Market Dynamics are pushing retailers to discard their legacy systems and turn to new IT technologies that permit end-to-end retail enterprise resource planning, integrating their points of sale and back office operations to become more lean, efficient, productive and cost effective. Microsoft Dynamics AX for Retail, a flexible and scalable solution, is one of competing products in the clustered ERP market gunning for a bigger stake in the mid and upper mid-size business segment while also offering something for small enterprises. Change is a constant in the retail space – change in economic conditions, consumer behavior and technology.
Today’s economic climate is impacting on the minds of wallets of consumers, with power in retail shifting to shoppers. The demand chain is increasingly being driven by information.Digitally empowered and well-informed, consumers are using technology to research products that interest them. More pressed for time, they also demand convenient, personalized and multi-channel shopping experiences. Recent research into consumer behavior shows that customer satisfaction is driven more by the overall retail shopping experience than product price and availability, with loyalty depending on the quality of interaction. Today’s retailers thus need to provide a consistent experience for better informed and more demanding consumers across multiple channels. Also, with business operations and verticals becoming more complex and dynamic, they need to look for ways to drive down costs, manage their inventory better and make their employees more productive. Retailers are finding it difficult to execute their business strategies with unwieldy, legacy based enterprise applications and are looking for low cost of ownership (TCO) IT solutions with speed to the market that integrate their business processes end-to-end, thereby providing a differentiated, multi-channel shopping experience that enhances and adds value to their brand value.
Microsoft Dynamics AX for Retail is one such solution that seamlessly integrates and manages every component of the retail operation- from financials, operations and distribution, to point of sale, purchasing and store management- driving efficiencies and improving service while reducing costs. Available in several formats, it connects critical points of sale (POS) with headquarters and can be used for end-to-end retail enterprise resource planning (ERP), integrating existing points of sale (POS) or streamlining back-office systems. The IT solution’s out-of-the box integration allows control of data flows across the retail organization, delivering better business intelligence to maintain a competitive edge in today’s marketplace. It helps improve customer relationships by capturing and sharing customer data and loyalty transactions in real-time inventory checks also provide information on product availability, enhancing customer centricity through speedier service. The increased visibility and reduced complexity across the organization that such integration brings enables retailers to track sales, understand consumer behavior, manage inventories and optimize the chain of operations – from sales to supply and distribution.
They can then react quickly, seize new opportunities and build customer loyalty, all of which are vital in today’s evolving retail. The robustly functional Microsoft Dynamics AX for Retail solution is thus an extended version of ERP’s that mostly look after day-to-day functions in a retail organization, having all the features that enable it to be immediately functionally adopted for retail operations. But it can also be customized to fit specific customer needs through the addition of other powerful infrastructure software components provided by Microsoft’s partner ecosystem, its architecture also providing extensibility and flexibility as well as a high degree of interoperability, which permits the business to adapt, grow and expand. Increasing awareness of how such retail solutions drive supply chain efficiency, supplier collaboration and store staff productivity by connecting customers, vendors, business partners and employees through an integrated retail backbone has seen their adoption by many medium-size, large and specialty businesses. But can they be scaled to suit the needs of smaller players looking for increased productivity who find it difficult to adopt high cost platforms? RetailME posted this question to Sunil Kumar, General Manager, Headstart, which supports and implements the deployment of Microsoft Dynamics AX for Retail as well as other retail and hospitality solutions. Quickly allay such fears; Kumar points out that the IT major’s solutions are viable for small as well as large-sized retail enterprises, given their availability in multi-user formats.
“It’s true we focus on upper mid-market retail chains with Microsoft Dynamics AX but I don’t think it’s an expensive proposition even for mid-sized players. For smaller customers who cannot afford ERP solutions Microsoft has another strong retail POD solution which it offers in different capacities right from a single user to 1000-plus user licenses,” says Kumar. His company, established in 2002, is one of the leading regional providers for technology and services for business process automation in the retail and hospitality industry.
Tamer Elhamy, Microsoft Gulf’s business solutions manager, says the company spends US$9 billion annually, probably the highest among IT companies in the world.” Microsoft Dynamics AX focuses on retail, manufacturing, services and the public sector leveraging the existing suite of Microsoft applications including MS Office and Windows,” he explains. Elhamy points to research conducted by Nucleus Research in Dubai, which shows that of Microsoft Dynamics AX offers higher returns on investment (ROI) and lower overall costs than other major competitive offerings, the success the rate of Microsoft ERP’s being 86% against the ERP market average of less than 50%.” We are targeting a 90% success rate and hope to achieve it,” he says. Microsoft is banking on the flexibility, scalability and strong ease-of-use of its new retail ERP product, which though integration with the SQL Server 2008. For instance, Microsoft Dynamics Ax running on the SQL Server 2008 and Windows Server 2008 can compress the database by 40% to 60%, which leads to lower hardware and data maintenance costs. “Business dynamics in the market are changing drastically and suitable products are needed. We came up with this package taking into consideration retail constraints.
The main advantages of Microsoft Dynamics AX for Retail are its scalability, flexibility and low cost. Most ERP solutions available in the market don’t have such flexibility,” Elhamy points out. Retailers are still feeling the heat of the economic recession that cut into the top line of their balance sheets but recognize the need to adopt ERP solutions despite the investment cost involved. “Retailers are under pressure but this is the right time to adopt our product to overcome present market challenges. The Microsoft solution helps customers branch out to new areas and geographies. We already have several customers like Chef Middle East and Simba Toys using Microsoft Dynamics AX in the Middle East,” observes Kumar. Anilesh Kumar, director of business development at Levtech Consulting, also believes that implementing the right IT solution is the right thing to do in the present challenging business environment. Levtech Consulting is engaged in business consulting across the globe through deploying a range of mission critical business solutions. But there’s a problem. Most retail organizations find it difficult to change from one ERP product to another to meet ever changing trade dynamics and unforeseen eventualities in the retail business.
However, Elhamy is confident about the new ERP product’s strength to attract and benefit customers. “It’s true most retailers don’t generally change their IT platforms, but their priorities are changing and they are now beginning to turn to innovative and suitable ERP solutions in these challenging times. We can tailor our solution to suit the specific needs of an organization, depending on the size and requirements. Moreover, our customers can easily realize the benefits of our product within three to four months.” he observes. According to Elhamy, retail organizations are moving from competitors’ products to the company’s platform, quoting the example of a Gulf-based retailer who switched to Microsoft Dynamics AX after spending more than half a million dirham’s on implementing another ERP platform. Microsoft says the new ERP product can manage growth and change including new territories, new products, services as well as mergers and acquisitions without constant upgrades. “Our customers can continue to use Dynamics AX for the next 10 years without being pushed to another upgraded version because we have a road map for this product till 2018, which should help build up customer confidence and trust.” says Elhamy Kumar says another reason why organizations are switching to the company’s platform is the rigidity of their traditional systems, which militates against integration and scalability. “Companies are moving from their legacy systems to IT platforms and investing in building IT architecture because they require flexibility in adjusting to market dynamics.
That’s the strength of our platform, which can be integrated with any other ERP available in the market.” he observes. “Another advantage is that our solution reduces maintenance costs for our customers by 20-30%, when compared with other ERP implementations. We also focus on IT education so that trained manpower is available for running the platform globally. It requires four to five months for total implementation of the product.” he adds. Kumar points out that the solution has several base applications that make it an attractive proposition in the ERP market. “It takes care of everything in any vertical it focuses on. For instance, fashion likes combining several colors and there is an application to do this, which most other ERPs don’t have. Microsoft Dynamics AX also helps generate bar codes for retail products.” he says. Jayshree Balasubramanian, Director (Pre- Sales Consultant), Levtech Consulting reiterates the platform’s versatility. “Microsoft Dynamics AX is available in 40 languages including Arabic. The business intelligence tool enables users to analyze market dynamics and data on the retail industry and the analysis can be presented in video, PowerPoint or slide show formats.” she points out. The versatility is seen in other ways as well. For example, the retail industry is very dynamic, offering promotions and discounts every day that require heavy back office work.
The business intelligence tools incorporated in the product optimize for profitability with pricing flexibility, including several types of discounts for different customer groups. “Microsoft Dynamics AX takes care of this. More than 200types of promotional schemes have been fed into the system. In fact, we are quite fed up writing codes for numerous combinations comprising several types of promotions and discount schemes.” Adds Balasubramanian.