How Cloud Computing And Growing Franchisee Influence Are Hitting Retail IT
Written by Evan SchumanConsider this: Is there a connection between a growing support for various cloud computing approaches and the increasingly active IT role that franchisees are taking?
Yes, it’s a wacky juxtaposition, but stay with me for a moment. There has been a steady noise coming from retail franchisees who are trying to drive more of their stores’ IT strategy. Just this week, we heard about a McDonald’s kiosk trial that franchisees practically demanded. Demanded in the "we’ll pay for it ourselves and do it ourselves if we have to. Do you want it done your way or our way?" manner.
But that’s just the latest example. Ran into an IT manager with another large national chain with heavy franchisee involvement who said the trend is now undeniable.
Why now? This IT manager said it’s another impact from the economic freefall. In some segments, franchisees were amateurs who saw being a franchisee as a good investment. For many, it was an absolutely wonderful investment.
When the dollars were flowing freely, having sophisticated reporting wasn’t seen as a priority. "Some didn’t care about their labor or inventory. A third of our franchisees couldn’t have told me what their product costs were," the exec said.
But as the economy has soured, the amateurs, if you will, bailed and were replaced by more professional franchisees, who know retail and spreadsheets and who insist on knowing precise product and labor costs. It’s the combination of a freefall economy coupled with more sophisticated franchise owners that is pushing demand for IT.
Even though these new owners want lots of data, they don’t have IT support on site and they want their workers to focus on the core retail elements. Hence, cloud computing leveraging virtualization and pulling POS data into the cloud is the right strategy for these people at this time.
"They want to pull as much technology out of the stores as possible, with IT people managing all of this instead of the stores," he said.
For years, the franchisee has been the footnote when discussing retail IT. Unless the economy flips around quickly, look for those franchisees to be much less of a footnote and much more inclined to put their foot down.
-Marc
October 20th, 2008 at 9:01 pm
Great article, and you have certainly hit on growing interest in Cloud Computing to take away the pain of managing networks, updating software etc.
For major franchises, rolling these kinds of systems are major projects – but leveraged off the size of the enterprise.
For smaller franchises that are yet to hit that scale and are on the way up, outsourcing this to a cloud computing solution makes a lot more sense simply due to the economics.