Small business owners find silver lining in cloud-based POS systems
If your business is growing, storing your
transaction data in a fixed location might no longer make sense. That's why many
merchants are choosing cloud-based point-of-sale (POS) systems over traditional
in-house POS systems.
Storing your data in the cloud could save your
business time and money -- yet there are risks to consider before you leave the
ground.
Understanding cloud-based POS systems
The "cloud" loosely refers to the network
of resources available to anyone with an Internet connection. A cloud-based POS system is a system hosted on
the Internet by software-as-a-service
(SaaS) vendors, which allow merchants to rent
space and Web-based software instead of using their own software and their own on-site
computers. Using the cloud has numerous benefits, beginning with significant upfront
and ongoing cost savings.
Think of the difference between buying and renting a
home. If you buy a house, you (or your mortgage provider) pay a very large sum
of money upfront. If something goes kaput (your air conditioner, for example), you must pay to have it repaired or
replaced.
On the other hand, if you rent the home, you simply pay
monthly rent, and the broken A/C is your landlord's problems. So are updating
the property, keeping it up to code and paying for ongoing expenses.
A similar principle applies to SaaS and cloud-based
POS systems. The upfront cost for traditional POS hardware and software can be steep,
especially for small businesses owners. If the business's computers crash, are
hit with viruses or slow to a crawl during busy periods, it is the business
owner who is left footing the bill, dealing with the fall-out and sometimes
losing customers.
That need for damage control and maintenance is why
the cost of an on-premises POS system can be as much as 55 percent higher than
that of a cloud-based one, according to Hurwitz & Associates data cited in
a recent white paper by POS system provider Retail
Anywhere.
Hurwitz conducted
an analysis that pitted a cloud-based POS system against a proprietary one,
for a small company with 100 employees who had access to the POS system. It estimated
that the total four-year cost of cloud computing would be more than $730,000
less than on-premises POS systems. For in-house POS systems, IT infrastructure
costs ate up 11 percent (roughly $172,000) of the total four-year cost. The IT infrastructure
costs for cloud-based POS systems? Zero.
Do your
research
While most cloud-based POS systems offer standard
benefits -- vendor-provided security, accessibility from anywhere via the
Internet and compatibility with any operating system -- POS systems are not one
size fits all. If you decide a cloud POS is what your business needs, do your
research and ask the right questions. In addition to finding out the costs,
payment specifics and contract terms, here are some additional questions to ask
a potential vendor:
- How
accessible is it? Cloud-based POS systems are accessible from an ever-growing
number of devices, from PCs to Macs to tablet computers, to smartphones. Find
out which devices work with any system you're considering.
- Is
it compatible? If you use POS
equipment -- a receipt printer or card reader,
for example -- make sure your cloud-based POS is compatible.
- Is
there free support? Many vendors offer free support, but ask about their
service provisions to be sure.
- Are
there additional built-in features, such as inventory management, marketing
controls and integration with other software? If so, what are they and do they
cost more?
- How
fast can the vendor get your system up and running?
- Liability issues. What happens in the event of
a system crash, etc.? What type of customer service is available and is it
24/7?
- How is customer data stored and how well is it
protecting from theft?
Possible risks
in using the cloud
Cloud-based POS systems come with some degree of
risk, according to
Tapas
Technologies, a company that provides inventory
management tools and analytics for the hospitality industry. Some risks
include:
-
Cloud network outages. A
significant outage could prevent the merchant from taking orders for days on
end.
-
Data privacy. Read the fine
print. A notation saying the data is "secure" or "private"
is not specific enough. Make sure you do not sign a contract that gives your
POS provider permission to share your data with others.
Moreover, because SaaS companies often store several business's data in the
same place, they can be targets for hackers. Since your data is out of your
hands, you have to rely on your SaaS provider to keep it safe.
-
Internet problems. If your
business has a slow connection, or one that goes down regularly, that can slow the
interface with your data in the cloud -- and that can mean poor customer
service and lost revenues. Find out if your POS provider has offline storage
capabilities or other ways to address Internet issues.
On the horizon
As the need and demand for cloud-based POS systems
increase, so will the available products and options offered by vendors. And,
as businesses continue to make use of mobile
payments and registers, the ability to connect to their
data from anywhere may become an increasingly attractive option.
See related: Manuy small merchants ignoring security standards,
7 things you must know about credit card processing
Published: May 31,2023
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