Five Steps to Selecting the Inventory Management Software

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inventory management software selection

With growing complexity in today’s business environment and more reliance on IT, the use of inventory management software has become more critical and their success is much desired. Inventory management and POS software solutions are not just used for improving the productivity of retail businesses but are also the means of doing business. Therefore, it has become more important to be able to select the right software for any business concern.

Retail software can automate different functions of retail businesses. For example, inventory software is used to manage inventory in a manufacturing environment, and point of sale software is used to manage all operations of a retail business. Selecting the right business application is usually costly, requires more training to operate, and has greater business risks associated with it.

In this article, we will establish five guiding principles that can be helpful in finding the right retail software for business needs.

[bctt tweet=”Caution: Software failure is very common and according to statistics, 70% of projects suffer failure. The Degree of failure ranges from total failure (project abandonment) to partial failure (not fulfilling the entire needs of customers). This situation demands careful attention to making software related decisions” username=”WeTalkRetail”]

Evaluate Feasibility of Software Deployment

evaluating software deployment feasibility

Like any other asset, software deployment feasibility should be evaluated on the basis of expected ROI (return on investment). Simply stated, the business owner should calculate the TCO (total cost of ownership) of getting a retail business solution and then compare it with expected benefits. The decision of selection and acquisition of any software solution should be made on the basis of expected benefits which should exceed the cost of investment.

Total Cost of Ownership includes the software cost, associated hardware cost, and allied software license. For example, an inventory software may cost Rs.50,000/- but to calculate the TCO, the cost of the computer on which the software will run should be counted. Moreover, if the software is going to run on Windows Operating System, the license cost of the operating system should be included in TCO. The recurring cost in the form of a maintenance fee or annual license fee is usually part of the solution cost and should be considered.


Compare Pre-packaged software versus customized software

Once the feasibility of software acquisition is established, the next question to consider is whether to get the software developed according to one’s own requirement (customized software development) or to evaluate and purchase a pre-packaged solution.

Generally speaking, customized software development is riskier as compared to available pre-packaged solutions. Customized software seems attractive because it promises complete adherence to existing business processes and satisfies all the customer’s requirements. While selecting this option, the customer should understand that the failure rate of this type of software is very high. Besides, the total project time and cost is usually more than the expectations and projections.

Pre-packaged software poses less risk but usually does not fulfill all business requirements. As a rule-of-thumb, if pre-packaged software satisfies 80% of the business requirements then it merits consideration. Another advantage of this choice is the availability of industry best practices which are built into such software products. Usually, pre-packaged software products are evolved over a time period and are therefore more rugged and relatively error-free.


Go for Pilot Deployment of Pre-Packaged Software

While evaluating a pre-packaged software solution, its available features and requirements of the business should be considered; usually hiring a consultant for evaluation of software products makes business sense. Another useful option is to ask the software provider to agree for a pilot deployment. Pilot deployment means software provider installs the selected software and validates the business practices over a very small portion of data. Since this is just a small sample of total operations, it can be done at a small cost and within a few days. For example, [bctt tweet=”an inventory software may be tested by entering data of five to ten inventory items and performing all operations like purchase order issuance, inventory receipt from vendors, inventory issuance to departments, gate pass generation, stock audits, etc. This will give some idea about the usefulness of that particular software solution and thus help in the decision-making process.” username=”WeTalkRetail”]


Weigh Your Risks Before Choosing Customized Software

If no pre-packaged software satisfies the business requirements of a particular business, then it may become necessary to get customized software. Again there are two options. First is to get the software developed in house. This means that the business owner hires some software developers and asks them to develop the required software. The second option is to get the software developed through a software development company. The first option seems attractive because apparently it is less costly and the business owner has more control. But it usually turns out to be riskier and can prove to be more costly in the long run. Amongst other issues of this approach, high turnover of IT staff is quite common.

Evaluate the Software Development Company

To reduce the possibility of risk and save cost in the long run, customized software solution should be developed through a software development company. Selection of a software company is a very important decision and needs considerable attention of business decision makers. It should be considered a strategic business decision and planning should be done for a long term mutually beneficial business relationship.

Companies having business domain expertise will have more chances of successful project delivery. Business owners should exercise caution while examining the financial quotations from different software development companies. Some estimation regarding the expected cost of the software should be done and quotations which are on the lower side should be discarded. For software development companies, the major portion of a software cost involves man- hours cost, overheads cost, project buffer cost, etc. Thus the business owner has to look for the logic behind the quoted price. For example, if any particular project takes six months for its completion and four people work on it, it amounts to 24 man-months. If the salary bill of one developer is, say 50,000 (including overheads), the total salary bill for 24 man-months will amount to 12,00,000.

Now if the vendor has quoted below half a million the possibility of low bidding becomes obvious. Asking the vendors to support their financial quotations with their project cost can be helpful.
Many software projects suffer failure during the deployment stage. Therefore, the capability of a software company to deploy projects should be carefully examined

Quality of the workforce and development methodology of the software company is extremely important and should be carefully evaluated. If a software company does not possess good expertise in requirement management, software architecture, functional specifications development, configuration management, quality assurance, etc. then its chances of successfully delivering the software project are quite remote. The best way to evaluate a particular software company is to do a comparative study of different vendor practices. Ask the vendors to treat you as a novice and tell you why their software is best suited to your requirements. Another option is to hire a consultant for the evaluation of different software companies. Though this involves extra cost it helps to avert a bigger financial risk

Inventory software selection is a critical decision for retail businesses. While making this decision, follow the above guide and you won’t go wrong.

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