Franchisees See Retail Chain CIOs As Being Out Of Touch With Reality

Written by Todd L. Michaud
August 12th, 2009

All retail franchisee owners have, at one point, been dying to have this conversation with their chain’s CIO: “Just stop talking: you’re an idiot. How can you even keep a straight face when trying to justify a $25,000+ POS system when I know I could put in a system that does everything I would need for less than $5,000?”

And the CIO in this fantasy conference call has her own dialogue: “I wish you franchisees would see the bigger picture and understand that the retail chain needs to enable technology to help us better run marketing, operations and supply chain across all stores, owned and franchised.” This begs the question: How does an IT department successfully deliver retail technology that meets the needs of both a franchisor and the chain? Both sides need to change the way they think about large-scale IT projects.

This is a lesson that shouldn’t be ignored by non-franchise chains, too, as today’s reality of Web-enabled, mobile-fueled, social-network-infested high-turnover low-margin is forcing everyone to play by very different rules or to die not trying.

I’ve spent the last 16 years trying to fight IT issues, with the last six years focused on franchisee IT issues—first running the retail technology department for Dunkin’ Brands (Dunkin’ Donuts and Baskin Robbins) and now running IT for Focus Brands (Cinnabon, Carvel, Schlotzsky’s and Moe’s Southwestern Grill)—and both sides need to step back and better understand the reality of the other. In this weekly column here at StorefrontBacktalk, I’m going to try and bridge that gap as we look at all of the IT hot buttons of today, from RFID, CRM and E-Commerce to mobile, payment, PCI, self-service, kiosks and supply chain.

Imagine you are on stage in an auditorium with 3,000 different retail CEOs. Large and small, all of them are in the same industry and even the same market segment. Each one of them has different levels of experience and generally different approaches to being successful. Some have Ivy League degrees, others have learned through hard work. Some manage their business by their gut, and other’s crunch numbers a million different ways. Some of them have access to deep financial resources, and others are just scraping by. Your job is to deliver a single POS that meets all of their needs.

You start by asking them what is important in a POS strategy. You are met with a wall of sound as everyone responds with 3,000 requirements all at once. Some of the requirements contradict each other: It needs to be highly-reliable. It needs to be cheap.

From behind the curtain, there is a small mob of people whispering loudly to you. “We need access to good data.” “It has to help drive sales.” Overwhelmed, you try to outline on a whiteboard an approach that meets most of the critical needs. Each time your marker touches the board, half the audience groans: Welcome to the world of Franchise IT.

I have had the opportunity to work in a Franchise environment on several large-scale, complex retail technology projects over the years. I have to admit that these projects have been the most challenging and yet rewarding of my career. Outside of the challenges associated with typical large scale IT projects, these projects have the added challenge of having conflicting motivations between 3 distinct groups: The Franchisor Business Unit, the Franchisor IT department and the Franchisees. I have yet to run into a project where all of these organizations are in complete alignment, even when there is a rock-solid, outstanding business case that shows a quantifiable business benefit for all.


3 Comments | Read Franchisees See Retail Chain CIOs As Being Out Of Touch With Reality

  1. Arun Gupta Says:

    Very interesting insights here on the tussle between the large retailer and the franchisee. Down the memory lane it was almost a deja vu moment.

    The large retail CIO has to think like an entrepreneur to make it work internally as well as with his partners. We completed that journey a couple of years back by choosing some of the franchisees as the champions (the MIT types) who made life easy.

  2. John Szabo Says:

    Hey Todd you are really funny. I am the following type of franchisee:

    There will likely be a small group of franchisees that constantly remind you about the failed project that happened 10 years ago. Even though you were not involved, they have not forgotten or forgiven the money and the time that the rogue project cost them all of those years ago. Be nice to these “your grandfather used to cheat at poker” people.

    The reason we won’t let you forget is because we do not want to go through that hell again. You really should work in the store on a Saturday night when the POS goes down during the peak hour. Your two options are to serve customers or get on the phone with the help desk and tell them the BIOS settings. Try doing this with two stores at the same time for months on end.

    I could care less if the POS system does my employee schedule or inventory. The first and foremost feature it should have is to subtotal the customer’s purchase, add sales tax, and open the drawer. If it does not do this, then you fail.

    The POS system should be tested until fails in the home office before being rolled out to 2,000 stores. Once it fails in the stores and the help desk is overwhelmed, then we are back to using adding machines. The $10,000 POS system is then a very expensive paperweight.

    The true shame of the whole “rogue project” is that we lost numerous customers that did not want to wait in line and gave our competition a foot hold in the market.


  3. Todd Michaud Says:

    Great comment! You have given me a great idea for an article: “A Franchisees Guide To Working With Their 4th CIO in 10 Years”.

    I love your point that the Franchisee is just trying to make sure that the mistakes of the past are not repeated (“The last 3 people failed at this, why are we trying again????”) and how the basics like reliability need to come before bells and whistles (“I don’t care if the car can parallel park itself if it tends to breakdown in the middle of rush-hour”)

    At the end of the day, as long as both sides realize and respect that the other is trying to do the right thing, that is success.

    Thanks again!


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