How Is Automation Software Impacting The Retail IT Channel?

Business Solutions recently connected with Jim Roddy, a Reseller & ISV Business Advisor for Vantiv’s PaymentsEdge Advisory Services, to talk about his company’s recent survey on automation software in the point of sale (POS) channel. Vantiv surveyed 113 of its reseller and ISV partners in mid-November.

Q: What prompted you to conduct this survey?

Roddy: When I joined Vantiv this summer to launch a business advisory program for their partners, my first step was to reach out to as many successful VARs and ISVs as I could to see what made them tick. They were incredibly candid and shared details such as how focusing on one vertical allows them to charge more and how they have restructured their company to go after more managed services, more recurring revenue.

The part that surprised me was every single one of the most successful resellers — by successful I mean profitable and growing revenue — said one of their keys to success was embracing automation. When I dug into that, I saw that POS resellers were using PSA (professional services automation) and RMM (remote monitoring and management) software not quite to the full capabilities I’ve seen on the managed services side of the channel, but pretty darn close.

But when I asked those resellers and other VARs who weren’t embracing automation as much, nobody knew to what extent automation software had been adopted in the POS channel. Vantiv has a research arm that studies topics important to the channel and to merchants, and I took advantage of that to conduct this survey.

Q: What jumped out to you the most when you looked at the survey data?

Roddy: First, we learned 38 percent of resellers and ISVs who responded said they are not using PSA software. What that means, unfortunately, is that about 4-in-10 resellers are tracking projects manually using tools like Excel spreadsheets. That’s not very efficient and, with all the other pressures on resellers, they can’t afford to be slowed down. However, the survey says we’re closing in on two-thirds adoption in the POS channel. The number could’ve been much lower than 62 percent.

A very encouraging data point was that, of the resellers and ISVs who hadn’t embraced PSA software yet, about a third of them said they are either likely or extremely likely to adopt those tools in 2017. So, a big chunk of the non-adopters are going to take action soon. I’m a big believer POS resellers need to shift their business to the recurring revenue/as-a-Service business model, and PSA software will help them do that.

If you’re only selling cash registers, you don’t need that software. So, POS resellers are embracing technology that will help them deal with a more complicated business model, and that’s a very good thing.

Q: That’s PSA software. What about RMM? Remote monitoring and management is more complex so I would guess fewer POS VARs have adopted that.

Roddy: Correct. PSA software has been implemented by 62 percent of the point of sale solution providers who took our survey, but RMM software is being utilized by only about half. I thought the gap would be bigger than that.

Q: And what does the next year look like for adoption of RMM software in the POS channel?

Roddy: Nearly 25 percent of survey respondents who are not utilizing RMM Automation Software said in 2017 they are likely to embrace it. So, that’s slower adoption than PSA, but it’s still a big step in the right direction.

What also seems to be hindering RMM adoption in the point of sale channel is the lack of one accepted standard software for that purpose. Vigilix RMM software was mentioned the most often by Vantiv partners, but that was still by only about 12 percent of respondents. I really think the adoption rate would accelerate if a company can effectively design and market an RMM tool for the POS channel. But the tool would also have to be flexible because of all the different markets under this umbrella — hospitality, retail, grocery — so it certainly is a tall order.

Q: What else do you think is slowing down the adoption of automation software by POS resellers?

Roddy: Because resellers already face a ton of challenges — I haven’t met anyone who is overstaffed — and these software packages completely change the way you do business. So that right there is a giant hurdle. If you’re struggling to find time to take care of day-to-day operations, you’ll struggle finding time to make a significant and fundamental change to your business.

There’s also the expense. PSA and RMM software that’s built for a reseller business is no cheap date and I don’t know any reseller with cash burning a hole in their pocket. Several partners who took our survey said they created their own version of automation software in-house to avoid the out-of-pocket expense of buying PSA and RMM software.

But the resellers who have fully embraced and adopted automation software say the benefits far outweigh the headaches. One respondent said they are able to scale without adding staff because of automation, and they also now provide a more consistent experience for their customers. So if you can handle more projects without creating more overhead while at the same time providing better service to your customers — that’s a pretty powerful combination for any solution provider.

Q: Any final thoughts to share on the survey?

Roddy: This data keeps me optimistic about the future of the POS channel. I can recall at RetailNOW just two-and-a-half years ago a presentation on PSA software, and it seemed the only solution providers in the room who fully embraced the concept were the two resellers on stage. The audience was a mix of curious, skeptical, and combative. One dealer in the audience stepped up to the Q&A microphone and plainly said, “This won’t work.”

Resellers who think like that are in the minority today, and that group gets smaller with every passing quarter. POS technology and business models are changing, and they’ll continue to change of course. It’s encouraging to see many POS resellers and ISVs are making the necessary moves to adapt as well.

If anyone would like to see the details beyond what we discussed here, we have published a full analysis on the Vantiv website.

Jim Roddy is a Reseller & ISV Business Advisor for Vantiv’s PaymentsEdge Advisory Services. He has been active in the POS channel since 1998, including 11 years as the President of Business Solutions Magazine, six years as a Retail Solutions Providers Association (RSPA) board member, and one term as RSPA Chairman of the Board. Jim is regularly requested to speak at industry conferences and he is author of the book Hire Like You Just Beat Cancer.