Multi-unit retailers, consumer packaged goods manufacturers, and distributors are all struggling to accomplish more with less (fewer people, less budget, less time). Automation is widely considered the best way to make the most of limited resources, but how do you decide for yourself? We’ve compiled an updated guide to analyzing your buy vs. build dilemma.
Using paper and Excel for in-store audits is time-consuming and labor-intensive. If you have decided to automate in-store retail audits, the next question to ask is “Is it better to buy an off the shelf retail audit software solution or build an in-house solution?”
- Return on investment
- Time to market
- Internal resources and Ongoing Support
- Customization and features
Cost to Develop an In-House Solution
It is common to ask the IT department for an estimate of costs to develop an in-house solution. When asking for an estimate, remember to inquire about ongoing support and maintenance costs associated with the entire lifecycle of the software.
This is especially important for small and medium-sized retailers. In general, SMBs are less likely to have a long-term software roadmap in mind in comparison with larger organizations when deciding whether to buy or build. SMBs also often lack the larger IT infrastructure to provide ongoing support.
Regardless of your size, it is important to be aware that a large number of IT projects go over budget. A 2017 study by the Project Management Institute (PMI) found that 43% of projects exceeded their initial budget.
Initially, the cost to develop may appear cheaper. However, beyond the initial cost of building a solution, it is important to remember that 70% of software costs occur after implementation!
“A rigorous life cycle analysis that realistically estimates ongoing maintenance by in-house developers often tips the balance in favor of buying.” – Mark Lutchen, former global CIO of PriceWaterhouseCoopers
Once you have an estimate of the cost to build based on infrastructure, IT support and hardware, you can begin to compare a ready-made solution.
Utilizing a retail audit software has a measurable impact across all areas of the company. For those previously relying on paper/Excel, automating audit programs with software demonstrates ROI on process improvement alone and gives all levels of the company real-time access to data instantly.
Retail audit software saves time – An average 145 minutes per audit per store:
- Scheduling the audit and notifying stores is automated.
- Review past audits quickly using reports instead of searching through paper/email data.
- Forms are intuitive: only showing items (questions) that are applicable to the location and the user.
- Scoring is automatic.
- Data is available in real time.
- With one click, action plans are automatically created for all non-compliant items identified during the audit.
- Assigned action plans and tasks reminders are automated instead of chasing after staff with emails, phone calls, and chat threads.
- Track completion and trends on any device, any time with simple reports.
An out of the box solution will save you the cost of data entry, postage and physical data storage. It gives brands the capability to create and edit forms quickly and eliminates distribution costs associated with sending and/or printing endless hard copy audits.
An appointed form builder can work collaboratively with their team on a single platform to calibrate their forms/checklists as opposed to sharing by email and waiting for a response.
Head office can handle unexpected emergencies and changes (product recall, regulation changes, equipment breakdown, viral negative customer review) for any personnel level instantly with task management.
Retail audit software saves money lost on poor execution. The cost of sub-optimal merchandising is approximately 1% of gross product sales. Success ultimately comes down to proper execution.
- Only 40% of contracted promotional displays are executed properly.
- Successful CPG collaboration with retail partners for merchandising execution can generate up to 10% in operating margin improvements and reduce inventories by an average of 10%.
- Real-time access to information between head office, teams, and stores facilitates communication that can allow teams to address issues immediately. For time-sensitive campaigns, this assists in a faster improvement to underperforming campaigns.
Retail audit software reduces loss associated with theft, fraud, vandalism, and waste. A recent study by the National Retail Federation (NRF) found an average shrink rate of 1.44%, costing “the overall U.S. retail economy $48.9 billion.”
- Companies with efficient processes in place, save time and money. Almost 8% of loss prevention departments are seeing budgets decrease by 20% in 2018.
- Use retail audit software to distribute loss prevention policies and review tests to ensure standards are understood at the store level.
- Task management modules enable brands to assign and track LP policy review.
- Quickly distribute updates to loss prevention policy. Ensure that users have reviewed in real time and follow up with those who have the task outstanding.
- Retail audit software provides a history of due diligence should a critical incident occur.
Retail audit software protects the company from claims, fines, and lawsuits due to health and safety violations.
- 70% of small retail businesses feel overwhelmed by government regulations including safety guidelines and labor regulations.
- Change employee behavior by clearly communicating health and safety standards.
- Use task management to assign essential equipment maintenance.
- Attach policy and regulation updates to the form so that information is easily accessible.
- Demonstrate due diligence for disaster and emergency preparedness with an electronic, easily accessible audit history for each location.
Time to Market
PIM reports that 49% of IT projects finished late in 2017. So when deciding between buying a software solution and building a solution, there are important questions you need to ask yourself.
How soon do you need a solution? If your in-house development team lacks the skill set required for certain areas of the project, do you have the time to wait for and resources to bring in an additional expert? How “right the first time” must the solution be? Do you have the resources to wait for debugging issues?
PIM reports that 49% of IT project finished late in 2017.
Building an in-house solution takes a substantial upfront commitment and the development process from conception, to testing, debugging, and deployment can be months, or longer depending on the solution’s complexity.
Consider your type of business. Forbes observes that for most retail businesses (QSRs, c-stores, furniture retailers, etc.) a great software solution is likely readily available and has already proven effective in your vertical.
Before you decide to build, explore retail audit software solutions that offer a free trial. Other than a few minutes of exploration, your upfront investment is essentially nil. Some applications allow you to be up and running in one day so that you can “test-drive” the solution in your stores with your existing forms or checklists.
Internal Resources and Ongoing Support
As noted above, building software is only one part of the process. As the company scales and technology continues to change, it is important to consider the resources required to provide ongoing support and updates.
Security and recovery – How is data backed up, recovered in case of a system failure, and secured from hacking?
Supporting materials – Who will author best practice documents, provide training, and keep resources up to date?
Usability – How will the company respond to technology changes (mobile, tablet, app, browser upgrades), requests for new features and ensure uptime for end users?
In the past, a lack of pre-packaged software was a major reason for opting to develop a solution in-house. Today, the competitive nature of the industry requires software vendors to be transparent about offerings and costs.
This means you can choose a vendor whose package includes all of the above as well as upfront pricing for additional modules and features. One major benefit of purchasing a retail audit solution is budgetary predictability.
Customization and Features
There are three major reasons companies choose to develop an in-house solution:
- Off the shelf software cannot meet every need.
- Off the shelf software is rigid and won’t allow you to have a solution customized to your needs.
- Off the shelf software is not compatible with other company systems.
Creating a solution in-house does not necessarily guarantee that the solution will meet every need. The needs of head office may be vastly different than the needs of the director of merchandising or a store manager. As noted above, use free trials to test retail audit software already available. If the software meets the company’s needs by role and budget, there is no reason to build.
What level of customization is required? Retail audit software like Compliantia is highly configurable: build your own unlimited forms with as many types as you require, manage your own stores and user accounts, and create your own workflows.
What aspects of the company’s current systems require integration with the retail audit software solution? Choose a retail audit software vendor who is API enabled to integrate with other third-party systems. Implement “one-click” login from the company’s intranet. Finally, Compliantia’s easy-to-use Data Uploader allows companies to import third-party data with a web-based Excel file uploader or schedule data import using FTP automation.
Our advice? Google “retail audit software” and have a look at what’s available before you invest, or invest further, in your own custom retail audit software. Shop around, do a free trial and see for yourself.
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