If you’re in the retail space you’ve no doubt heard these acronyms thrown around many times. While some are more popular and have been around for years, are they actually that different or have we started using them interchangeably to mean the same thing?
Let’s start at the beginning.
What is a POS?
POS is the most common of the four acronyms and stands for Point of Sale, or more recently Point of Service. Traditionally, POS software was built to handle the processing of a transaction. The sales associate scans the item and charges the customer for their purchase, processes a return, or goes through with an exchange.
Modern POS solutions are so much more than just a point of purchase. Many POS solutions include various other management tools such as inventory management, customer relationship management (CRM), reporting, as well as more Point of Service qualities like being able to schedule appointments and repairs.
You’ll notice we say “more than a POS” throughout the iQmetrix site. That’s because there are so many other business modules within our software, which makes it so much more than a traditional description of a POS. And that's where the playground gets muddy.
What is RMS?
RMS stands for Retail Management System, and refers to the modern-day, more robust POS I described above.
RMS is an amicable example of the industry attempting to rename a product to better describe its usage and implementation today. But, adoption was low, which is why most companies will include both POS and RMS in their marketing.
What is ERP?
ERP stands for Enterprise Resource Planning and refers to business management software that takes care of all aspects of your business—manufacturing, accounting, sales, marketing, etc.
A lot of the functionality of an ERP crosses over with a modern-day POS, and that's why when you Google ERP vs. POS, so many results come up. The most common usage today is to integrate an ERP with a POS to create a powerhouse of efficiency.
ERP software was initially focused on large enterprise but as lite versions have come into play, they are gaining more popularity within small and medium businesses (SMBs) too. They have a reputation for being clunky, expensive, inflexible, and complex. As a result, ERP software usually takes a long time to implement.
What is SOS?
Okay, slight confession to make. SOS is not quite a real term, so don’t beat yourself up if that stumped you. It stands for Store Operating Software and has been favored lately by industry analysts as the most accurate term when it comes to describing retail operating systems (ROS… the acronyms are truly endless).
I included this one partially in jest; the acronym is ironic given the term's intended use is to provide clarity - but unless the market adopts it, it’s just another three-letter acronym we need to Google.
So Where Does That Leave You?
POS and ERP are the main names in the game and which software you go with depends primarily on what business problem you are trying to solve.
Regardless of which you choose, here’s what you should be looking for in your retail operating system provider.
- Choose Something Flexible: your business won’t be in the same place a month, year, or a decade from now. A solution that will grow with you and meet your future needs will save you constant switching costs.
- Allow for Integrations: whatever system you choose will need to integrate with all the other systems you have in place, or provide you with better alternatives. Ask about partners and APIs but be wary of those that tell you, you don’t need anything other than their solution.
- Out of the Box and Custom: this depends on your size but, ultimately, you can get up and running faster (and less expensively) if there’s out-of-the-box functionality you can leverage. If you’re a small retailer, out of the box might be all you need but as you grow, you will need custom components built just for you. This ties back to the first point of choosing something you can grow with.
- Gut Feel: I’m going to get a lot of eye rolls here but this is such an important part of decision making. Richard Restak, a well-known neuroscientist and author of The Naked Brain, talks about how gut feel decisions, which are made in the limbic brain, tend to be faster, higher-quality decisions than those made with the rational brain. You can read more about that here. All that to say, make sure you feel good about your future business partner.