The Business Side of POS Integration

A couple of years back, my oldest daughter and I were hiking up to the top of Mount Elbert (14,433ft), Colorado’s highest peak, when I was amazed to see a mountain biker coming down the trail!   I spoke to him briefly and realized he was just a few years younger than me and that his bike was about the same as mine.   I started thinking, I CAN DO THIS!   I can bike to the top of Colorado!   Fast-forward nine months: after losing a few pounds and getting my bike tuned, I started training at Deer Creek park, just outside of Denver, on a rather gnarly bike trail.  I was battling a trail up a ravine when I hit a boulder that stopped me in my tracks; then, since my feet were locked in my clip-less pedals, I starting falling to the right, down into the ravine!

Fortunately for me (and this blog), the Good Lord put a willow bush there to catch me.   Twenty minutes later, after extricating myself from the willow and realizing I was still in one piece, I trudged on, only to suffer a similar fate ten minutes later.  But this time, instead of a willow bush, my landing zone was a pile of rocks.  Instead of a couple of willow scratches, I considered myself lucky to only have a couple of bloody scrapes and a number of bruises.   But my day was done, and I realized that making it to the top of a mountain on a mountain bike was going to be VERY HARD.    I share this story because to tell you the truth, POS Integration can be quite similar to my “Biking to the Top” experience; you think it isn’t going to be that hard, and then once you try to make it happen, reality sets in!   This is particularly true on the BUSINESS side of POS Integration.   The technical side can be challenging as well, but believe me, the business side can cause a tremendous amount of hair pulling.

I’ll start out this discussion by delving into Aloha, Micros, and then Positouch.   Over the years, that’s whom I have worked with the most due to their dominating position in the market.   I’ll also briefly touch on Digital Dining, Dinerware, Aldelo, Posera Maitre’d, and Expient.

Let’s talk about Aloha.  Obviously, it is a big gorrila in Restaurant POS.  If you are a third party integrator with the next great idea for connecting to restaurants, then you need to integrate with Aloha! Having been a Aloha POS Integration business partner for about a decade, I have received hundreds of calls asking about how to make an integration with Aloha happen.   Historically, Aloha has made it very difficult for anybody to integrate with its system.   Technically speaking, Aloha has several integration points built in, allowing third party integrators a great deal of personal flexibility, so long as Aloha approves the integrations.   In my opinion, corporately, Aloha has a very closed business philosophy making Aloha  protective of their customer relationships and having no interest in sharing them with anybody—including third party developers. Aloha wants its vast cash flow generator to be for its stockholders and their dealers.   Therefore, it’s almost impossible to create a true “partnership” with Aloha.    Third parties such as Gift, Loyalty, Reporting, Ecommerce, and Mobile Payment providers are viewed as competitors to Aloha’s own offerings, discouraging any relationship between companies.   Consequently, getting traction with Aloha can be very difficult.

How do you reach a decision-maker at Aloha?   The Aloha dealers will typically try to put you in contact with a “Partnerships” person at Aloha.  In my opinion, the Partnerships person has a tough job at – they spend almost all their time saying “NO!” to people.    Most of the time, when someone contacts Aloha Corporate about third party integration, they just blow you off and continue to blow you off until you either give up or you give them a reason to listen to you.  What’s a good reason?  Well, the angles I suggest typically revolve proving your business model using some POS other than Aloha!   If you can get traction outside of Aloha restaurants, then when you talk with Aloha, you are more likely to look like you have your act together and they might be more inclined to give you the time of day.    Another approach is to bring a significant Aloha customer to the table with you, one that’s willing to go to battle for you.   I typically suggest a “Big Gorrila” but I don’t think it always has to be that way.   It may only need to be a customer with some “influence” in the Aloha world; however, remember that since Aloha is in over 100,000+ restaurants, any one restaurant will typically not be enough to persuade Aloha to listen.  In one case I know, the threat of legal action got the necessary cooperation, but who wants to write six figure checks to lawyers each month?

So now that you have gotten Aloha’s attention, what typically can you get out of them?  Assuming you are a third party solution provider, you want to connect your product to Aloha.  How is that done?  Can you have Aloha do the work for you?  LOL!  I have never heard of Aloha doing something like that.   Besides, the issue with Aloha is that they have 7000+ requests for changes to their software.   If they do add a feature, it takes at least eighteen months to make it happen! Unlike Micros, Aloha doesn’t offer professional services, so your only option is to purchase an Aloha Software Development Toolkit (SDK) so that you can hire some software developers to link your solution/product package to Aloha’s.  This is where the costs come in.    For years, IF Aloha is willing to sell it to you, the SDK costs $25K.    Besides the SDK, you will need to buy an Aloha system for development.   BUT, besides these initial costs, Aloha charges a “per site” license fee called “Aloha Connect.”   Aloha Connect is a feature of the Aloha software that enables third party packages to talk with Aloha.   Aloha dealers sell this for $800 to $1000 a location, and most Aloha restaurants DO NOT have this feature turned on.   So if your business model can’t absorb these costs, you probably need to rethink your business model!

Of course, there are other ways of extracting data out of Aloha without requiring an SDK or Aloha Connect license, but there’s NO WAY to push data INTO Aloha without a connect license.   So if you are trying either to push items or payments onto a check, then there’s no way of doing it without Aloha Connect.

Another cost is annual support.   Your developers will need this to deal with development and support issues for your integration.   It’s important to know that Aloha dealers can provide you with VERY LITTLE support for Aloha Connect integration problems.    Most have no experience in this area.   If you want dealers to be your installation/technical partners, you will have to train them on all the specifics of your product.

If you do get to the point of an agreement, don’t expect a “partnership” agreement from Aloha, but rather a highly restrictive license agreement that limits your ability to utilize the SDK for purposes other than what you have specified.   Aloha controls the relationship; therefore, it will never be a partnership!

Also, don’t be surprised if after six months of talking to Aloha about an agreement you still haven’t seen one.   Delay after delay in the Aloha legal department is typical.

Once you have FINALLY obtained the SDK and your Aloha System (congratulations!), you can start development.  I have lots of thoughts to share on this, the technical side; that will be in the next blog posting.

Let’s talk about Micros, the other big gorrila in Restaurant POS.  If your business model is something that requires POS integration and you are thinking about Aloha, you should be thinking about Micros as well. Micros can be tough to engage, but they are much easier  than Aloha.   Over the years I have been involved with different efforts where people were able to partner with Micros.   It seems that if you have a competent and experienced team and a strategy that properly targets Micros’ clientele, then Micros Corporate may listen to you and actually even help you!  However, from a business perspective, Micros is extremely daunting because unlike Aloha, which has one POS product to integrate with, Micros has four platforms, all of which require different integrations!

The Micros 3700/RES 3000 product has been around for a long time in restaurants in large-scale use around the world; but Micros also sells the newer E7 platform in restaurants and I am frequently asked about its integration functions. Micros’ 9700 platform is used in Hospitality applications (Hotels, Cruise Ships, Casinos, etc.).   The 9700 platform appears to be technically similar to the 3700 platform, but from a business perspective I encourage you to think of it as separate from the 3700 platform.  Finally, there is the 8700 platform, which has recently been replaced with the 9700 platform.   Although Micros no longer sells the 8700 system, it’s still a popular Hospitality System.   If hotel restaurants are important targets, you may need to develop your solution on both platforms, creating versions of your solution for both the 3700 and 9700 platforms.    And, don’t be surprised if you find yourself pondering whether to develop for the 8700 platform to capture one key customer!   The E7 platform is problematic from a third party integration perspective considering that the official word from Micros is that there is NOT an SDK available to third party development on that platform, due to technical constraints.  To make matters even more complicated, the 3700 platform has FOUR (4) different methods of performing integration, each requiring different integration methods or licenses!

All these different interfacing methods can create a perplexing business / technical problem.   In about half the integration requests that come our way, the required functionality is not available in any one interface, which means that two interfaces need to be implemented.   And this isn’t always obvious when the project is started; it may take some time and development to understand how the various interactions need to occur and what options are really available.   To add to the confusion are the licensing costs and choices.   Even if you make the right choice in completing the integration, getting the licensing setup at location can be surprising difficult.   That’s because the each integration method has a different licensing technique and it seems that almost every time the dealers are not able to get the licensing right the first time, even when they have been given the proper Micros Licensing part number to order!  It seems that somebody either in the dealer office or from corporate will suggest a “better” way of doing licensing, setting up their recommendation, seemingly ignoring the requests of their customers.  I see this especially with the 3700 Platform “RES POS” APIs (of which there are two flavors of licensing). Of course, Micros charges roughly $800 to $1000 per site license for each integration as well; so if you are forced to use two, the cost may well be $2000 per store in license fees that somebody has to pay to Micros just to “enable” your interface to work! Beside the site license fees, some of the SDKs will cost you as well – the 3700 “RES POS” SDK seems to run about $15K.   And then you’ll need to purchase annual support as well. So making the wrong choices about which integration method to utilize can be quite costly and time consuming.

What most of the startups that I work with have a hard time understanding is that Restaurant POS systems are black boxes, all built differently, and all with different integration points; there will be hazards on almost every road, but even in the best of circumstances you often can’t see them until you get around the next bend.  So I say, expect some bumps (or even some landslides) on the road.

When it comes to getting the actual integration work done, Micros does offer Professional Services that can assist you.   Also, Micros Dealers are typically far more capable then their Aloha counterparts in developing integrations and add-ons  since many dealers can create what are called “SIMs” (I’ll discuss these in a future blog as well).

Technically, you really don’t have to engage Micros Corporate prior to creating your product if you don’t want to.   There are third party developers that can perform the integration for you, and they don’t need to get a rubber stamp from Micros Corporate before proceeding.

Now let’s turn to Positouch.   My experience with Positouch, from the business side for POS Integration, is that, as a smaller company, Positouch is much easier to work with than either Micros or Aloha.   There are fewer layers of organization and Positouch is willing to work with most anybody.   That attitude seems to percolate down to their dealers as well.   I believe Positouch sees the value of your POS needs and requests.  Thus, they will install their software with the necessary SDKs on a PC you provide, to assist you in the future.  This proactive policy is really VERY helpful!   The question is, can you accomplish what you need to with your integration on their platform?   I have to say that the Positouch Integration points are more limiting than Aloha and Micros, but that isn’t to say they don’t get the job done.   Like Aloha and Micros, POS Integration with Positouch can get technically challenging, but lots of integrations have been completed.    Because so many integrations have been completed, Positouch dealers can be quite helpful in addressing technical issues regarding configuration.  However, you will still need your own team of developers to get the work done.    Like Aloha and Micros, Positouch does require license fees for the interface licenses, but unlike Aloha/Micros, it seems that many customers already have them.

Now, here is a brief breakdown of some remaining, aforementioned POS technologies:

Digital Dining: Like Aloha, Micros, and Positouch, Digital Dining is another POS where we have seen requests for integration over the years.  It’s not obvious that they support third party integration, but they do have interfaces that allow you to extract data from the POS as well as an external Order Placement Interface (which I helped them develop).

Dinerware: Unlike the manufacturers previously discussed, Dinerware encourages third party integration.  Just go to their homepage and you’ll see the tab for “Developers” right there.  It’s easy to engage with Dinerware and our experience has shown their willingness to work with you to help your team get the information you need so that you can complete your product integration.

Posera Maitre’d: This Canadian POS manufacturer has provides SDKs for third party integration for some time now.   Our experience in trying to provide Online Ordering integration has been difficult, as the interfaces always seemed to be in flux and fairly complicated to use.

Adelo: This is another POS manufacturer that makes it known on its website that it has a collection of available SDKs that support a wide variety of integrations.

Xpient: This POS manufacturer also boasts a well-defined SDK that is available to third parties.

Let me conclude this blog entry for now by stating what should be pretty obvious – the business side of POS Integration is a big challenge.   Since every POS manufacturer has different philosophies about POS integration and (as we will find out in the future blog posts) different technical approaches to integration, connecting all these solutions together requires a large capital investment.   The bigger problem the POS industry needs to focus on surrounds the idea of providing customers with a mechanism that accommodates and encourages independent innovation, thus allowing restaurants and retailers more customization regarding their specific business transaction needs.  Though I have some suggestions for how POS technology can improve, that discussion is for another time. . .

For my next blog post, I’ll delve into the technical side of POS integration.