A smartphone for $1000. Is it worth it? The answer lies in the value equation – which is different for everyone. To some, the hardware is more important. Others, software. And there are those who care about the overall experience- amazing graphics, a cool camera, a digital assistant that sometimes works, games to play while standing in line at the grocery, etc. Whatever value somebody places on those things will determine whether it’s worth it or not. However, most people don’t consider what it actually took to create such a product. Materials, software development, design, marketing and so much more. Factor in the years of research, expertise, testing and patenting costs. When you consider that, $1000 doesn’t seem so bad.
So much of the value is in the software. But not all software can be treated equally. It is amazing that apps on our phones have phenomenal functionality and are free or just a few shekels. Yet large enterprise software remains very costly. Why? You’re paying for niche expertise and customization. As Ray Dalio, Founder of Bridgewater Associates has stated: “pretending domain experience doesn’t matter in data science is a mistake”.
Now Artificial Intelligence dominates the headlines. It’s intertwined in many devices and used in software to make decisions about our lives (credit, college acceptance, the likelihood of committing crimes, and more). Some very smart, successful billionaires are very worried about it. Some very smart, successful billionaires welcome it. Like most things with technology, there are both positives and negatives. One great benefit of AI is how it can look for patterns in data, determine whether something is important or not and what inferences can be drawn – with lightning speed.
In our latest retail analytic reporting tool, Retail Narrative, we embrace many facets of AI. From our earliest days of using desktop software to locate in-stock deficiencies by store or sales opportunities, we learned how to look for opportunities and liabilities that existed in the data. Now we’re teaching the software what to look for. The result is that the software becomes a virtual planner for some companies or serves the busy planning team of other companies. While most reporting platforms focus on just that – reporting, Narrative focuses on combing through the data and determining what is relevant to show the user. It only presents the most valuable and actionable opportunities to the user.
At first look, our Retail Narrative expert system seems to be a just another dashboard. But it is much more. Like smartphones, users don’t really know how the “intelligence” gets in there. The truth is it isn’t really artificial – someone actually had to code it into the software. That means experience, methodology and bias are baked into it. In some cases, it’s a good thing and in other cases, it isn’t. Our product is great because the user is not required to know what to look for – the system will lead them to the most relevant and actionable opportunities. For those who know what to look for, it makes sure any single trend buried in millions of rows of data does not go unnoticed. It focuses on areas where inventory productivity can be improved, analyzing POS data (EDI 852, retailer web portals, etc.) for sales opportunities, SKU-store replenishment opportunities and provides predictive forecasting. In many cases, our software does more than the now decades old auto-replenishment systems used at most retailers. At a fraction of the cost.
So how is value determined for such a powerful piece of software? Like the smartphone example, there are tangible and intangible costs. There’s the actual coding, data storage, processing power, etc. And then there are the years of planning experience and customer feedback required to power the algorithms. Multiple design iterations (37 to be exact) to get the user experience right. Data mapping to over most any big box retailer (developed over 12 years). Integration of non-POS data sources – wholesale data, forecasts. From the user’s point of view there’s massive time savings, finding of opportunities that would otherwise go unnoticed, and a system that trains itself. And guess what – you can even use it on your phone, and not just the $1000 kind.