POS Systems for Small Business: Advantages, Disadvantages, and Risks

This report discusses the significance of POS systems for small businesses like Four Seasons Greenhouse and Nursery. It covers the advantages and disadvantages of implementing a POS system, the associated risks, and the importance of decision making, competitive advantage, and a centralized database. The report also discusses the type of telecommunication and network and media type suitable for small businesses.

Running Head: POS Systems
IT FOR BUSINESS

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Executive Summary
The use of Information system has become an utmost need for every organization whether it is
small, medium or large scale enterprises. Implementation of such systems means investing a
hefty amount of money which can be a problematic situation for a small and some medium
enterprises. The need and importance of such systems is to be analyzed as these systems has its
own advantages and disadvantages which might or might not be beneficial for a business
process. The report discusses about the case of a firm, Four Seasons Greenhouse and Nursery
where POS system is to be implemented to make the process more effective.

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Contents
Introduction.................................................................................................................................................2
Advantages and Disadvantages...................................................................................................................3
Advantages of POS..................................................................................................................................3
Disadvantages of POS..............................................................................................................................4
Competitive Advantage...............................................................................................................................4
Advantage associated with having a centralized database..........................................................................5
Decision making with POS...........................................................................................................................5
Telecommunications for POS......................................................................................................................5
Network Type..........................................................................................................................................6
Media Type..............................................................................................................................................6
Associated Risks with POS...........................................................................................................................6
 Security............................................................................................................................................7
 Privacy.............................................................................................................................................7
 Confidentiality.................................................................................................................................7
Conclusion...................................................................................................................................................7
References...................................................................................................................................................7

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Introduction
Nowadays, most of the business operations are switching to advanced technological systems to
make its process more efficient and effective. It has become a need of the hour for every business
from small to large to adopt to such technological ramification. Every large organization’s basic
requirement is to integrate its business process with such intelligent systems which will help
them in enhancing its internal operations. However, such systems are also important for small
and medium scale industries too. One such example is discussed in this report where a small
business firm called four seasons Greenhouse and Nursery is adopting a new POS system. The
firm used to rely on manual registers to keep track of their daily business which was very
inefficient and time taking. Later on they found out that the data collected through manual
registers represented incorrect statistics of a product and were very vague. So the company
decided to move towards a more reliable system of selling which is POS system. The report will
discuss the various aspects of POS system and the need of such systems for a business operation
like four seasons (Medineckiene et al., 2015).
Advantages and Disadvantages
The use of such advanced technology brings several benefits to a business process, especially for
a small business like four seasons. It was the need of the business that prompted the firm to
implement POS system of sale which brought several changes in the business process but also
with such dynamic changes it also introduces several risks which can be categorized as a
disadvantage of such system.
Advantages of POS
 POS systems reduces the involvement of human which ultimately minimizes the human
error which usually can be seen in case of handling manual registers. Such systems are
far more reliable than a generic means of maintaining data.
 The management of inventory becomes very easy using POS. It can help in getting the
data regarding an inventory which is more profitable and which is less. It will help in
focusing on the right product inventory
 This systems facilitates in taking an effective decision making. Decision making on how
many units are to be flagged for a reorder which was earlier based only on a speculation.

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 The prediction of accurate inventory counts can be made using POS which eliminates the
chances of unnecessary expenditures.
 By analyzing the data from the POS, it helped in pricing the products more effectively
according to the customer needs so that a perfect price can be chosen for the consumers
maintaining the business profitable at the same time (Pugh et al., 2016).
 A transparent operation can be seen running in the business with implementation of such
system. Now, the employee and labor schedule can be controlled using the POS system
and it sets up a realistic goal for the employees of the organization.
Disadvantages of POS
 Switching a business operations completely on a POS system is very heavy for the pocket
as it involves investment of huge amount of money. Also, migrating to a new system will
also take some time as large amount of data is to be handled.
 POS systems is completely based on software and a timely update and upgradation is
required for such software related systems in order to keep the business process flow
moving.
 There are various security risks too which comes along with such systems that might
compromise the data of the business (Voege et al., 2017).
 It is very important for such systems to be connected with ISPs so that the process
remains uninterrupted and unaffected.
 There are several issues that are concerned with the hardware of the POS. As
troubleshooting the hardware is a hectic work and might also result in investment of
money (Eason, 2014).
Competitive Advantage
In a market of intense competition, it is very important for a business to gain competitive
advantage and the same can be achieved by implementing an intelligent POS system. There are
certain points through POS helps in gaining competitive advantage in a business which are-
 POS systems helps in getting accurate data results which helps in predicting the exact
inventory units needed which helps the business to operate on leaner inventory and
reduce expenses

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 It helps in making predictive decision making through which the business owners can get
the idea about which of the product is actually generating profits and to invest efforts in
that particular product (Pantano, Priporas and Dennis, 2018).
 One major feature of POS systems is that it can be used to run reports regarding the sales
pattern and sales history of a product. With the help of these reports, strategy can be
formulated in order to get maximum profits (Farias, 2015).
Advantage associated with having a centralized database
It becomes important for a business to maintain its data in a database as when a business
expands, a large amount of data is running through the systems and to collect all and save them,
requires a setup of a centralized database management system. There are several advantages
associated with having a centralized database, especially if a business is at a small or medium
scale.
 The preservation of data is important so that it can be used whenever required. To keep
the data safe, a centralized database system is a suitable way to ensure that there is no
data loss even in case of a major breakdown.
 The data security aspect is not compromised when a business is running on a centralized
database system, as it limits the probability of risk to an individual place instead of
distributing the data at several locations where it should be ensured that every location is
secured so that there is not data breach.
 The space required for such database system is very less, as all the data is stored at a
single place which in turn reduces the cost involved.
 The reliability factor of such system is very high as it helps in reducing the data
redundancy (McLaughlin and Lyon, 2016).
Decision making with POS
A proper analysis of large amount of data can help taking an effective decision that can enhance
the business process and can provide a significant advantage. A real time data is available using
the new POS system and data can be tracked at the time a product is sold. This data tracking
feature was not possible with conventional methods as there were possibilities of human error
and data redundancy (Ingram et al., 2015). By evaluating all the data of the POS system, it can
provide us the answer regarding a product sales, purchase history and number of inventory left.

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All these data further facilitates in taking an effective decision and better management of the
business process can be done.
Telecommunications for POS
The type of telecommunication that is to be implemented should be based on the process of a
business. There are several options available when it comes to laying down a proper
telecommunication channel but the choice is to be made according to the feasibility and keeping
in mind the financial condition of a business (Hall, 2012).
Network Type
Among the three options LAN, WAN and MAN, the best suitable option for such business
would be a Local area Network (LAN). As four seasons is a small business confined in a small
area so the type of network requirement is also very small. Laying down LAN would provide the
business with a high speed internet connectivity and also compared to other types, LAN is more
economical.
Media Type
When it comes in choosing between a wired and wireless technology, both have their own
advantages and disadvantages. For a business like four seasons, the most suitable option would
be a wired connectivity as it is faster in comparison to a wireless technology. Also, in wireless
technology there are more security concerns and it is not secure and information can be accessed
sometimes by a third party (De Velasco Cortina and Rietzler, 2017). However, wireless
technology is more economical as it reduces the cost of lying down of the wires but still when it
comes to reliability, the preference is always given to wired technology.
For wired technology, an Ethernet cable is suitable. It is a twisted pair cable which has high
speed and is more secure. There are several wireless technology available but not all are cost
economical. Technologies such as infrared communication, satellite communication, mobile
communication and Wi-Fi are some of the examples. However, for a wireless technology, the
most suitable technology is a Wi-Fi technology.
Associated Risks with POS
With every advanced technological system there is always some kind of risk associated with it.
There is always a physical security threat associated with POS as the system is easily exposed to

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everyone. Before switching to such systems it should be ensured that all the risks associated with
POS has been taken care of. The major risks associated with POS is basically related to privacy,
security and confidentiality of the data and using several authentication methods these can be
protected.
 Security: The data security is the major issue associated with a POS system. As a large
amount of data is at stake, a proper security system should be implemented so that the
possibility of data breaching can be minimized. A multi-level authentication system can
be used which allows on restricted users to access the data (Von Solms and Van Niekerk,
2013).
 Privacy: Data is one of the important assets for a company. Every organization ensures
that the privacy of their data is maintained and there is no sharing of unnecessary data.
By encrypting all the data the privacy can be maintained to the optimum limit (Rachels,
2017).
 Confidentiality: Data confidentiality is basically ensuring that the data doesn’t falls
in the hands of an unknown person. As this might result in misusage of the data for their
own personal needs. Confidentiality can be maintained by using a secure server for
transaction and also by monitoring the online activities regularly. This would ensure that
the sensitive data should not be shared with any person.
Conclusion
The report discusses the significance of the POS systems for a business operations. For a firm
like Four seasons switching to POS system might not be economical for short term, but for a
long run it would help the business to excel more and more by keeping track of sensitive data.
The discussion is wholly based on how POS system can change the way how a business operates
and can help in gaining competitive advantage. Before implementing POS sale systems the risk
factors should be checked as there are some set-backs that are also associated with this system.
With advancement in technology, POS system will be more reliable and secure which will help
the business processes to become more efficient and earn profits.

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References
De Velasco Cortina, F.M. and Rietzler, M., Neology Inc, 2017. System and method for
providing secure identification solutions. U.S. Patent 9,558,385.
Eason, K.D., 2014. Information technology and organisational change. CRC Press.
Farias, A.S.P., 2015. System for accessing a POS terminal, method for downloading and
updating applications and method for performing electronic operation using such a system.
U.S. Patent 9,131,012.
Hall, J.A., 2012. Accounting information systems. Cengage Learning.
Ingram, T.N., LaForge, R.W., Williams, M.R. and Schwepker Jr, C.H., 2015. Sales
management: Analysis and decision making. Routledge.
McLaughlin, Q. and Lyon, B.H., LivingSocial Inc, 2016. Systems and methods to
implement point of sale (POS) terminals, process orders and manage order fulfillment.
U.S. Patent 9,275,407.
Medineckiene, M., Zavadskas, E.K., Björk, F. and Turskis, Z., 2015. Multi-criteria
decision-making system for sustainable building assessment/certification. Archives of Civil
and Mechanical Engineering, 15(1), pp.11-18.
Pantano, E., Priporas, C.V. and Dennis, C., 2018. A new approach to retailing for
successful competition in the new smart scenario. International Journal of Retail &
Distribution Management, 46(3), pp.264-282.
Pugh, B., Robinson, E.L., Pallas, D.S. and Ross, K.M., MEIJER Inc, 2016. System and
method for linking pos purchases to shopper membership accounts. U.S. Patent
Application 14/965,823.
Rachels, J., 2017. Why privacy is important. In Privacy (pp. 11-21). Routledge.
Voege, M., Najafi, F., Schultz, E. and Govindarajan, S., PayPal Inc,
2017. Merchant/customer POS interaction system. U.S. Patent 9,568,955.
Von Solms, R. and Van Niekerk, J., 2013. From information security to cyber
security. computers & security, 38, pp.97-102.

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