, ironically, much harder to capture online. Think of it as Big Brother with a sales commission.…

“Our captive center in Bangalore continues to be an important part of our long-term strategy and is highly integrated with our work and team in Minneapolis,” said a statement attributed to Jacob, who is a Target executive vice president in addition to being the chain's CIO. Added Tim Baer (another Target executive vice president and general counsel): “We do not know the source of this ridiculous speculation, but we can absolutely reaffirm that it is unequivocally not true.” If the speculation is so ridiculous, why issue a statement quoting two executive vice presidents? The only sentence in the execs’ statement that describes these rumors says: "The company emphatically refutes the irresponsible rumor that it is engaged in any discussions, or has any plans, to sell its Target India operations." This is where things get scary.Read more...

"3-D Secure has so far escaped academic scrutiny, yet it might be a textbook example of how not to design an authentication protocol," wrote Cambridge University's Steven J. Murdoch and Ross Anderson. "It ignores good design principles and has significant vulnerabilities, some of which are already being exploited. It's bad enough that EMV Verified by Visa and MasterCard SecureCode have trained cardholders to enter ATM PINs at terminals in shops. Training them to enter PINs at random E-Commerce sites is just grossly negligent." The pair, however, found that 3DS did get one part right: the money and where it comes from. Although "other single sign-on schemes such as OpenID, InfoCard and Liberty came up with decent technology, they got the economics wrong, and their schemes have not been adopted. 3-D Secure has lousy technology but got the economics right, at least for banks and merchants. It now boasts hundreds of millions of accounts."Read more...

As eBay has discovered, there’s a lot of money to be made in them thar online auctions. So it’s no surprise that lots of startups are trying to creatively find their own slice of the auction pie. But a site called Biddees, from the people who brought you shoes.com, is taking an unusual approach that just may prove to be the most needlessly complicated auction site in quite some time.

This wonderful story from Internet Retailer does a nice job of detailing this cocoon of complexity: “In order to see the current price of a prepaid card, which is guaranteed to be at least $1.50 less than the card’s face value, shoppers first have to use a token called a Little Biddee Thing, which costs 99 cents. Each time a customer views the current price of a card, the price automatically drops 50 cents. If the shopper is the only person viewing the card, he has 30 seconds to buy the card at the current price,” the story said. “If another person is already viewing the card, the shopper enters a queue before he can see the card’s price. If the card is purchased while the shopper is still in the queue, the shopper will be transferred to the next auction for the same product. An auction ends when someone purchases a card or when its price reaches zero. The last shopper gets the card for free.” Of course. What could be more natural?…

For many retailers, flat or minuscule in-store revenue increases are becoming the norm, with online increases the only thing that looks bright. Mobile is going to quickly fall into that category (although a percentage increase for anything as new as mobile is meaningless, it still looks cool on an earnings report). But how can this work given the small revenue percentage E-Commerce still controls? Let’s take a look at Amazon’s latest numbers (which look pretty much like all of its numbers.)

The king of E-Commerce reported on Thursday (Jan. 28) a 42-percent increase in net sales for the fourth quarter just ended, along with a net sales increase of 28 percent for the whole year, to $24.5 billion. (To be precise, it’s actually 29 percent if you exclude a $182 million unfavorable impact from year-over-year changes in foreign exchange rates throughout the year, the company reports.) Sure, you say, but revenues are not the point. What about profits? Net income soared 71 percent (to $384 million) for the quarter and 40 percent (to $902 million) for the year. Amazon’s official guidance for the first quarter 2010 is equally rosy, suggesting a sales increase of as much as 43 percent. For those arguing that E-Commerce will always be a footnote to in-store, these numbers are hard to ignore.…

Former Woolworth’s CIO David Wills is in the middle of a criminal trial, accused of accepting more than $3.7 million in bribes related to IT decisions about a POS system and some server upgrades. The fraud accusations involved approximately $37 million in IT contracts that were awarded by the retail chain.

According to The Australian newspaper, the executive “allegedly received $1.78 million between February 1997 and January 1999 in exchange for awarding an IT contract to Israeli software firm Az-Ben. He is accused of accepting a further $1.92 million from Az-Ben for giving advice to NCR that was likely to influence NCR to enter into a contract with Advance Retail Technology.” The newspaper story added that the “contracts were for Woolworth’s APOS2000 project, an upgrade of its point of sale systems and servers for the Millennium rollover. In December 1997, the retailer began a $130 million overhaul of its systems.”…

Although it’s hardly a stunning revelation that retail IT will be spending more on POS software maintenance this year than they expect, it’s unusual for a research report to quantify it precisely. A new report from the IHL Group and RISNews, however, tries to do just that.

Beyond showing a modest IT spending increase at both the store and enterprise level, the report found a “disconnect between what retailers are claiming they are paying today for software maintenance” and what the vendors they are considering for their next POS are actually charging, said IHL President Greg Buzek. “So those people considering buying Oracle for POS their next time, they are currently only paying 10.1 percent of license fees towards maintenance. If they actually buy Oracle, they will be adding an additional 11.9 percent to their annual software maintenance cost for POS. If they move to accounting/finance/HR, it would be an 8.4 percent increase. And if it’s Oracle merchandising and supply chain applications, it would be 8.6 percent more than what they pay today with their current vendor.” The vendors examined were Microsoft, SAP, Oracle, JDA, Micros, IBM, NCR, Retalix, Epicor and Fujitsu.…

The PCI community has been debating the audio rules for years, with our first story on it back in August 2007. (No, we won't say that this is the first sound decision from PCI in years. Plays on words and data security stories rarely mix well.) The issues go beyond the literal digital audio capture ruling that PCI just issued. Another key concern are overheard snatches of conversation. In theory, that is where a cyberthief calls a call center with a series of long questions. The thief records the call and later extracts the sound of other call center operators reading back credit card numbers, expiration dates and CAV2/CVV-2/CVC-2/CID details.Read more...

The CIO needs to sells ideas upstream to senior management and sideways to line-of-business peers, convincing them that the technology is the right move and that it needs to be approved and funded. If that works, it's barely 30 percent of the battle. If the stores aren't sold on the idea, Franchisee Columnist Todd Michaud opines, the data won't be used and the project is doomed to fail. And you're to blame.Read more...

One key issue that both sides are arguing is timing. Some of the franchisees have argued that Burger King is being punitive by moving so quickly. They are pointing out that the chain's deadline was Dec. 31, 2009, and that the lawsuits started being filed within a few days of the deadline passing. Burger King argues that it has been extremely patient, having informed its franchisees of the POS upgrade rule back in April 2008--giving the stores a rather generous 20 months to arrange for and make new POS purchases. Indeed, Burger King is saying that it was even willing to give franchisees more time if they needed help raising the money, as long as they were truly trying to follow corporate's edict.Read more...

Dear StorefrontBacktalk Reader: I am truly surprised at you. Here you are, raised to be proud money-grubbing capitalists and you’re leaving cash on the table like Bill Gates at a charity reception. (And can you believe how much Bill Gates jokes have changed in the last 15 years?) We’ve been giving away autographed copies of a best-selling security book and we still have some left. All we ask is that you fill out 5 minutes’ worth of questions on a one-page survey about whether your trust your QSA.

Even if you don’t like the book, they’re selling for decent bucks on eBay even without the author’s signature. Heck, they even make a great gift for that IT staffer who didn’t get a raise last month because you really wanted him to quit. Seriously, we only have a few left and they are easy to turn into cash. Is a 5-minute survey such a lot to ask? And if you fill it out, I won’t have to come back next week and beg even more pathetically.

Read more … …

In a marked contrast to the same kinds of questions two years ago, the intent is not to ignore security. Indeed, many of the chains considering such a heretical question are already putting in place security procedures that go well beyond current PCI requirements. This isn't a safety or security issue. It's a simple CFO's ROI balance sheet, contrasting the bureaucratic and paperwork costs of dealing with the very formal PCI procedure with the limited fines and other bad things that will happen if a chain suddenly stops pursuing PCI compliance. A report released this month from Ponemon tried to quantify the cost of breaches today, but its conclusions are rather underwhelming. Read more...

The role itself is a spreadsheet of contradictions. White House jobs, especially those senior enough where the President is personally involved in the selection, are highly coveted. And yet, quite a few of the people who were approached for this particular gig rejected it. This position is supposed to get a lot of POTUS face-time. And yet, in a town known for its inflated titles (another czar anyone?), this job title is the underwhelming Cyber Coordinator. Coordinator? That's the best they could do? But there's a serious issue with this gig. Some of its applicants complained of insufficient authority. In many ways, this lack of authority problem nicely encapsulates all of the problems with IT security management today: all responsibility; no authority; not enough money; plenty of blame.Read more...

A letter from a POS vendor making the rounds warns retailers—under the headline "Information Security Advisory"—that an out-of-date OS will cause lack of compliance with PCI. The warning isn't true, but the popularity of this and related PCI claims is moving beyond annoying. Are these vendors lying or is marketing being allowed to make the claims without anyone checking? A recession drives marketers to desperate measures. (OK, so does prosperity, but let's not go there.) Read more...

But PCI is not like that. PCI has requirements that demand regular attention if merchants are to remain compliant the other 364 days in a year. CIOs and merchants who focus only on their annual PCI validation may actually find that they unintentionally make themselves more vulnerable to a costly data breach. They also make their PCI revalidation the following year more difficult, and possibly more expensive, than it has to be.Read more...

Just as certain a fact as stating that many of today’s social network sites will be gone in two years is the fact that new social sites—invariably much more niche and focused—will replace them. Hidden in plain sight within the millions of posts in dozens of languages of these huge number of sites is every trend, every individual customer profile and every hint of what customers will buy—and perhaps even their desired price range—that your chain could ever wish for. There’s only one problem: There is no simple spreadsheet-friendly way to access that data.

You can read it without limits. But to automate that process and to process the data in a way to get anything meaningful out of it, that’s difficult. We are deluged with products and services that are trying to solve problems that hardly anyone has ever experienced. Who will be the first to conquer this one? Many companies—including SAP and Oracle—are trying to figure it out. But they typically try to fall back on algorithms and filters. The software needed is closer to what the CIA and the NSA use to parse billions of phone calls and E-mail messages while trying to figure out plots. It’s much closer to artificial intelligence than cryptography. Military satellite technology eventually came to consumers in the form of GPS. How long will it take for AI to visit the local retail chain, where software will peruse the world to find out the best assortment to be displayed tomorrow?…

What brings up this topic is a maddening news release issued by a customization vendor called ChoiceStream. In reporting its own survey, ChoiceStream concluded that "consumers are not as interested in shopping when engaged with social networks. The survey found that while M-Commerce is a hot spot for recommendations in 2010, social networking is not. Of the respondents who belong to a social networking site, only 8.5 percent report that they have ever made a purchase while on the site. And only 27 percent indicate any interest in product recommendations from trusted retailers." That so misses the whole point of social networks and E-Commerce. Read more...

The change was for several reasons, including "some functionality in the Fujitsu software that we really liked and needed" that wasn't offered by NCR and testing that showed Fujitsu's software on NCR self-checkout units performed about 20 percent faster than when NCR's own software was loaded on its units, said Cara Kinzey, Home Depot's Senior VP of IT. Read more...

"We consider CVS and (Walgreens) to be the most advanced, as they have already implemented chain-wide computer synchronization, advanced inventory management and pharmacy workflow optimization systems," said Deborah Weinswig, from the Citi investment research and analysis group. "The warehouse clubs are considered to be the least sophisticated of the group. However, BJ and (Costco) have fewer inventory management needs as a result of their unique business model."Read more...

Michaud describes the first parent-included IT interview he did, where the mother reminded him that her daughter was trying to decide about him, too. This makes for an awkward interview, but even worse, what does it say about the applicant's independence? Their ability to lead? Are programmers expecting instant gratification, the product of an "Everyone's a winner" upbringing? A frightening column for anyone hiring for IT positions this year.Read more...

The lawsuit, filed Tuesday (Jan. 19), hit Heartland hard for its "lack of Payment Card processing system security; its desire to use a 'lowest bidder' system of selecting its outsourced IT 'auditors'; its reliance on a 'snapshot' telling it that, at one identifiable point in time, its system supposedly complied with the bare minimum industry standards; its startlingly poor IT oversight in general; and (Heartland's) complete and utter disregard of the oversight responsibilities they had to their fellow members of the Associations that allowed the intruders to make trip after trip in and out of the Heartland Payment Card processing system." The lawsuit also referenced Heartland's initial response to the attack. "Thirteen months later, the 'clean up' efforts would be seen for what they were—worthless." (Pause. But other than that, Mrs. Lincoln, how was the play?)Read more...