It depends on the chain and the needs of the vendor. Some important considerations to decide which model is the right model for a new technology vendor/system:
Are the functionality requirements dramatically different between different operators in the system? The more diverse the need is, the more challenging a single-vendor approach will be. Some franchisees need just the basics, while others need all the bells and whistles.
How complex is the new system and what is the typical franchisee’s capability to self-support? Systems with a lot of moving parts that cause a high-reliance on the vendor for support may be better managed with local, on-site resources. In other cases, an umbrella help-desk that manages the complete “technology stack” in the store might be a better option
How sensitive are the franchisees to pricing? I had to put something in here to make you laugh. We all know that franchisees are sensitive to pricing, but specifically how does their value equation (cost vs. functionality) relate to the new approach? Example: If they just want a cash register and you are pushing a fully functional POS, then the sensitivity is through the roof. In most cases, volume commitments through exclusivity and/or contract term can help reduce costs.
How many integration points are there with the new system? If the new system is integrated with several other systems (as in the POS example), then integration costs become a serious consideration with adding multiple vendors. If every POS release must be tested, certified and deployed with several integration vendors, then the brand should expect to expend significant capital and human resources on maintaining those integration points. If you have four different POS vendors that each release two major releases a year and the POS is integrated with five different IT systems (Inventory, Supply Chain, Labor Management, Payments and Loyalty), then the IT team will be certifying 20 different releases every year.
What is really required and what is optional? The more things there are on the required list, the more likely specific vendors will be named. Make sure that you are evaluating requirements with a fair eye. Understand that the level of risk that the chain is willing to take and the level of risk the franchisee is willing to take may be different. Try to find an approach that meets both the requirements and appetite of risk for both. Maybe a single manufacturer with different service providers is a good compromise for franchisees worried about competitive service after the sale.
What are the security/compliance requirements or importance of the technology to the brands? Technologies that involve sensitive data will most likely require very precise standards be met, which can often lead to a choice of a specific vendor. Are you selling printing services? If so, the printer that is used is probably very important to the brand and is therefore likely to have tighter controls on vendor selection. In most cases, a chain will need to use each of the vendor models in some fashion or another to be successful. Both the franchisees and the chain need to understand that decisions that are made around the structure of an IT vendor relationship can have a significant impact on the total costs of a technology approach and all of those costs must be carefully weighed early in the decisions process. It is important that these decisions are documented and communicated to all those involved so that expectations are properly set.
What do you think? Love it or hate it, I’d love to gain some additional perspectives. Leave a comment, or E-mail me: Todd at Todd.Michaud@FranchiseIT.org.
Cards issued by European banks when used online cross border don't usually support AVS checks. So, when a European card is used with a billing address that's in the US, an ecom merchant wouldn't necessarily know that the shipping zip code doesn't match the billing code.
-Marc
