The Publication For The Grocery Trade

The Interview - Xface - the rising star in Microsoft retail solutions

Small to medium size grocery retailers have an enormous dependency on IT these days, and many face increasing problems finding the right level of support to keep their systems up and running. Now help is at hand, thanks to retail IT specialist Xface, which has recently introduced a Managed Network Service, remotely monitoring every single PC and server within the customer's business and providing retailers with cost effective 'pay as you go' IT support. Xface is also launching a new Demand Chain Management Solution XPredictor, designed to help independent supermarkets and C-store chains to think and act like their larger peers by using the right IT tools, but at an affordable price. Alagarsamy "Raja" Rajamannar, Xface's Director, spoke to The Grocery Trader. The Grocery Trader - First of all, Raja, in non-technical language, how does your Managed Networks Service (MNS) work? MNS is a comprehensive IT management solution for smaller retail organisations that depend on IT but may not have an IT manager to oversee good housekeeping in their systems, or mid-size organizations with complex IT structures, which can't afford technical support staff in house so outsource it. MNS fills these gaps. GT - When was your Managed Networks Service launched? We launched the service in June 2006, at the Retail Solutions show. We have signed a growing number of customers, including various grocery retailers and the Britten's Music Stores group. GT - What size retail organisations are your Managed Network Services aimed at? They are aimed at everyone from stand-alone stores to multiple chains, and in terms of devices, from a single computer with a broadband connection to clustered services covering 60-70 stores and with 500 machines. A typical customer is an East Midlands-based retailer with four servers, 20 work stations and two stores. GT - How much do your MNS services cost to use per month? It depends on the number of servers and PCs - for a single server the rate is £30 PCM and the price per additional desktop PC is £10. GT - Have you got any customer case studies? Yes, we will shortly be publishing one for Britten's. GT - When was Xface set up, and who by? I started it in 2004 with two colleagues. I was previously working as an IT contractor, and my family background was in fashion and fashion retail. I saw that smaller retailers increasingly required effective management resources for their IT as their usage increased, hence my decision to offer a specialist service for this market. GT - What else does Xface do? We also provide Microsoft Retail Management System (RMS) solutions, install server networks, and develop web stores and so on. Some of our retail customers have their own approach to business: the Microsoft Retail Management System can be customized to their needs, which we carry out. We also integrate Microsoft Dynamics RMS with other Microsoft Dynamics products. GT - What happens when your customers grow? As retailers get bigger, our services grow with them. For instance, we can integrate Microsoft Dynamics RMS with Microsoft Dynamics AX, the back-end application. To make the most of their sales opportunities retailers need to be in contact with customers directly; hence they need effective CRM. At store level, Microsoft Dynamics RMS can capture the shopper's details, but you need Microsoft Dynamics CRM to do the rest - create email shots, create personal promotions and so on. GT - Where does the name 'Xface' come from? We coined Xface from Xtreme interFACE, as our solutions interface with other applications. GT - What's your current turnover? How fast are you growing? Our current turnover is £300,000, and we are taking on five new customers per month. GT - Where is your UK office? We have our main office in Croydon and a development centre in India for our various outsourced services. GT - What's your (Raja) business background? I was an IT consultant with BUPA and before that I worked in IT with UNICHEM, the pharmacy wholesalers. I have 14 years of IT experience. GT - You've also launched some new Demand Chain Management solutions. Can you talk us through them? Demand Chain Management is by no means new, and considerations on its practical deployment have been discussed since the 1980s. The XPredictor solution is the practical implementation of Demand Chain Management. The XPredictor solution available today enables ordering decisions to be made on the basis of actual demand. XPredictor increases the precision of sales and inventory forecasts and creates the precondition for considerable cost savings along the entire supply chain. GT - What's so new about XPredictor, and what business benefits does it offer the customer? As opposed to the conventional stock management system-based ordering procedures that only automate around 10% of replenishment planning, the XPredictor solution impresses with more than 90% automation. Instead of time and cost consuming manual planning in wholesale and retail operations, the XPredictor solution integrated with Microsoft Dynamics RMS automatically calculates the optimal inventory levels for any given number of stores, as well as for any number of items and any desired time interval. GT - How much does a licence cost for your XPredictor Demand Management Solutions? The cost of using the XPredictor solution is based on the customer's turnover and the number of line items to be managed. It's suitable for retailers with annual turnover of £2m upwards, and a minimum of 10,000 SKUs. A typical licence for a £3-4m turnover is £7-8,000. GT - Every store manager has three key questions: How much will I sell? How do I ensure my service level? How much should I order? How do your XPredictor Demand Chain Management solutions help them answer these and other questions? It assimilates the client's existing sales information and forecasts, and helps them fine-tune their stock level and avoids out-of-stock situation. GT - What about new products? When the retailer introduces new items, you can make forecasts against similar sales for a similar SKU. GT - What specific business functions do your XPredictor Demand Management solutions cover? When integrated with Microsoft Dynamics RMS, XPredictor solutions provide the following functionalities: automatic ordering, reduced out-of-stocks, optimum inventory levels, reduced inventory levels, avoidance of supply shortages, lower warehouse and handling costs, long term planning for annual budgets and reviews, and item specific forecasting. Having said that, we can also integrate XPredictor with other EPOS software. GT - Can the retailer override the system? The customer is able to monitor the automated replenishment through graphic output. If they disagree with it, they can pick out selected SKUs and manually override what’s proposed by the system. GT - How does the system cope with the unpredictable? Automated ordering responds to unexpected sales trends, like those following a heat wave or bad weather, and overrides itself. It also takes promotions, price changes and Christmas into account when forecasting. GT - What kind of results have you seen? Deutsche Woolworth forecasts sales for over 1.2 million items daily for its 340 stores. They experienced reduction of merchandise inventories by 20% and also revenue boost by 8% compared to the inventory level. They also decreased the out-of-stock rate to below 4%. I hope these figures explain why retailers in the grocery world need the XSAF solution! GT - What IT technology do clients need to already have in place, in order to run your Demand Management solutions? They need a minimum of the current Windows operating platforms running on decent server based hardware. We have already integrated with the Microsoft Dynamics product range. We also integrate with other EPOS software like Torex Retail and Retail Pro. GT - How do your XPredictor Demand Chain Management Solutions fit in with retailers’ existing systems for stock and ordering, warehouse management and EPOS? The XPredictor solution should be seen as additional to them. It’s a business intelligence tool that uses retailers' sales information from their EPOS systems to predict future demand, and leaves a store manager free to concentrate on the really important job of improving his business, and getting his staff to perform better. GT - Some symbol groups provide their members with IT systems as part of their overall package. Where does XPredictor fit in? Our product is complementary to any software and so on that the symbol groups supply to the individual retailers. We'd love to talk to the symbol groups' head offices about how we can help them enhance their IT offering to their members. GT - Retailers tend to be very careful about capital expenditure. Do you offer retail IT consultancy to help them plan? We provide pure consultancy services for people who are thinking about adopting these IT systems at some time. GT - How easy are your XPredictor Demand Chain Management solutions to operate? They're very simple to operate, provided there's clean data to begin with, going back a minimum six months or ideally one year's sales figures and updated stock information. GT - What training etc do staff need to operate them? Our provision of on-site training depends on the individuals and organisations. In most cases, the training process starts during the feasibility study phase. Customers are learning with us as we're developing their solutions and solving their problems. GT - How long does it take from firm order to go-live? The Managed Network Service takes two to three weeks’ time. We’ve implemented XPredictor solutions in anywhere from six months to a year, depending on the organisation and complexity of cleanup and analysis. GT - How long before the retailer sees a return on their investment with your XPredictor Demand Chain Management solutions? With XPredictor you start to see a return on investment immediately, because everything is running at optimal level. GT - As the retailer's business grows and adds more users and more branches, how easy is it to scale up your XPredictor Demand Management Solution to keep pace? It's really easy. We can integrate new stores with the distribution centre’s automated ordering, confident in the knowledge that the logistics and supply chain planning will be perfect. GT - Looking at both your Managed Network Services and Demand Management Solutions, what external factors do you see impacting on demand for externally provided retail IT services like yours? The demand will continue to grow, for two reasons. First, there will continue to be a role for small to medium retailers, offering convenience. However the major multiples have well established supply chains, which the small to medium retailers cannot possibly replicate. Instead, to compete, they must effectively manage consumer demand. Hence the increasing importance of demand chain management technology. In parallel with retailers' growing reliance on IT, keeping networks up and running and managing them effectively will be essential, while keeping staff costs down. Retailers will increasingly look to have their networks managed as an outsourced service. GT - Finally, where do you see Xface as a company going from here? I see us constantly growing in stature as a certified Microsoft Partner, exceeding £1m turnover by 2008 and taking a significant share of the market for demand chain management along with the Microsoft Dynamics product range. Xface Tel: 0208 668 6688 Email: rajamannar@xface.co.uk www.xface.co.uk