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POS Systems: Impact of IT on Business

Impact of IT on Business

HC1041 IT for Business

Read the case study and answer the following questions: 

1) What are the advantages and disadvantages of the new POS system? 

2) How will this POS system help the business gain competitive advantages?

 3) What are the advantages of having a centralised database? 

4) How could this POS system facilitate decision making?

 Address the following points: 

 Why do point-of-sale systems process business activities more effectively?

  Can the information be tracked manually in an effective manner? Why or why not?  What types of questions could be answered effectively? 

 How could the information be used to better manage the business? 5) Recommend telecommunication options for this POS system Address the following points: 

 Types of networks – LAN, WAN or MAN? 

 Types of media? --Wired or wireless technologies? Which types of cables should be used for wired technologies? Which types of wireless technologies?

 6) What type of risks does the POS system bring and how to protect the business against the risks? Address the following points:

  Security 

 Privacy

  Confidentiality Your report will be assessed on the quality of your research and quality of report. Discussion must be relevant to the case study business. Your report is to be in the style of a business report.

Case study 

 Blooming with Technology 

The use of information technology is needed by every industry size and type of business. Small businesses can realize the positive effects through adopting technology. However, small businesses often do not have the resources and expertise of large corporations to implement information technology strategies. However, the benefits of technology for small and medium-sized enterprises (SMEs) are just as crucial to business operations and strategy. 

Consider Four Seasons Greenhouse and Nursery, located in Colorado. This small nursery was like many other small businesses and garden centers. They used manual registers to track and maintain its inventory as well as determine which products were realizing the most profit. The profits from the nursery were either "negligible" or a loss. They did not have access to useful operational data to effectively manage their business. For example, they did not track or review the margins of individual products. However, they believed that they needed to do something different for their $1M business operation. 

Enter a new point-of-sale system (POS) in 2008. The system allowed the owners to track useful business data from the sales transactions immediately at the time of the sale; eliminating the need for tracking sales manually. The system processes and stores data from the sale while updating the inventory as well as compiling a sales history. This eliminates reliance on manual entry of sales transactions and reduction of inventory units for the items sold. POS systems provide much more than a cash register. These systems provide more robust functionality in inputting, tracking, and distributing data to provide useful information to operate and manage the business. 

Accurate inventory data maintained by the POS helped with decision making. Decisions on how many units of a product to order were no longer based on speculation about current inventory units. Now, accurate inventory counts eliminate the guesswork on how much to order, helping the business to operate on leaner inventory units. The system's reporting can provide the detail transactions for an inventory item, such as how many were purchased, discarded, and sold. 

The implementation of a POS system also confirmed that the owners did not know as much about their business as they thought they did. As they reviewed reports from the new system, they saw that some products were less profitable than they thought. The more detailed cost reporting by item helped them to understand which products contributed the most profit to the operation. Their new perspective of the "real costs" provided the opportunity to shift production to the higher-profit items, thereby gaining more profit. Prior to implementing the POS system, they simply did not have the time to approach this level of decision making. 

Knowledge of their detailed product costs helps them to price products more profitably. Price changes can be implemented temporarily (for a promotion) or permanently and still remain within acceptable product margins. The accurate and timely reporting of this information assists them to be more effective managers of their business operations. The ability of the system to process sales, inventory, and purchasing transactions immediately reduces the need for data entry of paper information. The time savings can be used for managing the business rather than mundane clerical functions. 

The new system has expanded Four Seasons' management control over employee schedules to review and allocate labour expenses to specific departments and functions. An additional benefit allows the owners to delegate more responsibility to the staff and establish accountability. Instead of the owners establishing goals, they provide the system's data and ask staff to submit their sales goals for the next reporting period. Ultimately, the information technology system creates a solid infrastructure to process and report the businesses operations for the entire enterprise. 

The garden centre is an excellent example of how technology can realize benefits for a business. The ability for organizations to remain competitive and agile is crucial. These systems allow organizations large and small to leverage business data to gain a competitive advantage and operational efficiency.

Answer

POS Systems                 

Introduction:

The use of information technology is needed by every industry size and type of business. Consider Four Seasons Greenhouse and Nursery, located in Colorado. This small nursery was like many other small businesses and garden centers. They used manual registers to track and maintain its inventory as well as determine which products were realizing the most profit. Enter a new point-of-sale system (POS) in 2008. The system allowed the owners to track useful business data from the sales transactions immediately at the time of the sale; eliminating the need for tracking sales manually. The system processes and stores data from the sale while updating the inventory as well as compiling a sales history. This eliminates reliance on manual entry of sales transactions and reduction of inventory units for the items sold. POS systems provide much more than a cash register. These systems provide more robust functionality in inputting, tracking, and distributing data to provide useful information to operate and manage the business. The implementation of a POS system also confirmed that the owners did not know as much about their business as they thought they did. As they reviewed reports from the new system, they saw that some products were less profitable than they thought. The more detailed cost reporting by item helped them to understand which products contributed the most profit to the operation. Their new perspective of the "real costs" provided the opportunity to shift production to the higher-profit items, thereby gaining more profit. Prior to implementing the POS system, they simply did not have the time to approach this level of decision making.  

1. What are the advantages and disadvantages of the new POS Systems?

Advantage 

Using the POS system can have a positive effect on your business. It allows you to have better control over your business operations. With a POS system, you know exactly which products you have sold on daily or monthly bases, how many products are in the warehouse or how much money you have made. A POS system allows a business to effectively track sales, analyze profits/expenses in detail, maintain inventory, analyze sale trends, as well as allow you to manage employees and other store operations. In essence, the POS software combines managerial duties, bookkeeping, and transaction management into a small automated system that costs far less to utilize as opposed to hiring employees to handle these duties. i.e

  1. Point of sale devices provide faster service.
  2. establish accurate sale and inventory record
  3. easier to make adjustment
  4. easier to plan promotion
  5. ensure consistency of different stores

Advantages of Using a POS System for Small Business(“Ehopper”,2016)

Disadvantage: 

  1. If you do not already own POS hardware, you will need to purchase it separately
  2. Web-based POS Systems often come with monthly fees
  3. Could be problematic with a slow Internet connection
  4. Costly sustainable cost
  5. Technological risks

2. How will this POS system help the business gain competitive advantages?  

Pos System helps the business in a more efficient manner than competitors with providing report of lower cost high profit product, high demand products, less selling product, non-moving items, moving items, which facilitate the business to make strategies based on the data and helps organization to gain  competitive advantages over the competitors and consumers.

Four Methods of Competitive Advantages (“Jared Lewis”, 2018)

3. What are the advantages of having a centralized database?  

A centralized database is a single database under the control of a single location. This means that an organization has one large powerful database which is central to the successful operation of the organization. User can work on a database as a whole at one location, files only accessible via the host computer. Since there is only one database file, it is easier to:

  1. get a complete view of data, manage, update an backup data
  2. Economies of scale
  3. lack of duplication
  4. Ease in enforcing standards, security

Distributed Data Processing(“Slideplayer”, 2016)

4. How could this POS system facilitate decision making?  

POS system maintains the complete transactions, inventory data and records for the business. When the departmental store are selling hundred types of items under one roof, it’s difficult to track and trace the inventory of any item at any given time if the POS system is not used for the sales. It will be more difficult situation for the business owner and manager, if the business spreads with multiple departmental store and supermarket. WAN, LAN or MAN based POS system helps to check the product inventory, sale, cost, price at any given time, this helps the owner of the business to understand the demand, profit, stock, sales trend and to take business decision based on the such data. With the ready POS reports, decisions are taken instantly to make the business more profitable.  

Factor beyond cost that impact POS decision making (“Zorrik Voldman”, 2014)

5. Recommend telecommunication options for this POS system   

LAN :  Local Area Network based POS system generally installed on a centralized database server and application server to manage all the records and settings for a POS system. All POS Terminal are then configured to connect to the database server to read and write the transaction data or inventory data. 

This is mostly used in small departmental store to large supermarkets. LAN based setup can be accessed from single terminal or from multiple POS Terminals. 

WAN :  A WAN (Wide Area Network) based POS system is also installed on a separate database server and a separate application server or sometimes database and application server are on same machine like LAN based POS system. But their connected POS Terminals are over a large geographical distance connected via a leased line. 

This is the usual setup at spanning multicity, regions and countries based supermarkets, department stores or banks. 

 MAN:  Metropolitan Area Network are smaller than the WAN but larger than the LAN .  The POS system installed on Metropolitan Area Network can be accessed within metropolitan area with multiple POS terminals. Such setups can be found at supermarkets, department stores, educational institutes spread over the city limit.

Wireless networks can be referred to as any group of wireless devices which are interconnected without the use of wires or cables. A wireless LAN, or WLAN, is a type of wireless network that uses radio waves instead of cables to transmit and receive data across resources and access resources from computers that are not connected to the wired network. Over the past few years we have seen tremendous growth in wireless networking technologies. With the increase in security, reliability and speed of wireless networks, more and more organizations prefer the use of wireless networks over the traditional wired networks. 

Things You Need To Know in Building Your Own POS System (Chubbable, 2016).

6. What type of risks does the POS system bring and how to protect the business against the risks?

POS system is a computerized network that consists of the main computer linked with several checkout terminals and supported by different hardware features starting from barcode scanners and ending with card payment terminals.

Where computerized systems are in play, security is always an issue. Transaction fraud, retail crime, losing important data and even dishonest employees can result in major losses for any retail business. POS malware has typically targeted windows based POS terminal. POS systems are used to enable debit and credit card users to provide payment information to purchase goods and services. These systems include a range of hardware and software, including the ubiquitous POS terminal in retail locations as well as the applications used to process the payment data. There are many common attack methods to attack the privacy of the system. i.e Vulnerable software, abusing remote access functionality, phishing, vulnerabilities in Host OS of POS systems and Insider Threats. POS malware has typically targeted windows based POS terminal.

How to Choose the Best Risk Management Software to Fight Fires in Your Business (“Deeksha Malik”, 2016)

Conclusion:

A good POS system will help to make sure that your business is running smoothly. As much as beneficial it is to have a POS system deployed in your store, working on an outdated point of sale system can put your operational performance and business productivity at stake. Being reluctant to upgrading your POS systems now will only drain your money and time in the future.

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