POS in the Cloud

By  Tammy Mastroberte, Contributing Editor | October 14, 2011

Moving technology systems into the cloud is becoming more accepted in the hospitality industry, as experts and operators continue to tout the benefits, from the ability to update software at multiple locations in minutes rather than weeks, to savings in both cost and labor.

But what about utilizing the technology for point-of sale (POS) systems? Is it safe for such a mission critical application? Is it reliable, or will the result be downtime and lost sales? Industry experts, as well as operators who have taken the plunge, believe cloud-based POS is not only reliable and safe, but is also on its way to becoming the norm rather than the exception.

“I can’t imagine going back to a traditional hardwired POS system again,” says Daniel Dolan, CEO and chairman of Native Foods Café, based in Chicago. The company operates 12 locations, and switched to Brink Software’s cloud-based POS system two years ago. Dolan also uses the vendor’s cloud-based loyalty and online ordering system.

“It’s not coming. It’s here today,” Joe Finizio, CEO and president of the Retail Solutions Providers Association (RSPA) says about cloud-based POS. He believes many operators are waiting until their current POS systems need upgrading before making the change, and many vendors who aren’t offering a cloud-based POS today will be in the future. “I think it will be mainstream in the next two to five years,” he says.

While deployments exist at multi-unit restaurants chains, many of the early adopters have been single restaurant locations who are much more nimble when it comes to incorporating change, notes Dave Matthews, CIO of the National Restaurant Association (NRA). Large chains are more likely to turn to cloud applications for business intelligence solutions first because there is not as much investment or change in infrastructure compared to the POS, he says.

“Most chain operations have a lot invested in their current POS systems, and if they are currently working in their stores, there is no immediate payback for switching,” Matthews explains. “The point in their lifecycle where they begin evaluating a new system or upgrade would be the time to switch.”

However, for the single-unit restaurant, a cloud based-solution is an easy and cost-effective solution. One entrepreneur who decided to invest in the cloud from opening day last October is Brian Burns, owner of Brian’s Brew in Austin, Texas. The café uses an iPad and two iPhones, along with an app from SalesVu, and an attached credit-card reader for his POS system.

“The iPad is on a stand in the store, so customers view it as a typical POS,” Burns explains. “The software costs only $10 per device, so I pay only $30 per month.” And since his café offers catering, he can accept payment on location with the iPad or iPhone, something not possible with a hardwired system, he notes.

“When you look at the concept itself, it is attractive to the guy that is just starting up,” explains Lee Holman, lead retail analyst at IHL Consulting. “A cloud-based solution allows him to get up and running from an IT standpoint without a lot of servers, hardware and infrastructure needed.”


Debunking Downtime

One of the biggest fears for a restaurant operator is downtime at the POS, and when the entire system relies on the Internet, this fear hits an all time high. However, as long as backup measures are taken, a cloud-based POS is no different than a hardwired system in this regard, according to Dolan.

“The hardware we use up front is similar to a traditional POS. We just don’t have the server and computer in the back office,” he says, explaining his locations have a three-prong backup plan to ensure uptime, which ends with the same solution as a non-cloud POS system.

“We have a hardwired Internet connection, and if that were to go down, all of our stores have a back-up system that switches them to a wireless Internet connection. So if our hardwire cable goes down, it is on a 30-second rollover to the wireless backup,” he explains. “If the hardwire and wireless goes down, which has never happened, then it switches over to stand-alone mode where the screens upfront are still processing transactions, and credit cards are processed using a phone line. This is the exact same thing that occurs with a traditional POS.”

And for those operators utilizing an iPad, iPhone or other portable device, if a wireless Internet connection is not available, the fallback would be the 3G or 4G connection provided by the carrier.

“I don’t see the big fear,” Dolan says. “We have had Internet connection problems, but it has never shut down a restaurant.”

Additionally, Matthews recommends using more than one Internet carrier so if one fails, the other would likely be available.


Safe and Secure


When operating in the cloud, data resides in the hands of someone other than the restaurant operator. In terms of security and PCI concerns, this can be viewed as a drawback, but most see it as a benefit. Not only does it shift responsibility to the vendor, but more than likely they will have more money and resources to dedicate to it.

“There are security concerns everywhere, no matter if you are dealing with a cloud or a client-based server because anybody could be hacked today,” Finizio notes. “You always need to have firewalls, be sure to segment your local area network, and change your passwords. But when it gets down to it, who has the better IT department, a large technology vendor or Joe’s Bar and Grill?”

Technology providers, especially those in the cloud space, invest a lot into ensuring their solutions are secure, and in some cases, are more secure than a restaurant operator could maintain on their own, Matthew’s notes.

“I’m a small chain and don’t have an IT person on staff,” Dolan points out. “The vendor is the one who is protecting my data. They are the experts, and I don’t want to worry about whether or not I’m doing the right things to protect the data.”

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