We are often reminded that retail software implementations are a partnership. In the midst of the current global turmoil, the need to choose partners carefully has been brought into stark relief. Open Plus Ltd, bring a business model designed for difficult times that introduce a whole new selection criteria to retail partners and ERP vendors, the watch-word is leverage.

With financial strains starting to hit high street retailers, furnishings firm, Rosebys being among this week’s casualties, it’s becoming clear that innovative bottom-line savings are to be the crucial survival differentiator for 2009.

Recent developments in the financial markets have introduced the term “leverage” to the retail Zeitgeist. The act of using debt to amplify the effects of the business’s revenue generating model, or leverage, is what allows a hedge fund to generate such large returns. Leverage however is not the lofty preserve of esoteric financial transactions, but the fuel that drives our entire enterprise ecosystem.

With the cost and availability of capital increasing, prudent retailers are seeking inventive new ways to decrease reliance on the financial leverage, until recently, readily accessible from the now ham-strung banking sector.

Like great retail businesses, great retail solutions has been built, not solely on the equity investment of shareholders, but on the financial leverage extended to software vendors by banks. De-leveraging a retail business will take innovative new operational strategies and with that, innovation within the retail software industry. Yet with retail software vendors facing the same leverage constraints as the retailers themselves, innovation will inevitably come at a new price.

Just as software vendors are likely to face unprecedented downward pressure on price, they are also going to find themselves instrumental to retail de-leveraging strategies. Margins can of course be squeezed and capital reserves drawn upon, but software vendor’s pockets do not have infinite depth and the extent to which these reserves can be drawn upon will depend on the individual software vendors reading of the financial future.

The question for the prudent retailer, having carefully constructed a de-leveraging strategy, is “to what extent is my software partner leveraged?”. To answer that, the retailer must look to the vendor’s approach to product development. Heavily leveraged product development is a double edge sword for the retailer. Not only can the retailer expect to face price increases, but the rate of product innovation from the software vendor is also likely to be reduced.

Open Plus Ltd is uniquely placed to answer the leveraging question. As a specialist in open source software, product development has never been a function of how much debt or investment the business has available to it. Product development exists as a community effort aggregated over many vendors. While other vendors seek to find solutions to the debt drought open source products chosen by Open Plus continue to accelerate in their rate of innovation.

World opinion is united in anticipation of tougher times to come. Successful retailers will be those that transition to modified business models as smoothly and painlessly as possible. To facilitate this transition, retailers will need a software partner who specialises in agility and whose business model is not predicated on the easy availability of bank credit. Open Plus stands uniquely poised.

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