Anyone in retail IT looking for a good ROI argument should simply refer to an advisory to shareholders that Rent-A-Center issued earlier this month. The $3.3 billion, 2,600-store chain on Oct. 11 advised that its revenues were dropping — and then it pointed the finger at POS problems.
I needn't point out that IT never wants to be discussed that way. But if you don't work for Rent-A-Center, the explanation it put forward could be useful in making arguments for systems purchases with the CFO.
Explaining a 12% drop in same-store quarterly sales, CEO Robert Davis said, “Following the implementation of our new point-of-sale system, we experienced system performance issues and outages that resulted in a larger than expected negative impact on core sales. While we expect it to take several quarters to fully recover from the impact to the core portfolio, system performance has improved dramatically and we have started to see early indicators of collections improvement.”
CFOs are fond of favoring low bidders, and IT usually has few concrete bullet points to fight back with. The perception is that all reasonably competent POS systems will do the job, so why pay more?
It's one thing for POS glitches to cause problems. It's a big step up for those problems to become "material," in the SEC sense of the word. But what happened with Rent-A-Center is even worse. This wasn't a regular earnings report. No, the Oct. 11 statement was the company saying that it needed to "pre-release selected preliminary unaudited financial information for the quarter ended September 30, 2016."
To be blunt, the company felt that these POS-glitch-caused earnings problems were so significant that it felt it had a fiduciary obligation to issue a special statement about it.
Any system can glitch, but when POS glitches, it can have a devastating impact on revenue. This was primarily in-store impact. That means that a customer can't merely click away and come back in an hour. That customer drove to your store and waited in line to be hit with this glitch. The drop in revenue might only be a preview of imminent revenue losses from angry customers who may not to come back.
This is People's Exhibit #1 for why IT needs to be trusted to select all manner of retail IT systems, especially POS. This is literally how people pay, which, Mr. CFO, happens to be where almost all revenue comes from. Is that really where you want to be going with the lowest-cost bid?
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