Magazine Article | December 13, 2012

Quit Selling POS Hardware?

By Matt Pillar, Business Solutions magazine

POS hardware margins got you down? Here’s how one of the nation’s leading integrators maintains growth by pitching solutions, not systems.

John Pruban’s sales team understands the difference between what his company successfully sells and what his customer has to buy. Pruban is president and CEO at tekservePOS, a retail technology integrator with 100 employees and more than 1,700 contracted technicians nationwide.

The company’s success formula is one small part in-store hardware and one heavy dose of consultation and services. Here’s how it breaks down. The company successfully (i.e. profitably) sells:

  • Consultation
  • Procurement
  • Staging and integration services
  • Field services: installation/de-installation/move-addchange (MAC) work
  • Maintenance/repair
  • Warranty management & enhancements
  • POS sales & reporting software
  • Asset management
  • Life cycle management (decommissioning, recycling, reuse, etc.)
  • 24/7/365 Help desk

Its customers have to buy:

  • Technology, both existing and new
  • Hardware repair services and depot repair
  • Consumables
  • Technology rollout services and support
  • Store openings and closings field service and support

When it’s all said and done, two-thirds of revenue at tekserve- POS is made on the former: the intelligence and skill required to develop holistic, fully integrated retail systems and then manage those systems throughout their life cycle. Only a third of sales, says Pruban, are attributed to POS hardware, peripherals, and infrastructure.

For POS VARs and integrators accustomed to the old way of doing business, where the sale was centered on a vanilla set of boxes and peripherals and where services and systems architecture expertise were ancillary, the business model at tekservePOS might look radical. But for Pruban, it’s simply a matter of following the market and serving its needs. “The vast majority of our business comes from the retail chain that comes to us with a problem, not a specific need,” he says. “We find our growth opportunities by helping them find the solution, then delivering and supporting that solution.” It’s a philosophy that demands agility on the part of the integrator, a nimble approach to tech architecture and procurement that’s evidenced by the new stuff tekservePOS is integrating these days. Stuff like iPads and Windows-based tablets, kiosks and digital signage, VoIP (voice over Internet Protocol) and other phone systems, and networked traffic-counting and security devices.

Winning The New Sales Cycle
Pruban says his company’s best opportunities come early in the customer’s tech discovery phase, before any systems choices have been made. Recognizing this, tekservePOS has established a consulting practice devoted to retail systems discovery and problem solving. While Pruban warns that getting into potential deals well before the retailer has determined its technology requirements greatly extends the engagement cycle, he says it also expands the long-term opportunity for tekservePOS by exposing end users to the company’s broad portfolio of solutions expertise before they begin shopping. And of course, the development of a consultation practice means the hours add up long before sleeves are rolled, wire is laid, and implementation begins. “In today’s market, a longer sales cycle is inevitable in any event. As retailers find themselves contemplating myriad new technologies, especially mobile technologies, the decision-making process becomes that much longer and more complex,” says Pruban. “The opportunities for VARs are growing, but decision cycles are elongating because there are so many moving parts to the puzzle.” Resellers who sit patiently while retailers put the puzzle together themselves are not only missing consultative partnership opportunities, but they could be in for a longer wait than they can bear.

Pruban also warns that it’s not easy for a company that’s traditionally been viewed as a ground-level integrator to establish its place as a boardroom consultant. “To overcome that challenge, we spend a lot of internal training time on the need to understand the retailer’s business, how they think, and align the technologies that meet their needs. If you do that, you provide value.” The practices Pruban has established to ensure a consultative sale include daily 45-minute sales staff meetings to work collaboratively on current deals, ten days of off-site training annually (in addition to standard vendor training and certification programs), and an open “pod” environment on the sales floor. “In practice, there can’t be any silos of information on the sales floor. Establishing an open, collaborative environment is akin to a rising tide that lifts all ships,” he says.

Pruban also says the rapid progression of retail technology from necessary expense to business enabler, marked by a veritable explosion of multidisciplinary technologies and applications available to retailers, creates a huge market opportunity for companies with a unique combination of “in the trenches” experience and consultation savvy. “We’ve seen a distinct blurring of the walls between technology vendors and end users, and with it a dramatic shift in the expectations of the IT community,” he says. “It’s no longer about phone and field support. We’re called on to serve business needs in every department, and so are our customers’ internal IT staffs. That creates more opportunity to serve as an extension of their team, whether it’s on the front end [consultation and architecture] or the back end [integration, installation, and maintenance services].”

4 Hot Technologies For Retailers In 2013
As he’s plied the consultative waters, Pruban has been able to draw a bead on which technologies are on the cusp of becoming big opportunities for retail VARs. Not surprisingly, mobile is at the top of his list. “Most of our customers are pushing for iOS devices for inventory, CRM, and pricing applications because of their customer appeal and because, as consumer-grade devices go, they offer some relative stability in terms of future proofing. The challenge for retailers — and again, therein lies the opportunity for VARs — is integration,” he says. “When a company says it wants to deploy iOS devices, it typically has no idea how to get them communicating with their enterprise OS and applications. That’s where we step in, and along with integration we consult on the wireless infrastructure, device monitoring, and security opportunities that come with mobile deployments.”

That said, Windows 8/Windows RT just threw a wild card into the mix. As business usage goes, Pruban sees a potentially epic battle brewing between Apple’s interface prowess and Windows’ integration ease. “No question, despite its late entry, Microsoft could still wind up with the market share. We’re investing in Windows 8, Metro, and iOS,” he says.

A bit more surprising than mobile is what can best be described as a telephony reprise among retailers. Pruban says tekservePOS is taking on a lot of wireless infrastructure projects to enable Wi-Fi access for customer-facing mobile applications, but more interestingly, he’s seen a marked uptick in VoIP rollouts in the past twelve months. “Retailers took a stab at VoIP five or six years ago and largely passed on it. Back then, the price point was too high, and the bandwidth was too low,” he says. Now, the VoIP business model has evolved to a fixed monthly fee structure, and quality of service has improved dramatically thanks to an increase in bandwidth availability. Those factors make it attractive to distributed, multisite retailers looking for a way to manage telephony costs, and tekservePOS expects continued growth here in 2013.

For much of the retail technology reseller community, cross-channel integration is a dirty word; if it’s not brickand- mortar, it falls outside of scope. Big mistake, says Pruban, and while he admits the VAR’s role in the future of cross-channel retail is unclear, he says the starting point is a no-brainer: kiosks, digital signs, and mobile devices. “One of the cross-channel retailer’s first ‘omni-channel’ integration challenges is how to make e-commerce completely seamless to stores,” he says. Retailers certainly struggle with the integration necessary to drive endless aisles to kiosks, digital signs, and associates’ mobile devices, not to mention consumers’ mobile devices. “The misguided perception among many retailers is that there’s a wizard out there to walk them through cross-channel setup. The reality is that there’s a lot of systems disparity that requires multiplayer integration expertise, and that creates a great problemsolving opportunity for well-connected integrators.” Those same kiosks, digital signs, and associate-level mobile devices are also prime real estate for planogramming and associate task management applications, which Pruban also counts as opportunities for the channel in 2013.

Finally, the retail security and traffic-counting business has grown steadily for tekservePOS over the past two years, a trend Pruban expects to continue in 2013 as more retailers move security and traffic analysis systems onto the network. Pruban calls networked surveillance systems integration a safe bet for VARs because of their relative ease of installation and the fact that the POS—the retail VAR’s most proven stomping ground — is their most common point of integration.