{"id":1316,"date":"2018-04-10T11:18:16","date_gmt":"2018-04-10T11:18:16","guid":{"rendered":"http:\/\/reformingretail.com\/?p=1316"},"modified":"2019-01-23T09:23:01","modified_gmt":"2019-01-23T15:23:01","slug":"like-heartland-shift4-will-face-a-pos-product-conundrum","status":"publish","type":"post","link":"https:\/\/reformingretail.com\/index.php\/2018\/04\/10\/like-heartland-shift4-will-face-a-pos-product-conundrum\/","title":{"rendered":"Like Heartland, Shift4 Will Face A POS Product Conundrum"},"content":{"rendered":"<p><span style=\"font-weight: 400;\">When Heartland bought a slew of<\/span><a href=\"http:\/\/www.businesswire.com\/news\/home\/20150213005090\/en\/Heartland-strengthens-position-hospitality-retail-POS-markets\"> <span style=\"font-weight: 400;\">restaurant POS systems in 2015,<\/span><\/a><span style=\"font-weight: 400;\"> the market went into a panic. We saw the classic knee jerk reactions predicting the end of the hospitality POS market as we know it.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">&#8220;Heartland will own everything!&#8221;<\/span><\/p>\n<p><span style=\"font-weight: 400;\">&#8220;There&#8217;s no room left to play!&#8221;<\/span><\/p>\n<p><span style=\"font-weight: 400;\">&#8220;How will I survive?!&#8221;<\/span><\/p>\n<p><span style=\"font-weight: 400;\">But inside Heartland, leadership knew it wouldn&#8217;t be that easy.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">In buying these POS systems, Heartland had to sidestep some legitimate pitfalls. First, there&#8217;s the nasty truth that most<\/span><a href=\"http:\/\/www.investopedia.com\/articles\/investing\/111014\/top-reasons-why-ma-deals-fail.asp\"> <span style=\"font-weight: 400;\">M&amp;A fails to meet expectations<\/span><\/a><span style=\"font-weight: 400;\">. Next, Heartland had to cautiously cut unproductive redundancies which had them trimming close to 60% of their resellers. Lastly, Heartland realized there needed to be a cohesive product strategy. <\/span><\/p>\n<p><span style=\"font-weight: 400;\">While Heartland would continue to let their legacy POS assets operate independently, none of them were particularly well-suited for the future. Many were written on old technology stacks. Not one was mobile\/cloud-first. Integrations with third parties were less than seamless and the customers, growing ever more comfortable with technology, would eventually demand more.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Heartland swallowed hard and<\/span><a href=\"http:\/\/reformingretail.com\/index.php\/2017\/05\/18\/eating-crow-how-heartlands-new-pos-xenial-could-prove-us-wrong\/\"> <span style=\"font-weight: 400;\">appropriated a good chunk of money to build Xenial<\/span><\/a><span style=\"font-weight: 400;\">, a POS system built on the know how of Heartland&#8217;s POS acquisitions with a mobile\/cloud-first DNA. None of the existing POS systems were to be abandoned, but Heartland had to prepare for the future too. Think about this logically.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Heartland acquired four legacy hospitality POS systems (we&#8217;re not counting Leaf or LiquorPOS):<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Digital Dining<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Dinerware<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">PCAmerica<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Xpient<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">This means Heartland has at least four different teams supporting products that aren&#8217;t getting any younger. These are teams with their own siloed employees working on sales, product, marketing, and channel relationships. It seems like a large cost in a thin margin industry where the<\/span><a href=\"http:\/\/reformingretail.com\/index.php\/2017\/01\/09\/data-that-proves-cloud-pos-migration-is-happening-faster-than-believed\/\"> <span style=\"font-weight: 400;\">market is migrating to an entirely new technology stack in cloud POS<\/span><\/a><span style=\"font-weight: 400;\">. Put another way, if you were Henry Ford how much money would you continue investing in your horse-and-buggy business while your Model T kept selling out?<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Lighthouse (now called Shift4) might very well need to follow Heartland&#8217;s learnings around product after the creation of<\/span><a href=\"http:\/\/www.lighthousenetwork.com\/\"> <span style=\"font-weight: 400;\">Lighthouse Network<\/span><\/a><span style=\"font-weight: 400;\">, a parent company holding Harbortouch and their POS acquisitions. Like Heartland, Lighthouse finds itself owning a number of legacy POS systems:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Future POS<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">POSitouch<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Restaurant Manager<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">This is in addition to Echo and Elite, Lighthouse\u2019s homegrown cloud POS products built between Allentown, PA and Lithuania. Echo and Elite have two distinct codebases and target markets, so it means Lighthouse is also paying for at <\/span><i><span style=\"font-weight: 400;\">least<\/span><\/i><span style=\"font-weight: 400;\"> four different teams with the majority of those supporting aging POS products that carry a lot of cultural baggage. As proof,&nbsp;<\/span><span style=\"font-weight: 400;\">POSitouch didn&#8217;t even bother with cloud development and instead<\/span><a href=\"http:\/\/reformingretail.com\/index.php\/2016\/11\/03\/positouch-is-going-to-cloud-did-it-make-the-right-move\/\"> <b>turned to a third party to figure it out<\/b><\/a><span style=\"font-weight: 400;\">, increasing costs for their merchants.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Yet Lighthouse is taking a different product approach than Heartland. While Heartland feels that the market will inevitably demand cloud POS functionality over time, Lighthouse believes there might be a grey area.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">\u201cSome of the POS brands we acquired have more \u2018mature\u2019 software than others,\u201d says Jared Isaacman, CEO of Shift4. \u201cIt doesn\u2019t make sense to ditch these systems and replace them with something new.\u201d<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Instead, Jared thinks Shift4 should fill gaps in their <span style=\"text-decoration: underline;\">existing<\/span> POS systems to make them more complete. \u201cWe definitely intend to have a degree of commonality across the POS brands. That could be in the form of common back-end technology, a common cloud, common third-party integration points, common pay-at-table solution, and others. That doesn\u2019t mean we are going to replace the core front-end software that has defined our POS brands and made them successful.\u201d &nbsp;&nbsp;<\/span><\/p>\n<p><span style=\"font-weight: 400;\">In this way Shift4 will continue supporting and modernizing (i.e investing in) each of its POS assets. But boy does is sound expensive &#8211; just ask Heartland. It appears that Shift4, at least to us, has a backup plan in the event the market doesn\u2019t see things Jared\u2019s way.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Harbortouch Bar and Restaurant (HBR) is a cloud-based POS system for the hospitality industry that\u2019s been in development for over two years. Jared shares that it\u2019s been in beta for several months already, and will go into full deployment in the first part of 2018. \u201cHBR has more mature features than current Elite Hospitality and Echo products,\u201d shares Jared. \u201cHBR is also suitable for multi-locations across full service and quick service environments.\u201d<\/span><\/p>\n<p><span style=\"font-weight: 400;\">\u201cBut just because we have HBR doesn\u2019t mean we aren\u2019t committed to supporting all of our other POS software.\u201d Jared is emphatic that Shift4 will continue to marry payments with their existing POS portfolio in ways the industry has not yet considered. We don\u2019t doubt it, as Shift4 has always<\/span><a href=\"http:\/\/reformingretail.com\/index.php\/2017\/02\/02\/the-industry-hated-harbortouch-so-much-they-copied-them\/\"> <span style=\"font-weight: 400;\">struck us as very innovative<\/span><\/a><span style=\"font-weight: 400;\">, especially when juxtaposed with their industry peers. Though we always like to think big picture when possible.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Processing businesses get a low revenue multiple relative to software businesses, which get a 5x multiple. This alone should provide sufficient motivation for Shift4 &#8211; or any processor, really &#8211; to strongly invest in recurring revenue software solutions. Accomplishing this under Jared\u2019s perspective seems to entail building APIs that enable additional software to be sold on top of their existing POS systems. In Heartland\u2019s view this might be best accomplished with the transition to a new POS system.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Only time will tell which approach is best. What we do know is this: doing less often results in more.<\/span><\/p>\n<p><img data-recalc-dims=\"1\" loading=\"lazy\" decoding=\"async\" class=\"aligncenter size-full wp-image-1784\" src=\"https:\/\/i0.wp.com\/reformingretail.com\/wp-content\/uploads\/2018\/01\/a1-5.jpg?resize=770%2C237\" alt=\"\" width=\"770\" height=\"237\" srcset=\"https:\/\/i0.wp.com\/reformingretail.com\/wp-content\/uploads\/2018\/01\/a1-5.jpg?w=813&amp;ssl=1 813w, https:\/\/i0.wp.com\/reformingretail.com\/wp-content\/uploads\/2018\/01\/a1-5.jpg?resize=300%2C92&amp;ssl=1 300w, https:\/\/i0.wp.com\/reformingretail.com\/wp-content\/uploads\/2018\/01\/a1-5.jpg?resize=768%2C236&amp;ssl=1 768w, https:\/\/i0.wp.com\/reformingretail.com\/wp-content\/uploads\/2018\/01\/a1-5.jpg?resize=370%2C114&amp;ssl=1 370w, https:\/\/i0.wp.com\/reformingretail.com\/wp-content\/uploads\/2018\/01\/a1-5.jpg?resize=270%2C83&amp;ssl=1 270w, https:\/\/i0.wp.com\/reformingretail.com\/wp-content\/uploads\/2018\/01\/a1-5.jpg?resize=740%2C228&amp;ssl=1 740w\" sizes=\"auto, (max-width: 770px) 100vw, 770px\" \/><\/p>\n<p><script async=\"\" src=\"https:\/\/widget.websitevoice.com\/UMwLESBjj1uq-UOHwOeBBw\"><\/script><br \/>\n<script>\n  window.wvData=window.wvData||{};function wvtag(a,b){wvData[a]=b;}\n  wvtag('id', 'UMwLESBjj1uq-UOHwOeBBw');\n  wvtag('widget-style', {\n    backgroundColor: '#F5953E',\n    contrast: 'wv-contrast-dark'\n  });\n<\/script><\/p>\n","protected":false},"excerpt":{"rendered":"<p>When Heartland bought a slew of restaurant POS systems in 2015, the market went into a panic. We saw the classic knee jerk reactions predicting the end of the hospitality POS market as we know it. &#8220;Heartland will own everything!&#8221; &#8220;There&#8217;s no room left to play!&#8221; &#8220;How will I survive?!&#8221; But inside Heartland, leadership knew [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":2659,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_feature_clip_id":0,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2},"jetpack_post_was_ever_published":false},"categories":[3],"tags":[],"class_list":["post-1316","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-pos"],"jetpack_publicize_connections":[],"jetpack_sharing_enabled":true,"jetpack_shortlink":"https:\/\/wp.me\/p81nA2-le","jetpack_featured_media_url":"https:\/\/i0.wp.com\/reformingretail.com\/wp-content\/uploads\/2018\/04\/a1-2.jpg?fit=813%2C250&ssl=1","_links":{"self":[{"href":"https:\/\/reformingretail.com\/index.php\/wp-json\/wp\/v2\/posts\/1316","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/reformingretail.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/reformingretail.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/reformingretail.com\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/reformingretail.com\/index.php\/wp-json\/wp\/v2\/comments?post=1316"}],"version-history":[{"count":18,"href":"https:\/\/reformingretail.com\/index.php\/wp-json\/wp\/v2\/posts\/1316\/revisions"}],"predecessor-version":[{"id":4210,"href":"https:\/\/reformingretail.com\/index.php\/wp-json\/wp\/v2\/posts\/1316\/revisions\/4210"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/reformingretail.com\/index.php\/wp-json\/wp\/v2\/media\/2659"}],"wp:attachment":[{"href":"https:\/\/reformingretail.com\/index.php\/wp-json\/wp\/v2\/media?parent=1316"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/reformingretail.com\/index.php\/wp-json\/wp\/v2\/categories?post=1316"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/reformingretail.com\/index.php\/wp-json\/wp\/v2\/tags?post=1316"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}