Q&A: Microsoft and ISV Partners Create a Model for Success with Solutions for Mid-sized Retailers

NEW YORK, Jan. 17, 2005 — As retailers gather for the annual National Retail Federation conference, held here Jan. 16-19, Microsoft and its Independent Software Vendors (ISVs) and reselling industry partners prepare to demonstrate an array of new retail applications and products. Designed to serve the point of service (POS), inventory, ordering, back-office and other business needs of mid-sized retailers, Microsoft’s retail solutions are designed to help store owners improve productivity, enhance customer loyalty and create a connected retail organization. Microsoft retail solutions are backed by a partner network that supports, customizes and extends the products as customers’ retail needs evolve.

To find out more about Microsoft’s vision for the midrange retail space, and to discuss the importance of ISV and reselling partners in company’s retail market strategy, PressPass spoke to Dale Sleppy, Microsoft’s retail-industry marketing manager for its small and mid-sized business unit, and Runar Sigurbjartarson, principal U.S. representative for Landsteinar Strengur, a Microsoft Gold Partner and one of Europe’s leading retail solutions developers.

PressPass: What is Microsoft’s strategy in the small and midrange retail space, and how does it differ from other companies in this market?

Sleppy: Microsoft’s strategy for small and medium retail is to focus on our customers’ business challenges and to support our ISV and reselling industry partners to solve our retail customers’ pains. Microsoft differentiates itself from its competition with a breadth of retail-specific business solutions backed by one of the world’s leading technology companies, coupled with “on-the-ground” support by our partners. The company relies on its ISVs and industry partners to provide retail customers with expertise and local support to ensure that customer satisfaction is maintained at the highest level. Microsoft is committed to the success of its industry partners because they help extend Microsoft technology and create new opportunities in the retail market.

PressPass: Last year Microsoft announced the Smarter Retailing Initiative at the 2004 National Retail Federation annual conference. What are Microsoft’s accomplishments in the past year?

Sleppy: The Smarter Retailing Initiative (SRI) is designed to help any retailer, small or large, to dramatically improve how they sell and operate through better access to customer and product information. Since the program’s launch, more than 25 retail industry partners have committed to Microsoft Smarter Retailing and its goal of using the Microsoft .NET Framework to deliver solutions and services that showcase the next generation of “smarter” retail solutions. We have extended the best practices of this initiative to develop strategies with our ISV industry partners that focus on small and mid-sized retailers.

Microsoft’s commitment to the lower end of the retail market is manifested in the Microsoft Business Solutions Retail Management System, which offers smaller retail customers an easy-to-install and easy-to-use POS and store management system that requires minimum investment but is designed to allow retailers to manage POS transactions and inventory, reduce loss and to customize the system to meet their specific retail requirements. For retailers with larger chains and more complex centralized inventory and purchasing management needs, Microsoft offers Microsoft Business Solutions business management applications. These applications provide the mid-sized retailer with a core technology that can be extended to meet specific retail needs with ISV partner-integrated solutions, including point-of-sale, warehouse management, distribution and fulfillment, electronic data interchange (EDI) and automatic data collection. Microsoft also launched Microsoft Speech Server, which offers a common platform to speech-enable a broad ecosystem of applications and services and bring the significant business value of speech technology to retailers of virtually any size.

PressPass: What are the challenges that mid-sized retailers face today?

Sigurbjartarson: One of the biggest issues that mid-sized retailers face is inventory management. In most retail operations, inventory is the company’s most expensive asset, and the goal is to turn it as often as possible. But retailers without adequate inventory management systems find it difficult to achieve visibility into their inventory and find it challenging to manage it very efficiently and effectively.

Dale Sleppy, Microsoft Retail Industry Marketing Manager

Sleppy: Related to inventory management is reporting. Many retailers lack the tools and integrated systems to quickly access accurate metrics, such as average number of items per ticket and average revenue per transaction. Timeliness of information is another big issue. How quickly a retailer receives information determines how soon they can react. Having access to real-time retail information allows managers to make informed decisions that can affect the success of stores and retail operations.

Customer service is also aligned to inventory management. Most mid-sized retail operations can’t compete with big-box retailers on price. But they can offer a more unique inventory and better customer service. But to do that retailers need integrated inventory-management systems to make sure they have the right inventory on the shelves. A large part of the so-called “customer experience” is simply having the right inventory in stock.

PressPass: Don’t most mid-range retailers already have automated inventory management systems?

Sleppy: The retail POS industry is at the crossroads of two trends. There are organizations with POS systems that have lasted 10 years, and others with POS systems that were upgraded after Y2K. This results in a situation where many retailers are looking to upgrade existing systems or develop new systems. This creates an opportunity for Microsoft and its partners to address the needs of the retail industry with retail-optimized software and solutions.

Most retailers do have POS systems of some sort, but many times these are not integrated with other systems within the store or the chain. It’s not uncommon, for instance, for POS information to be entered manually and after the sale into inventory systems. This creates extra work, introduces opportunities for mistakes and limits the ability for managers to react quickly to trends.

There are many reasons why some retailers don’t yet have fully integrated POS and inventory-management systems. Small retail chains often grow by acquisition, so a chain may include individual stores with systems that aren’t compatible and can’t communicate easily with others. Other retail operations may have started small, with just a cash register and a pad of paper to do inventory, but have quickly grown into small chains that need deeper inventory-management tools. There are also many niche retailers who operate on specialty inventory-management systems developed specifically for their product lines. The downside of these specialty systems is that they may be difficult or expensive to support, may not scale as companies grow, and may not be easy to upgrade as new technology becomes available or as new considerations, such as security, become paramount.

Sigurbjartarson: It is not uncommon for retail operations to overbuy in terms of POS technology and be saddled with an expensive, over-complex interface for their existing back-office systems. We have customers who have switched from these solutions to Landsteinar Strengur solutions based on Microsoft Business Solutions–Navision or Microsoft Business Solutions–Axapta, because they find these far less complicated systems meet their needs and save them time, money and frustration.

PressPass: How do Microsoft and its ISV partners help mid-sized retailers address these challenges?

Sleppy: Microsoft and its development and reselling industry partners bring a stable business partnership to their retailer customers. Microsoft retail solutions create a connected retail organization which helps retailers to have more accurate, timely reporting, one-time data entry, better connections with suppliers and trading partners, and greater access to data for real-time decision making. Microsoft will continue to invest in its technology to make it more secure, reliable and responsive to the needs of customers. A multi-billion dollar development budget stands behind Microsoft’s software, which ensures that retailers of all sizes can have access to product upgrades and new technology that will help them provide better service and be more connected, efficient and productive — which can lead to greater profitability.

It’s significant that Microsoft retail solutions are backed by a partner and support network. Both Microsoft and its industry partners stand behind the software we provide, allowing retailers to concentrate on running their businesses.

Sigurbjartarson: I can tell you that after Microsoft acquired Navision, Landsteinar Strengur experienced an increase in interest in our Navision-based retail solution. People trust Microsoft technology and when they are selecting a solution and a platform, they will choose Microsoft because they know it will continue to be developed into the future. This is one of the big advantages of developing on a Microsoft platform. Everyone believes that Microsoft is the future. It was my experience that after Microsoft bought Navision, we attracted a wider range of customers.

PressPass: In terms of technology, what advantages does Microsoft offer ISVs in the retail space?

Sleppy: ISVs in the retail industry serve different market needs, depending on their customer’s size, industry and specific solution requirements. Microsoft offers a complete and integrated set of platforms, including Microsoft Business Solutions-Great Plains, Navision, Solomon and Axapta, plus a selection of pre-integrated business applications to meet the individual needs of mid-size organizations. In addition to helping to provide developers platform flexibility and a toolbox full of applications and services, Microsoft business software and services are designed to be easily customized for a customer’s unique requirements. Using Microsoft technology helps provide ISVs faster time to market, greater end-to-end efficiency, and the confidence that components will work together out of the gate.

Another advantage of Microsoft technology is the ease of upgrades. Standard upgrades can be administered through a centralized system so there is no need for an IT person to go out to each store and deploy an upgrade on each POS machine. When you’re dealing with a distributed environment like retail, this is a very convenient feature.

Sigurbjartarson: The biggest advantage of Microsoft technology is that it grows with you. You can start with a small retail solution working with your native data base and then as you add stores and workforce, you can grow. Microsoft’s business systems can keep pace, as the platforms and applications are completely scalable. You can take your solution and put it on Microsoft SQL Server, you can take it to other countries and use the same solution because you have multi-language capability. You also have support partners worldwide — it doesn’t matter if you’re in Iceland, South Africa or Australia or Mexico, the ecosystem of certified partners is there, trained and tested with the same level of competency as everywhere else in the world.

Another advantage of Microsoft’s retail solutions is the familiarity of the interface. It’s a big challenge for retailers to train employees and keep them happy with technology. Most people are familiar with the Microsoft platform. Our customers often tell me how easy Landsteinar Strengur solutions are to use. It takes only 15 minutes to train someone how to use our POS system, because it leads you the way you need to go. It’s intuitive.

PressPass: What business programs and benefits does Microsoft offer its ISVs and partners to help them succeed?

Sleppy: Given market demands and the required investments for developing software, Microsoft is aware that profitability is a challenge for its ISV partners. We address the changing needs of ISVs by supporting them from a business-enablement perspective. Our new Microsoft Partner Program supports ISVs through the entirety of their business life cycle, from planning and development to selling and servicing to customers. Among the resources and opportunities available to ISVs from Microsoft are lower-priced ISV licensing, online training, marketing tools, networking opportunities and an online portal specifically for ISVs, where they can access information and resources. Our goal is to develop communities and events where ISV and reselling industry partners can develop relationships, with the aim of better serving the needs of end customers.

Sigurbjartarson: Microsoft has provided Landsteinar Strengur with significant levels of support over the years, particularly through business leads. Often they have opened doors for us that have led to new business

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