OD5897 Point of Sale Software Developers Industry Report PDF

WWW.IBISWORLD.
COM Point of Sale Software Developers in the USJuly 2016 1
Point taken: Downstream business growth will

encourage investment in POS software
This report was provided to
Wise Business Plans (211465492)
by IBISWorld on 08 April 2017 in accordance with their license agreement with IBISWorld
IBISWorld Industry Report OD5897

Point of Sale Software
Developers in the US
July 2016 Gavan Blau
2 About this Industry 16 International Trade 30 Regulation & Policy

2 Industry Definition 17 Business Locations 30 Industry Assistance
2 Main Activities
2 Similar Industries 19 Competitive Landscape 31 Key Statistics
2 Additional Resources 19 Market Share Concentration 31 Industry Data
19 Key Success Factors 31 Annual Change
3 Industry at a Glance 19 Cost Structure Benchmarks 31 Key Ratios
21 Basis of Competition
4 Industry Performance 22 Barriers to Entry 32 Jargon & Glossary
4 Executive Summary 22 Industry Globalization
4 Key External Drivers
6 Current Performance 23 Major Companies
8 Industry Outlook 23 NCR Corporation
10 Industry Life Cycle 24 Epicor
25 VeriFone Systems Inc.
12 Products & Markets
12 Supply Chains 28 Operating Conditions
12 Products & Services 28 Capital Intensity
14 Demand Determinants 29 Technology & Systems
14 Major Markets 29 Revenue Volatility
www.ibisworld.com | 1-800-330-3772 | info @ibisworld.com

WWW.IBISWORLD.COM Point of Sale Software Developers in the USJuly 2016 2
About this Industry
Industry Definition This industry develops point-of-sale (POS) depending on the type of business using it
software, which manages and facilitates and can provide extended features such as
sales at the physical location goods are sales analysis and history, appointment
sold. POS software varies significantly scheduling and inventory management.
Main Activities The primary activities of this industry are

Retail POS software development
Hospitality POS software development
Foodservice POS software development
Other POS software development
The major products and services in this industry are

Foodservice POS software
Hospitality POS software
Other POS software
Retail POS software
Similar Industries 51121 Software Publishing in the US

Companies in this industry disseminate licenses to customers for the right to execute software on their own
computers.
51121c Business Analytics & Enterprise Software Publishing in the US

Companies in this industry develop and distribute business analytics, customer relationship management
(CRM), business intelligence (BI) and other enterprise-oriented software.
51121d Design, Editing & Rendering Software Publishing in the US

Companies in this industry develop and distribute design, picture editing, video rendering and object
rendering software.
51121f Security Software Publishing in the US

Companies in this industry develop and distribute antivirus, antikeylogger, spyware removal, encryption and
firewall software.
Additional Resources For additional information on this industry

www.siia.net
Software & Information Industry Association
www.pointofsale.com
The Point of Sale News
www.bea.gov
US Bureau of Economic Analysis
Provided to: Wise Business Plans (211465492) | 08 April 2017

WWW.IBISWORLD.COM Point of Sale Software Developers in the US July 2016 3
Industry at a Glance
Point of Sale Software Developers in 2016
Key Statistics Revenue Annual Growth 11-16 Annual Growth 16-21

Snapshot
$1.7bn 6.2% 9.5%
Profit Wages Businesses
$96.1m $556.7m 97
Revenue vs. employment growth Demand from retail trade
Market Share
NCR Corporation 20 6
27.2%
15 3
Epicor
10 0
% change
% change
12.7%
VeriFone Systems 5 -3
Inc. 0 -6
6.5%
-5 -9
Year 08 10 12 14 16 18 20 22 Year 09 11 13 15 17 19 21
Revenue Employment
SOURCE: WWW.IBISWORLD.COM
p. 23
Products and services segmentation (2016)
Key External Drivers 13.0%

Demand from retail trade Other POS software
Demand from
accommodation
and food services
Percentage of services 17.6%
conducted online Hospitality POS software
Number of businesses 50.6%
Retail POS software
Corporate profit
18.8%
p. 4
SOURCE:
WWW.IBISWORLD.COM
Industry Structure Life Cycle Stage Mature Regulation Level Light

Revenue Volatility Medium Technology Change High
Capital Intensity Low Barriers to Entry Low
Industry Assistance None Industry Globalization Medium
Concentration Level Medium Competition Level High
FOR ADDITIONAL STATISTICS AND TIME SERIES SEE THE APPENDIX ON PAGE 31

Industry Performance
Executive Summary | Key External Drivers | Current Performance
Industry Outlook | Life Cycle Stage
Executive The Point of Sale Software Developers entertainment businesses. Large

Summary industry, which facilitates sales at the competitors have consistently acquired
physical location goods and services are smaller players to gain a foothold in
sold, have experienced a prosperous five niche markets or new locales.
years, with revenue increasing at an Nevertheless, increased competition due
annualized rate of 6.2%. The industry has to new startup operators has caused
benefited from increased reliance on profit margins to ease.
computers in its downstream markets, Industry revenue is expected to
including retailers, wholesalers and increase an annualized 9.5% to $2.6
hospitality and food service businesses. billion in the five years to 2021.
Growth has been bolstered by new Technological improvements will
technologies and the changing retail continue impacting industry products as
landscape. Trends like near-field POS software developers move to
communications (NFC), self-checkout software as a service (SaaS) business
counters, sensors, data analytics, and models and mobile computing, allowing
for more personalized marketing and
instant sales. Businesses will increasingly
The
industry has benefited from higher reliance look to operate real-time, data-driven
business models, driving demand for
on computers in its downstream markets POS software that integrates with
systems all along the supply chain.
point of sale (POS) systems integrated During this time, the industry will also
with back-end software systems have benefit from an increase in the number of
provided the industry with a platform for businesses operating in the United
growth. The industry has exhibited overall States. An increase in demand from
growth, further due to an increasing accommodation and food services and
number of businesses and increased retail trade, caused by increased
private investment in computers and disposable income, is also expected to
software as the percentage of services contribute to future revenue growth.
conducted online boomed. Industry Furthermore, restaurants and hotels, off
revenue is due to grow an expected 5.9% to a slow start in technological
in 2016 to an expected $1.7 billion. innovation, are expected to catch up with
The industry has experienced much retailers; restaurants will provide digital
merger and acquisition activity. For menu boards and use apps that allow
example, major player NCR acquired customers to pay using their
Radiant Systems Inc. in August 2011, smartphones, and hotels will embrace
expanding into the restaurant and cloud-based POS systems.
Key External Drivers Demand from retail trade Demand from accommodation
Retailers use POS software to help and food services
manage and facilitate sales at the physical Businesses in the accommodation and
location goods are sold. An increase in food services sector, including hotels,
demand from retail trade will increase motels and fast food restaurants, use
demand for POS software developers. point-of-sale (POS) software to manage
Demand from retail trade is expected to and facilitate sales. An increase in
increase in 2016, providing a potential demand from accommodation and food
opportunity to the industry. services will boost industry revenue.

Key External Drivers Demand from accommodation and food POS software developers. An increase
continued services is expected to increase in 2016. in the number of businesses will boost
demand for POS software. The number
Percentage of services conducted online of businesses is expected to increase
Services and sales conducted online are in 2016.
growing as the internet becomes more
intertwined with all aspects of day to day Corporate profit
life. As online activity grows, businesses are Enterprise software, including POS
requiring POS software that is integrated software, is a capital expenditure for
with the internet, as users can make businesses. When corporate profit is
purchases and reservations themselves high, companies are more likely to spend
online. The percentage of services on capital goods like POS software,
conducted online will increase in 2016. though spending often lags profit growth
by nine months. However, capital
Number of businesses spending shrinks when profit declines.
The number of businesses and business Corporate profit is expected to decrease
locations in downstream industries has over 2016, posing a potential threat to
a direct impact on the performance of the industry.
Demand from retail trade Demand from accommodation and food

services
6 8
3 4
0 0
% change
% change
-3 -4
-6 -8
-9 -12
Year 09 11 13 15 17 19 21 Year 09 11 13 15 17 19 21

Current Operators in the Point of Sale Software

Developers industry have benefited over
IBISWorld expects industry revenue to
increase at an annualized rate of 6.2%
Performance the past five years from increased over the five years to 2016. The industry
adoption among wholesalers and has benefited from increased reliance on
renewed demand from retailers, POS systems during the past decade as
restaurants and hotels. Point of sale downstream industries increasingly
(POS) software helps manage and turned to computers to manage day-to-
facilitate sales at the physical location day tasks. The industry has taken
goods and services are sold. The function advantage of the continued development
of the software differs from market to of mobile technologies, cloud software
market. For example, retailers and and demand for business data analytics.
wholesalers use POS software to keep Further growth in revenue has come from
track of inventory, while hotels and continued improvement in downstream
restaurants use the industry’s products to industries and growth in the number of
manage reservations. POS software also businesses in the economy. Industry
helps stores interact with customers in a revenue is due to grow an expected 5.9%
more efficient and personal way. in 2016 to an expected $1.7 billion.
Technological Over the past five years, the industry has

been drastically changed by Industry
consolidation
developments
advancements in technology. For has largely mirrored the
example, the development of mobile and
cloud computing systems have forced broader software market
industry operators to create POS software
that incorporates traditional, web-based consumers to store credit card and
and mobile platforms. Cloud computing loyalty information on their mobile
systems allow retailers that operate on a phones. NFC payment for goods or
national basis to view inventories across services is made via radio communication
the country. They have also forced POS at retailers that have the appropriate
software developers to take data and software and hardware, including
system security into account as more MasterCard’s PayPass system and Visa’s
operators serve clients via software as a payWave system.
service (SaaS). Under the SaaS contract Mobile POS devices allow for store-
model, businesses are billed a recurring wide promotion opportunities, with
fee for software and its support rather various sections of retail stores holding
than incurring all licensing costs upfront. demonstrations and promotions,
SaaS contracts have increased as a marketing and selling to customers
proportion of industry revenue during instantly and sending receipts via email.
the past five years as cloud computing Seasonal subscriptions allow retailers to
has continued to gain traction in the increase their POS budget during busy
business world. seasons rather than pay for a system year
Retailers have also adapted to changes round, and inventory and price searches
that are taking place at the cash register. assist customers in finding an exact item
More operators have started developing without waiting in line. When fashion
POS software for mobile devices that are and beauty retailer Nordstrom
enabled with near field communications introduced its mobile POS devices
(NFC). NFC-enabled devices allow throughout their full-line stores, retail

Technological sales increased 15.3%. Furthermore, customers to scan and bag their groceries
developments supermarket chain Stop & Shop launched while they shop, in some places using
its Scan It mobile app, which allows their own smartphones.
continued
Increased adoption Adoption of POS systems is largely

dependent on downstream industries. Developersmust take data
Growth has been strong since 2012, as
growing disposable income has led to
and system security into
increased demand from downstream account as they shift to
industries, boosting business software as a service
confidence and businesses making
capital investments. Industry operators
have further boosted revenue by NCR, for example, acquired Radiant
increasingly bundling value-added Systems Inc. in August 2011, expanding
services with software offerings. While into the restaurant and entertainment
services range from operator to businesses. On the other hand, IT
operator, many companies provide startups have continually entered the
on-site hardware maintenance, market in the hope of “disrupting”
operator and manager training, credit incumbent players. Increased
card software support, consulting and competition has contributed to a
customized software development. marginal decrease in industry profit.
The number of companies operating in Employment has meanwhile increased
this industry has increased at an an estimated annualized 9.4% during the
annualized rate of 8.3% to 97 in the five same period to 5,153 workers. Companies
years to 2016. Industry structure has increased their investment in research
largely mirrored the broader software and development, while also hiring new
market, with large enterprises acquiring workers to adapt existing software to
smaller niche firms to gain market share. mobile and cloud platforms.

Industry Revenue for the Point of Sale Software

Developers industry is expected to Industry revenue
Outlook continue growing, at a booming rate of
15
9.5% to $2.6 billion in the five years to
2021. Industry operators will benefit from 12
the increased capabilities offered by
technological advancement in computing, 9
% change
leading to new opportunities for software
that integrates POS systems with back- 6
office systems, thereby incorporating data

3
analytics, mobile platforms, sensors and
consumer behavior insights. Secondly, an 0
increase in the number of businesses, Year 08 10 12 14 16 18 20 22
along with increased per capita disposable
income that allows for greater expenditure SOURCE: WWW.IBISWORLD.COM
on accommodation and food services, will

increase the industry’s pool of potential businesses will increase at an average rate
clients and boost revenue. IBISWorld of 0.8% per year to 8.2 million in the five
estimates that the total number of US years to 2021.
Technology paves the Industry operators will continue to compatibility is expected to be offered in
future develop and integrate new technology. an increasing proportion of the industry’s
Cloud computing and mobile connectivity products. Similarly, an increasing
will continue to play an increasingly number of grocery stores have offered
important role, with more industry customers the option of self-checkout in
operators expected to use software as a the past five years. Self-checkout
service (SaaS) business models, in which terminals require different software,
clients pay for a subscription service which tends to be more visual to show
rather than a perpetual license. consumers the steps of the checkout
Subscription-based business models process. Self-checkout POS software is
produce more stable cash flows than the expected to increase as a proportion of
traditional develop-and-release format. industry revenue as more stores pursue
Furthermore, SaaS business models can these options. Mobile options are
improve security by allowing software expected to enhance traditional POS
publishers to release incremental updates systems, facilitating loyalty programs,
that install automatically; with traditional member registrations, digital signage,
antivirus programs, security is e-receipts and self-checkout centers.
compromised because users have to The restaurant and hospitality
install updates themselves, which they industries are also embracing the change
often neglect to do. that retailers have already jumped on.
Industry operators will also have to Digital Dining POS developed Tabbedout,
contend with the changing retail a mobile app that allows customers to
landscape. For example, POS software view and pay bar and restaurant tabs
developers will add more mobile with their smartphones. Revel’s iPad POS
functionality, including software that System, the product of a partnership
enables the use of near-field between Revel Systems and Network
communications (NFC) hardware. NFC Intercept, connects the receipt printer,

Technology paves the cash drawer and cardswipe to an iPad. among downstream customer
future continued Restaurants have also partnered with businesses. Mobile platforms, cloud
tech companies to offer digital menu computing, data analytics and sensors
boards, often including static and video will all offer opportunities to further this
images. Although the hospitality industry macro trend. In response, POS software
has been slower to adopt the mobile developers will be required to integrate
technology, it is expected to catch up in POS systems with back-office systems, in
the next five years. order to provide comprehensive real-
Improved technology is leading to a time data systems across the entire
rise in data driven business models supply chain.
Underlying demand Demand for POS software is expected to

growth increase as corporate profit rises. Subscription-basedmodels
Companies’ confidence in their financial
ability to invest in computers and
produce more stable cash
software is anticipated to cause private flows than traditional
investment in computers and software to software releases
increase at an average annual rate of
3.8% in the five years to 2021. A portion
of increasing software expenditure will 2021, the number of companies operating
stem from retailers, wholesalers and in the industry is expected to increase an
hospitality companies purchasing POS annualized 8.5% to 146.
software, bolstering the industry over the Large operators are expected to
next five years. acquire companies that service growing
The Point of Sale Software Developers niche markets, such as POS software for
industry is expected to continue to healthcare. Furthermore, the prices of
undergo mergers and acquisitions in the products designed for niche markets
next five years. New operators continue are expected to fall as the markets
to enter the industry, offering a wide mature and more options become
range of cloud and mobile-based available. Nevertheless, industry
solutions integrated across the payments consolidation will ultimately contribute
supply chain. This will continue a trend to a marginal increase in profit as the
across several software sectors, in which largest companies cut their operating
large multinational conglomerates costs. Employment is expected to grow
acquire smaller companies to increase as well, increasing at an average annual
market share and gain access to patents rate of 9.6% to 8,156 workers over the
and niche markets. In the five years to next five years.

Life Cycle Stage The industry is expected to grow faster than
the economy during the 10 years to 2021
Technology is providing opportunities for growth
The industry’s products have
wholehearted market acceptance
20 Maturity Quality Growth

% Growth in share of economy
Key Features of a Mature Industry

Company High growth in economic
consolidation; importance; weaker companies Revenue grows at same pace as economy
level of economic close down; developed Company numbers stabilize; M&A stage
importance stable technology and markets Established technology & processes
Total market acceptance of product & brand
15 Rationalization of low margin products & brands
10
Quantity Growth
Point of Sale Software Many new companies;
minor growth in economic
Developers importance; substantial
5 technology change
Business Analytics & Enterprise Software Publishing

Design, Editing & Rendering
Software Publishing Software Publishing
Intellectual Property Licensing
0
Colleges & Universities
-5 Decline
Shrinking economic
importance
-10
-10 -5 0 5 10 15 20
% Growth in number of establishments
SOURCE: WWW.IBISWORLD.COM.AU

Industry Life Cycle The Point of Sale Software Developers another sign of industry maturity.
industry is in the mature phase of its life Meanwhile, large operators have
cycle, with significant growth acquired smaller firms and niche
Thisindustry opportunities brought about by providers to increase their market share.
is M
ature technological advancement. As a result, For example, major player NCR
industry value added (IVA), a measure of Corporation completed an an acquisition
an industry’s contribution to the overall of Radiant Systems, Inc. in July 2011.
economy, is expected to grow faster than On the other hand, recent years have
GDP over the 10 years to 2021. During seen opportunities for new growth,
that time, IVA is expected to grow at an brought about by the transition to cloud
annualized rate of 9.0%, compared with computing, software-as-a-service and
forecast annual GDP growth of 2.1% mobile platforms throughout the IT
during the same period. sector. Accordingly, industry operators
On the one hand, this industry displays continue to look for new opportunities by
its maturity by having wholehearted incorporating new technology into
market acceptance. For many years, it existing systems, as well as developing
was the case that the industry’s low- different markets. Meanwhile, new
hanging fruit had largely been picked. market entrants are prevalent, seeking
Clearly segmented product segments are out new niches for POS software.

Products & Markets

Supply Chain | Products & Services | Demand Determinants
Major Markets | International Trade | Business Locations
Supply Chain KEY BUYING INDUSTRIES

44-45 Retail Trade in the US
Industry developers develop various POS software solutions for retail industries such as grocery
stores, department stores and big-box retailers.
71 Arts, Entertainment and Recreation in the US
The Point of Sale Software Developers industry sells POS software solutions to industries in this
sector such as cruise lines, spas, and entertainment venues.
72 Accommodation and Food Services in the US
POS software developers customize software for a number of industries in this sector such as
hotels, restaurants, and casinos.
KEY SELLING INDUSTRIES

53311 Intellectual Property Licensing in the US
Intellectual property rights are an important prerequisite for software development.
61131a Colleges & Universities in the US
Colleges and universities produce software engineering workers who are employed in the Point
of Sale Software Developers industry.
Products & Services Products and services segmentation (2016)
13.0%
Other POS software
17.6%
Hospitality POS software
50.6%
Retail POS software
18.8%
Total $1.7bn SOURCE: WWW.IBISWORLD.COM
Industry point-of-sale (POS) software is During the past five years, new market
typically part of a bundled solution of entrants and established industry firms
hardware, software, services and support have focused on providing more online
that is customized to improve operational POS solutions based on cloud-storage
efficiency in various sectors that involve technology so that the software can be
the exchange of goods and services. POS used independently of hardware
software developers focus on creating restrictions and accessed from multiple
software that provides numerous platforms, such as POS stations,
functionalities such as sales transactions, computers, smartphones and tablets. For
inventory control, reporting capabilities, example, recently developed POS products
customer data management and other such as Square, Intuit’s GoPayments and
targeted industry-specific functions. NCR’s Silver platform give customers the

Products & Markets
Products & Services ability to manage POS transactions from Foodservice POS software
continued smartphones and tablet devices. Industry POS software systems continue to
operators then deploy software on-site, revolutionize foodservice, particularly fast
hosted or as software as a service. foodservice, by decreasing service times
All industry POS software is a defined and increasing order efficiency. Industry
category of software that manages firms have typically built in functionality
business transactions involving the into foodservice POS software to allow for
exchange of goods and services along significant customization in customer
with back-end operational and financial orders to allow foodservice companies to
management functions for these quickly adapt to changing consumer
transactions. Implementation of POS preferences. Overall, this segment has
software solutions differ among industry been increasing as a share of revenue and
customers depending upon their size, is expected to continue to do so, reflecting
scope, location, products, services consumers’ return to dining out and a
management styles and customer base, refreshed demand from food services
but the basic functionality of POS industries and fast food restaurants.
software in these businesses is the same.
Consequently, while industry software Hospitality POS software
products typically all manage the same Hospitality POS software is customized for
business functions, firms are able to more property management functions such
achieve product differentiation by as labor and inventory management and
customizing product features for the consumer-based reservation systems. This
particular industries using the software. type of POS software is more online-
oriented and less reliant on hardware than
Retail POS software retail POS systems. In recent years, as
Retail POS software typically involves hospitality facilities have grown in size,
hardware such as POS terminals, which hospitality POS systems have trended
include a computer, monitor, cash drawer, toward cluster databases that store
receipt printer, customer display and transaction and customer data over a
barcode scanner and payment card readers. number of servers, as opposed to central
During the past five years, touch screen and database storage, to prevent any crashing
self-service kiosks with POS software have or system slowdown that could impact the
increasingly been used by retail industries entire operation. Service times and
to better serve customer volume in stores increased order efficiency have increased as
with fewer sales staff to reduce labor costs. a result. This segment has declined slightly
This type of POS software and related as a share of industry revenue because of
solutions are suited to handle a large competition from internally developed POS
volume of similar transactions and does not systems and substitute business software at
have the degree of customization that large hotel and motel chains. IBISWorld
foodservice POS systems have, for example, estimates that this product segment
to handle customized orders. This type of accounts for 17.6% of industry revenue.
POS software has declined over the past
five years due to the introduction of Other POS software applications
cloud-based storage POS, which has and revenue sources
reduced industry reliance on POS software. This category includes a wide range of
This category is expected to further shrink POS software that is customized to
during the next five years as consumer various entertainment, travel, leisure,
preferences for e-commerce over retail wholesale and financial services
stores continues to rise. industries. These types of POS software

Products & Markets
Products & Services account for a much smaller percentage of A number of full-service firms such as
continued industry revenue because they have a Micros Systems and NCR Corporation
much lower level of POS technology earn a significant share of their revenue
penetration. On the other hand, as a from hardware sales and associated
group, other POS software has been the services not included in this industry,
fastest-growing product segment during such as IT consulting and support
the past five years. The introduction of services for industry software. Many
cloud-storage based POS systems and the industry firms offer combined hardware
ability to conduct POS transactions on and software solutions, while others
mobile and tablet devices have opened up focus only on POS software or POS
this technology to a wider range of hardware that can support multiple kinds
business applications in these industries. of software.
Demand Demand for point-of-sale (POS) software wireless and cloud storage-based POS
Determinants generally follows the overall business systems, to ensure that operational
cycle and is driven primarily by business efficiencies and cost savings are realized.
investment in and adoption of Downstream customers in retail,
information technology (IT). POS hospitality, foodservice, leisure and
software is a capital expense for entertainment sectors are the principal
companies, and thus demand for POS businesses that drive demand for
products is closely tied to corporate industry POS software. End-consumer
profit. When corporate profit is high or conditions, such as discretionary
the cost of capital is low due to low spending levels and leisure time,
interest rates, businesses are more likely ultimately underpin demand from these
to invest in their operations, including industries for POS software. The specific
POS software systems. While growth in and evolving needs of individual
IT spending tends to lag corporate profit businesses, such as purchasing,
growth by three quarters, it is among the inventory, financial management and
first expenditures to get trimmed when business analytics, have led to significant
corporate profit contracts. customization in POS software products.
POS software is also complementary to Generally, industry firms have sought to
several categories of IT investment. offer customers bundled packages of POS
Depending upon the extent of the hardware, software, services and support
software rollout, businesses will also to cater to multiple business functions
likely spend on reliable network across a number of on-site and mobile
connections and hardware, especially for computing devices.
Major Markets Point-of-sale (POS) software has a IBISWorld estimates for industry market
number of applications in downstream segments are based on the number of
retail, accommodation, foodservice and businesses in these sectors and estimates
entertainment sectors. The technology of POS software adoption rates.
has the ability to enhance business and
consumer interactions in any industry in Retail industries
which goods or services are exchanged Retailers are the predominant users of POS
with consumers or other firms. hardware terminals, and consequently make

Products & Markets
Major Markets Major market segmentation (2016)

continued
4.8%
8.2% Other industries
Healthcare
8.2%
Entertainment and
recreational industries
35.3%
Retail industries
9.4%
Accommodation and hotels
15.3%
Warehouse and distribution
18.8%
Total $1.7bn Foodservice industries
up the largest market segment for POS Notable firms in the foodservice POS
software. Notable industry firms in this market include NCR Corporation, Par
market include Micros Systems, Epicor, Technology, Agilysys, Casio, Dell, HP,
JDA Software, Oracle (through its 360 IBM and Toshiba. Typically, restaurant
Commerce division) and SAP (through its POS software is able to create and print
Triversity division). Use of touch screen guest checks, print orders to kitchens and
technologies has grown significantly in retail bars for preparation, process payments
POS systems during the past five years, as and run analytics reports. Recent
has software that allows POS transactions to innovations in this sector include the
take place using mobile phone and tablet adoption of wireless POS technology and
devices. An increase in consumer spending the integration of tablet computers into
and more retail locations led the retail high-volume restaurants to collect and
industries market segment to rebound as send orders to kitchens and bars in real
demand recovered and is expected to time. During the next five years,
account for 35.3% of revenue. IBISWorld estimates that this segment
During the next five years, IBISWorld will grow as a share of revenue as food
anticipates that the retail segment will be establishments continue to integrate new
volatile as a share of industry revenue as POS technologies to improve operational
consumer preferences for e-commerce efficiency and customer interaction.
grow at the expense of brick-and-mortar
retail stores. However, any declines Accommodation industries
suffered within the retail industries Accommodation industries such as
segment are likely to be compensated by hotels, motels and casinos use POS
growing demand from warehouse and systems to keep track of sales, labor and
distribution industries, who carry out the payroll, property and financial
delivery of e-commerce sales. In 2016, management. There is significant overlap
warehouse and distribution industries with property management software,
expected to account for 15.3% of revenue. which allows users to perform many of
the same operational functions. Notable
Foodservice industries POS software developers that target this
Foodservice industries are estimated to market include Agilysys, Micros Systems
account for 18.8% of industry revenue. and Par Technology. However, these

Products & Markets
Major Markets firms compete indirectly with substitute entertainment venues, theme parks and
continued property management software and gyms. Meanwhile, healthcare industries
central reservation system software, make up 8.2% of industry revenue.
which may be internally developed by Growing demand for real-time cloud
larger customers such as multinational based healthcare data is likely to provide
hotel chains. Demand from these an opportunity for industry operators,
industries has remained stable during the growing this segment in coming years.
past five years and is estimated to Other industries account for 4.7% of
account for 9.4% of industry revenue. industry revenue because of the low
During the next five years, IBISWorld penetration of POS technology in other
estimates that this market segment will sectors with less consumer interaction.
remain stable as industry firms adapt This category has cumulatively grown as
new products to meet the changing new industries adopted POS
payment and reservation needs of technologies to realize operational
downstream accommodation clients. efficiencies and cut costs. For example,
banks have recently begun utilizing
Other industries retail POS systems on tablets and
POS software systems are also utilized in smartphones to sell banking products
various other industries to manage and manage services for customers in
consumer transactions and data, such as retail branch locations worldwide.
entertainment and leisure industries and During the next five years, IBISWorld
others such as wholesale, finance and expects this category to grow as a share
construction. Entertainment and leisure of industry revenue as new market
industries account for an estimated 8.2% entrants and established firms find new
of industry revenue and include POS ways to customize POS technologies to
software applications in sports and target new customer uses.
International Trade International trade within this industry is international borders. Many of the
highly understated. Trade figures only industry’s major companies have
reflect the value of software products that operations abroad and derive a
are shipped in the form of physical media, significant share of their revenue from
like CDs or DVDs; pre-installed or internet- foreign markets. International
based software is not included. Physical collaboration between software
shipments of industry software have fallen development teams is high and is
rapidly during the past decade because POS expected to increase during the next five
software is typically sold in a bundle with years because companies will want to
associated hardware and support services. take advantage of cheaper engineering
Today, POS software publishing labor and talent abroad to protect their
occurs almost seamlessly across margins in a highly competitive industry.

Products & Markets
Business Locations 2016
West
AK
0.0 New
England
ME
Great Mid- 0.1
Lakes Atlantic 1 2
NY 3
WA MT ND 3.3
5 4
17.7 0.3 MN
Rocky
0.2 1.9
WI
OR Mountains SD
0.0
Plains 1.0 MI
1.2
PA
4.0
6
7
1.6 ID IA OH 9 8
0.1 WY 1.3
0.0
NE
0.1
IL IN WV VA
2.2 0.4 2.8
West NV
0.1 0.0
KY
UT MO
0.0 NC
0.8
1.2 CO KS 0.3 2.0
2.9 0.2 TN
SC
Southeast
0.1
CA 0.4
26.9
OK AR GA
0.2 0.0 AL 2.2
AZ MS 0.6
1.2 NM
0.0 Southwest 0.0
TX LA
0.1 FL
6.1 4.0
West
HI
0.0 Additional States (as marked on map) Employees (%)
1 VT 2 NH 3 MA 4 RI Less than 3%
0.1 0.9 7.2 0.1 3% to less than 10%
10% to less than 20%
5 CT 6 NJ 7 DE 8 MD 9 DC
20% or more
0.7 1.9 0.1 0.9 0.4

Products & Markets
Business Locations The Point of Sale Software Developers

Distribution of employees vs. population
industry is highly concentrated in the
West region of the United States. The
50
West is home to 47.1% of all industry
employees, with large concentrations in 40
California and Washington. These two
states have thriving technology centers in 30
Seattle, San Francisco and southern
%
California, with large talent pools that 20
draw new and established companies

10
alike. The dominance of these areas in
the tech sector is the primary reason for 0
the Western region’s dominance. The
West
Great Lakes
Mid-Atlantic
New England
Plains
Rocky Mountains
Southeast
Southwest
Southeast and Mid-Atlantic regions are
the next most concentrated regions,
accounting for 12.2% and 10.6% of
industry employment, respectively. These Employees
regions are also heavily focused in several Population
key states, including New York, SOURCE: WWW.IBISWORLD.COM
Pennsylvania and Florida.

California accounts for the largest Seattle has a thriving technology and
share of industry labor at 27.0% of entrepreneurial business environment,
industry workers. Although Silicon Valley which attracts talent and businesses.
is the largest hotbed of tech companies in Companies in California and Washington
the state, southern California is also also benefit from the large number of
home to a number of companies, Fortune 500 companies headquartered
including industry player Epicor. Most nearby, with which industry firms are
companies in California, however, are able to build stronger relationships and
relatively small, reflecting the offer better, more personalized support.
entrepreneurial nature of the industry in Other states, like Massachusetts, Texas
Silicon Valley. and New York, benefit from similar
Washington has the next-highest situations. As a result, these states
concentration of workers, accounting for account for 7.2%, 6.1% and 3.3% of
17.7% of industry labor. Metropolitan industry employment, respectively.

Competitive Landscape
Market Share Concentration | Key Success Factors | Cost Structure Benchmarks
Basis of Competition | Barriers to Entry | Industry Globalization
Market Share The Point of Sale Software Developers shift follows the larger trend of increased
Concentration industry has a medium level of market merger and acquisition activity across the
share concentration, with the top three software sector. IBISWorld expects market
firms estimated to account for close to share concentration to increase during the
Level
45.0% of industry revenue. This share next five years as major industry firms
Concentration in this increased during the past five years, look to acquire smaller firms to stay ahead
industry is M
edium mostly due to NCR’s acquisition of Radiant of new technologies developed by new
Systems Inc. in 2011, which helped boost firms and expand their product and
its market share significantly. Market service portfolios and geographic reach.
share concentration has increased during The market is expected to remain
the past five years due to a number of fragmented, however, due to the low
acquisitions by major firms to diversify barriers to entry and the high number of
their product and service portfolios. This industry segments.
Key Success Factors Ability to quickly adopt new technology Effective quality control
Software industries are subject to rapid Industry firms design products that track
changes in technology. Being able to essential information for any business.
IBISWorld identifies adapt to new technologies faster than Because of software’s important role, POS
250 Key Success industry competitors provides firms with software must be secure and accurate.
Factors for a a competitive advantage.
business. The most Access to highly skilled workforce
Products that are easy to use Software development is a highly
important for this
Ease of use is an important design specialized skill set that is in high
industry are: element for industry software developers. demand from a variety of industries.
Having a product that is inherently easier Attracting and keeping highly skilled
to use than competitors’ products gives software developers is key to continued
firms an advantage. success and product differentiation.
Cost Structure The cost structure of individual firms in operating costs and outsource
Benchmarks the Point of Sale Software Developers programming work to foreign operations
industry vary significantly depending where labor costs are lower. In general,
upon a company’s size, products and industry firms are highly profitable
services mix and downstream industries because the cost of producing additional
served. For example, full-service firms copies of the product is minimal.
such as NCR Corporation and Micros
Systems have higher costs associated Profit
with manufacturing POS hardware IBISWorld estimates that the average
components than firms that solely focus industry profit margin is 5.8%. During the
on developing software. However, these past five years, industry operators have
full-service firms have boosted profit been able to boost margins by developing
margins by bundling value-added online and cloud storage-based software
services with their software offerings products that have lower development,
such as consulting and support services. sales and distribution costs. Also, industry
Larger firms are also able use their larger firms have increasingly bundled value-
geographic scale to spread out fixed added services to further boost margins.

Cost Structure IBISWorld estimates that average margins Over the next five years, IBISWorld
Benchmarks will rise slightly by 2021 as industry expects wage growth to continue to
software continues to become less tied to outpace revenue, leading wages as a share
continued
specific hardware, allowing it to be applied of revenue to rise further.
across multiple computing devices.
Research and development (R&D)
Wages R&D expenditures accounts for 12.0% of
The Point of Sale Software Developers total industry revenue, according to
industry is labor intensive and dependent IBISWorld estimates. These costs have
upon high-wage software programmers increased during the past five years as
and engineers. IBISWorld estimates that established industry firms have invested
industry wages rose as a share of revenue in adapting their POS software to new
from 29.5% in 2011 to 33.6% in 2016. smartphone and tablet applications to
Software programmers and designers are compete with new market entrants such
highly skilled workers, and have seen their as Square and Intuit.
wages grow over the past five years as they
are in hot demand right across the IT Other costs
sector. The increased sophistication of Other industry costs include sales,
POS systems and their applications to new marketing, administrative, depreciation
industries has required more skilled and other administrative costs. Rent
workers, such as those with advanced and utilities account for minimal share
doctorate and master’s degrees in of revenue. Depreciation accounts for a
mathematics and computer engineering. small and falling share of revenue as
Sector vs. Industry Costs
Average Costs of
all Industries in Industry Costs
sector (2016) (2016)
100
9.4 5.8 n Profit
n Wages
n Purchases
n Depreciation
80
24.8 33.6 n Marketing
n Rent & Utilities
n Other
Percentage of revenue
60
11.0
32.4 1.8 3.5
40 5.5
3.8
3.5
3.9
20 38.8
22.2
0

Cost Structure the percentage of revenue spent on IBISWorld estimates that these sales
Benchmarks material purchases declines, as industry costs have risen during the past five
software becomes less tied to hardware. years due to higher competition
continued
While these costs vary significantly pressuring industry firms to increase
depending upon the markets served sales and marketing expenditures to
and size of industry operators, differentiate their products.
Basis of Competition The Point of Sale Software Developers inventory and financial management
industry has a high level of competition functions into a single, reliable system
across all the market segments it serves. across one or multiple locations.
Level & Trend There are at least 20 significant industry POS software developers often cater
ompetition
C in operators offering restaurant POS software product functionality, services and support
this industry is systems, 10 offering competitive to particular needs in downstream markets
Highand the trend complimentary POS hardware systems, that offer customers the highest operational
over 15 offering significant hospitality POS efficiencies and cost savings. Recently, the
is I ncreasing
systems and more than 10 producing retail introduction of new applications made by
POS software and hardware solutions. newer firms and established enterprises
During the past five years, the level of such as Square, Intuit’s GoPayments and
industry competition increased as NCR’s Silver platform, has enabled POS
downstream industries continued to invest transactions to take place on mobile phones
in POS systems to become more efficient, and tablets, which has further increased
and the development of new mobile and industry competition. Software product
tablet devices, as well as cloud-computing differentiation is low in the industry;
technologies, allowed industry firms to developers compete more on product
produce new multi-platform and multi- features that handle the same business
business POS software solutions. functions. Consequently, price competition
is high because industry customers have a
Internal wide range of similar POS software products
Industry operators compete internally on to choose from. The threat of new market
various bases, including product entrants is also high because of low barriers
functionality and reliability, services and to entry, which also keeps competitive
support capabilities, price and geography. pressure on industry operators.
Operators are increasingly offering
software bundled together as an integrated External
POS solution that combines hardware, Industry operators compete externally
software and services. For example, in the with in-house-developed POS software
hospitality market, industry operators products, particularly those in the
compete to offer guest-centric software hospitality market, as well as with other
solutions that can handle guest substitute business software products
reservations, property and financial such as those developed by the Business
management, and is delivered either in a Analytics and Enterprise Software
software as a service (SaaS) model that can Publishing industry (IBISWorld report
be accessed on number device platforms or 51121c). Any software firm that develops
on-site. Comparatively, for the foodservice software products designed to improve
market, industry operators compete to business functions such as operational
offer multi-device POS systems that and financial management creates an
integrate workforce, service-delivery, external competition to this industry.

Barriers to Entry Barriers to entry in this industry are low;

however, success in the industry is far Barriers to Entry checklist
Level & Trend from guaranteed. Selling an unproven Competition High

product, especially one that handles Concentration Medium
arriers to Entry
B finances, is very difficult due to the high Life Cycle Stage Mature
in this industry are level of entrenchment by name-brand Capital Intensity Low
Lowand S teady products. Widespread use of well known, Technology Change High
established brands makes it difficult for Regulation & Policy Light
new entrants to make inroads since Industry Assistance None
businesses have developed a level of trust
and familiarity with larger software SOURCE: WWW.IBISWORLD.COM
developers. Unless entrants introduce a

new technology or cost-saving advantage this, talented software developers are in
that is also proven safe, there is little high demand and command high wages.
reason for businesses to switch providers. Industry firms hoping to compete with
As a result, firms entering this industry larger players must attract capable
are usually forced to target small developers who can write quality
businesses or prove the superiority of programs. Moreover, business analytics
their products to other industry firms’. software, and particularly data mining,
The limited pool of skilled software requires extreme statistical rigor beyond
developers is also a major barrier to entry that of ordinary software engineers.
in this industry. Industry firms compete Developers of POS software focusing on
with traditionally more popular tech data mining, predictive analytics and
brands, such as Google and Apple, as well statistical software packages typically
as financial companies who are able to employ software engineers who hold
offer better compensation packages for doctorates in mathematics, artificial
talented software developers. Because of intelligence or similar fields.
Industry The POS Software Developers industry allowed users to access this data
Globalization has a medium and increasing level of anywhere in the world from multiple
globalization. While international trade devices. Consequently, industry players
levels are low, this measure only are continuing to see a higher
Level & Trend accounts for physical goods. Industry percentage of their sales coming from
lobalization
G in products can be digitally distributed overseas as they cater to the global
this industry is instantly, making international borders needs of its customers. For example,
Mediumand the of little significance. The continued Micros Systems Inc. generates more
globalization of downstream hospitality, than half of its revenue from overseas
trend is I ncreasing
foodservice and entertainment sectors is sales. Foreign ownership of industry
driving higher globalization levels in this players is uncommon; however, there
industry. Increasingly, industry cloud- are a number of foreign operators that
based storage POS software systems are competitive in the US POS market
have standardized customer, financial, such as Sharp Corporation, SAP and
inventory and supply chain data across Posera HDX, which are based in Japan,
multi-national organizations and Germany and Canada, respectively.

Major Companies
NCR Corporation | Epicor
VeriFone Systems Inc. | Other Companies
Major players
(Market share) Epicor 12.7%
53.6%
Other
VeriFone Systems Inc. 6.5%

NCR Corporation 27.2% SOURCE: WWW.IBISWORLD.COM
Player Performance Founded in 1884 and based in Duluth, service levels. The hospitality segment
GA, NCR Corporation is a leading global offers technology solutions to customers
technology company that provides in the hospitality industry, including POS
NCR Corporation products and services designed to help hardware and software solutions,
Market share: 27.2% businesses build stronger relationships installation, maintenance, managed and
Industry Brand Names with customers at customer interaction professional services and a complete line
NCR RealPOS 82XRT points. The company develops automated of printer consumables.
NCR RealPOST 80XRT teller machines (ATMs) and ATM and Over the past five years, the company
NCR RealPOST 70XRT financial services software, point of sale has made some significant acquisitions,
NCR Silver Platform (POS) devices and POS software, and many of which are overseas. In 2011,
self-service kiosks and software NCR acquired Radiant Systems Inc., a
applications that enable customers to leading provider of multichannel POS
interact with businesses from their and managed hosted service solutions. In
computer or mobile device. 2012, the company made several large
Industry-specific POS technologies are acquisitions, including two of its
included under the company’s retail resellers, POS Integrated Solutions Do
solutions and hospitality segments. The Brasil Comercio E Servicos De
retail solutions segment offers products, Informatica SA and RDS South America
such as POS terminals and software, Comercio E Servicos De Informatica SA.
barcode scanners and innovative self- It also acquired six of its domestic
service kiosks, to improve sales hospitality resellers as well as Wyse
productivity, checkout processes and Sistemas de Informatica Ltda, a
NCR Corporation (US industry-specific operations) - financial

performance*
Revenue Operating Income
Year ($ million) (% change) ($ million) (% change)
2011 321.6 N/C 12.8 N/C
2012 319.7 -0.6 19.6 53.1
2013 395.8 23.8 39.9 103.6
2014 414.8 4.8 32.0 -19.8
2015 456.7 10.1 35.6 11.3
2016 450.7 -1.3 32.2 -9.6
*Estimates
SOURCE: ANNUAL REPORT AND IBISWORLD

Major Companies
Player Performance developer and provider of POS software Radiant Systems, a leading POS software
continued specifically designed for the hospitality developer for the restaurant sector, which
market in Brazil. The company also made helped the company increase its industry
several acquisitions that contributed to market share. The company saw
its financial services segments. In 2013, consistent organic growth over the past
the company bought Retalix Ltd, and five years due to new product rollouts,
Digital Insight Corporation in 2014. particularly in its retail solutions segment.
NCR has consistently led the industry in
Financial performance incorporating new technologies, which has
Over the past five years, IBISWorld enabled it to effectively compete with new
estimates that NCR Corporation has market entrants. In early 2012, NCR
grown its industry-specific revenue at an released its Silver platform, a cloud-based
average annual rate of 7.0% to about POS software, enabling small businesses
$450.7 million in 2016. This growth is to take payments with one POS solution
partly the result of the 2011 acquisition of using any Apple device.
Player Performance Epicor Software Corporation is a global Retail Solutions and Retail Distribution.
provider of enterprise application The ERP segment provides distribution
software and services focused on small solutions to provide a seamless order-to-
Epicor and mid-sized companies, that enable shipment cycle, manufacturing solutions,
Market share: 12.7% companies to automate and integrate and financial management and
Industry Brand Names information and business processes professional services solutions designed
Epicor ERP throughout their enterprise, supply chain to provide financial analytics. The Retail
Epicor Prophet 21 and distribution networks. The company Solutions segment supports retailers
Epicor Eclipse has a highly diversified base of more than across point of sale (POS) store
Epicor Eagle 20,000 customers in more than 35,000 operations and customer relationship
Epicor Retail sites and locations, in more than 150 management, as well as subscription-
countries. The company has more than based Epicor Retail software as a service
4,500 employees worldwide. (SaaS) offering that includes
Epicor operates three segments: preconfigured retail software. The Retail
enterprise resource planning (ERP), Distribution segment is aimed at small
Epicor (industry-relevant segment) - financial performance*

Year** ($ million) (% change) ($ million) (% change)
2011 61.1 N/C -9.2 N/C
2012 168.5 0.1 7.9 N/C
2013 169.2 -17.1 8.5 7.6
2014 184.4 7.3 11.5 35.3
2015 199.1 58.9 10.6 -7.8
2016 210.4 5.0 11.7 10.4
*Estimates **Year-end September


Major Companies
Player Performance retailers that require integrated POS and Richmond Hill, Ontario that supplies
continued ERP offerings. Company-relevant business management systems,
revenue is comprised of software license enterprise resource planning software
income and software cloud subscription and IT services to manufacturers,
income across all three segments. distributors and wholesale businesses.
In December 2011, the company
changed its name to Epicor Software Financial performance
Corporation in connection with the Over the five years to 2016, Epicor grew at
merger of Legacy Epicor, AGI and an annualized rate of 28.1% to reach an
Activant, incorporated under Delaware expected $210.4 million. Total company
law. In fiscal 2012, Epicor acquired the revenue increased by 3.0% in fiscal
remaining equity interests of Internet 2013-14 due to growth in software license,
AutoParts and assets of Cogita Business SaaS, payment exchange and software
Services. In fiscal 2013, Epicor acquired support revenue. Epicor has improved
the business of Solarsoft Business profitability as a result of ongoing cost
Systems, a software company based in reduction and restructuring measures.
Player Performance Incorporated in 1981, VeriFone produces electronic payment devices that run on
secure electronic point of sale (POS) the company’s unique operating systems,
payment solutions at the point of sale. The and Services, which included value-added
VeriFone Systems company is headquartered in San Jose, CA services aimed at enhancing the
Inc. and operate in more than 150 countries consumer experience at the POS. The
Market share: 6.5% worldwide, with a direct presence in 40 company participates in this industry
countries. Key industries in which through its Systems Solutions segment, a
VeriFone operates include financial minor portion of which involves running
services, retail, petroleum, restaurant, on proprietary POS software. VeriFone
hospitality, taxi, transportation, and offers server-based payment processing
healthcare. As of October 2015, the software and middleware, which allows
company had 5,400 employees worldwide. merchants to integrate advanced
VeriFone operates two segments: payment functionality into PC-based and
System Solutions, which operates POS other retail systems seamlessly. VeriFone
Verifone (industry-relevant segment) - financial performance*

Year** ($ million) (% change) ($ million) (% change)
2011 73.0 N/C 5.9 N/C
2012 73.1 0.1 5.8 -2.1
2013 60.6 -17.1 -2.4 N/C
2014 65.0 7.3 0.2 N/C
2015 103.4 58.9 5.5 2,500.0
2016 108.5 5.0 3.9 -30.2
*Estimates **Year-end October


Major Companies
Player Performance offers a PAYware software product line, Limited, and the April 2013 acquisition of
continued consisting of server-based, enterprise Sektor Payments Limited.
payment software solutions, including
POS integration software and card Financial performance
management systems. VeriFone has benefitted from growth
VeriFone has grown through both through acquisitions, as well as a growth in
organic growth and strategic acquisitions. income from US sources. In the past five
In August 2011, VeriFone acquired the years, industry-relevant revenue has grown
non-US business of Hypercom at an annualized rate of 8.2% to reach
Corporation, a provider of electronic $108.5 million. In December 2013, VeriFone
payment solutions and value-added launched a transformation program that
services at the POS. In January 2012, focuses on three initiatives: portfolio
VeriFone acquired Electronic Transaction management, research and development
Group Nordic Holding AB, a Swedish reengineering, and cost optimization.
company operating the Point Savings from the cost optimization
International business. Other initiatives have been reinvested in the
acquisitions in recent years include the company on new products. The company
May 2011 acquisition of Destiny also undertook restructuring plans to reduce
Electronic Commerce, the May 2013 headcount and consolidate facilities and
acquisition of EFTPOS New Zealand data centers, boosting margins.
Other Companies The Point of Sale Software Developers degrees. In the hospitality market,
industry is highly competitive with a low notable players include Agilysys,
level of industry concentration and a high MultiSystems, Newmarket, Northwind,
threat of new market entrants. Par Technology, Pro Tel and Softbrands.
Concentration and competition levels For retail POS systems, leading
vary across the industry, depending upon developers include Epicor, Escalate
the targeted downstream market. There Retail, JDA Software, Oracle and SAP.
are at least 20 significant industry E-commerce-specific operators include
operators offering restaurant point of sale DemandWare, Websphere Commerce
(POS) software systems, 10 offering (IBM), eBay Enterprise and Art
competitive complementary POS Technology Group (Oracle).
hardware systems, more than 15 offering
hospitality POS systems and more than Heartland Payment Systems, Inc.
10 producing retail POS software and Estimated market share: 4.0%
hardware solutions. Headquartered in Princeton, NJ,
Throughout the POS supply chain, Heartland’s primary business is to provide
there is significant integration between card payment processing services to
POS software developers, hardware merchants throughout the United States.
manufacturers, POS distributors and The company provides end-to-end
POS value-added resellers, which makes electronic payment processing services to
major players in this industry difficult to merchants by facilitating the exchange of
identify. Notable players in the restaurant information and funds between them and
POS market include full-service providers cardholders’ financial institutions. The
such as Panasonic, Par Technology, company’s other business segments
Sharp, Agilysys and Positouch, which include Heartland school solutions, which
develop or resell POS software to varying provides school nutrition, POS solutions,

Major Companies
Other Companies and associated payment solutions, marketer and servicer of enterprise
continued including online prepayment solutions, to information systems for the global food
K-12 schools; Heartland ovation payroll, and beverage, hotel and retail industries.
which provides full-service payroll The company operates under two
processing and related tax filing services; reportable business segments: US/
campus solutions, which provides Canada and International. Software sales
payment processing, higher education account for an estimated 11.8% of
loan services and open- and closed-loop company revenue. Micros Systems’
payment solutions to colleges and hospitality information systems consist
universities; and other solutions through mainly of software, including property-
micropayments and Heartland Marketing based management systems and central
Solutions. Heartland school solutions reservation systems. For food service
provides cafeteria POS solutions to more industries, its information systems
than 29,000 schools, making it the largest consist of hardware and software POS
provider of K-12 food service technology and operational applications to manage
in the nation. The segment has built itself inventory, labor, and financial
over the past five years through series of management functions. In the retail
acquisitions. In 2014, the company sector, its information systems include
acquired XPIENT Solutions, which hardware and software POS, loss
provides advanced technology services to prevention, e-commerce applications,
11 of the top 25 quick service and fast- business analytics, customer gift cards,
casual restaurant brands, including Taco electronic payment and other enterprise
Bell, Jack in the Box, Panera Bread and applications. In May 2012, Micros
Panda Express. In April 2016, Heartland acquired Torex Retail Holdings Limited,
was acquired by Global Payments Inc., a a provider of POS systems and back office
leading worldwide provider of payment products for retailers, gas stations,
technology services. In 2016, industry- convenience stores, pubs and restaurants
relevant revenue is expected to reach in the United Kingdom and Europe, as
$66.1 million. well as certain assets of Torex located in
the United States. In 2014, the company
Oracle Micros Systems Inc. was acquired by Oracle, which engineers
Estimated market share: 1.5% hardware and software to work together
Micros Systems Inc., founded in 1977 and in the cloud and in data centers. In 2016,
based in Columbia, MD, is a leading industry-relevant revenue is expected to
worldwide designer, manufacturer, reach $24.1 million.

Operating Conditions
Capital Intensity | Technology & Systems | Revenue Volatility
Regulation & Policy | Industry Assistance
Capital Intensity Capital intensity in the Point of Sale

Software Developers industry is low, with Capital intensity
Capital units per labor unit
firms spending about $0.05 on capital for
Level
every $1.00 spent on labor. Most software 0.5
The levelof capital companies need limited capital goods, like
intensity is L ow server computers and office space. In most 0.4
ways, software can be considered an 0.3

intangible product; producing quality
software chiefly requires talented employees 0.2
and time. Companies in this industry rarely 0.1

encode their software on discs themselves
and generally prefer to outsource that 0.0
Economy Technology Point of Sale
activity. This industry spends an estimated Software
Developers
33.6% of revenue on employee wages. The Dotted line shows a high level of capital intensity
largest companies employee hundreds of SOURCE: WWW.IBISWORLD.COM
workers and require vastly more office space

than smaller competitors.
Tools of the Trade: Growth Strategies for Success
New Age Economy Investment Economy

Recreation, Personal Services, Information, Communications,
Health and Education. Firms Mining, Finance and Real
benefit from personal wealth so Estate. To increase revenue
stable macroeconomic conditions firms need superior debt
are imperative. Brand awareness management, a stable
and niche labor skills are key to macroeconomic environment
product differentiation. and a sound investment plan.
Point
Capital Intensive
Labor Intensive
of Sale
Software
Developers
Business Analytics
& Enterprise Colleges & Universities
Software Publishing Design, Editing & Rendering Software Publishing
Traditional Service Economy Software Publishing Old Economy
Wholesale and Retail. Reliant Agriculture and Manufacturing.
on labor rather than capital to Traded goods can be produced
sell goods. Functions cannot using cheap labor abroad.
be outsourced therefore firms To expand firms must merge
must use new technology or acquire others to exploit
or improve staff training to economies of scale, or specialize
increase revenue growth. in niche, high-value products.
Change in Share of the Economy SOURCE: WWW.IBISWORLD.COM

Technology & Systems Firms in the Point of Sale Software costs are spread and the larger the profit
Developers industry operate in a highly potential. During the past decade, the
Level competitive environment characterized industry has experienced an increase in
by rapid technological change, evolving demand from customers looking to
The level
of industry standards, changes in customer automate transaction processes. As a
Technology requirements and frequent new product result, self-checkouts were implemented
Change is H
igh introductions and enhancements. As a with the usual POS software features as
result, software developers are judged on well as user-friendly operating systems.
their ability to design reliable and These systems continue to evolve as large
user-friendly products. Industry retailers, specifically grocery stores,
operators spend heavily on research and increasingly implement them.
development to maintain their A recent trend within the industry has
technological edge. The expansion of been the shift toward both physical and
cloud-based services and the use of electronic mobile payment applications.
mobile devices have forced many Square, a mobile payment startup, has
industry players to create point of sale become an attractive option for small
(POS) software that is compatible on business owners because it cuts down on
traditional, web-based and mobile hardware costs and allows entrepreneurs
platforms. This trend toward the cloud- to manage their content on their mobile
based hosting of applications and away smart phones. Although this segment of
from traditional on-premise the market is growing rapidly, it has yet
implementations has led companies to to have a clear impact on POS software
recognize their increased responsibility developers. Another emerging technology
for data and system security. is near field communications, which
The relative cost of up-front allows customers to pay for purchases
development, marketing and technical with smart phones rather than credit
support for new versions of enterprise cards. Although this technology will have
software is initially high, but subsequent little material effect on the development
products based on the first version are of POS software, advances in cheaper
generally much less expensive to develop. payment technology will create greater
The larger the customer base for a given demand for POS software from
software product, the more easily these merchants and small businesses.
Revenue Volatility The Point of Sale Software Developers productivity and business processes. On
industry has had moderate revenue the other hand, most businesses treat
volatility during the five years to 2016, a software spending as a capital expense, or a
Level
trend expected to continue. The majority of purchase that can be delayed in an
The level of industry revenue comes from software sold environment of declining demand. During
Volatility is M
edium to businesses, and is thus exposed to the the past five years, however, major
business cycle. In times of rising corporate technological developments in the industry
profit and business confidence, businesses have encouraged companies to invest in
are keen to invest in software to enhance industry software.

Revenue Volatility
A higher level of revenue Volatility vs Growth
continued volatility implies greater
industry risk. Volatility can 1000 Hazardous Rollercoaster
negatively affect long-term
Revenue volatility* (%)

strategic decisions, such as 100
the time frame for capital
investment.
10
When a firm makes poor Point of Sale
investment decisions it Software
may face underutilized 1
capacity if demand
Developers
suddenly falls, or capacity 0.1 Stagnant Blue Chip
constraints if it rises –30 –10 10 30 50 70
quickly. Five year annualized revenue growth (%)
* Axis is in logarithmic scale
Regulation & Policy Although Point of Sale Software information cannot be shared with third
Developers industry operators face few parties without a customer’s consent.
formal regulations, the recent trend Such information includes credit card
Level & Trend toward cloud computing has forced numbers, account information and
he level of
T software developers to become more purchasing preferences. Because many
Regulation is concerned with privacy. Numerous industry operators have started
Lightand the consumer privacy acts have been passed managing customers’ transactional data
in the United States because of the large off-site (i.e. cloud computing) rather
trend is S
teady
amount of user information stored in a than at the store’s physical location,
central location. The Right to Financial industry firms are now responsible for
Privacy Act of 1978 and the Gramm- data and system security with respect to
Leach Bliley Act of 1999 are two of the data held in their hosting centers. As a
most important pieces of legislation result, they can be held liable for
affecting the industry. These acts state compromised customer data resulting
that identifiable, personal financial from illegal hacking.
Industry Assistance The Point of Sale Software Developers

industry does not receive any assistance
from local, state or federal governments.
Level & Trend
he level of
T
Industry Assistance
is N
oneand the
trend is S
teady

Key Statistics
Industry Data Industry Priv. invest. in
Revenue Value Added Establish- Wages Domestic comp. and sfwr.
($m) ($m) ments Enterprises Employment Exports Imports ($m) Demand ($b)
2007 878.7 346.7 73 57 2,435 -- -- 276.4 N/A 524.1
2008 937.3 372.2 74 56 2,821 -- -- 302.8 N/A 537.2
2009 945.3 384.6 73 56 2,806 -- -- 293.8 N/A 512.9
2010 1,072.4 375.7 79 61 3,034 -- -- 337.7 N/A 535.6
2011 1,224.8 468.6 86 65 3,286 -- -- 361.7 N/A 557.7
2012 1,231.1 471.5 96 74 3,616 -- -- 388.9 N/A 589.7
2013 1,282.7 506.2 104 78 3,913 -- -- 412.0 N/A 610.2
2014 1,436.9 585.8 115 86 4,395 -- -- 477.0 N/A 641.4
2015 1,564.3 639.6 125 92 4,793 -- -- 521.2 N/A 676.4
2016 1,657.1 682.1 133 97 5,153 -- -- 556.7 N/A 691.3
2017 1,828.8 757.5 146 106 5,676 -- -- 619.2 N/A 718.6
2018 2,009.7 843.0 162 117 6,257 -- -- 691.0 N/A 756.7
2019 2,194.9 927.9 176 126 6,855 -- -- 761.8 N/A 778.6
2020 2,387.3 1,016.4 190 135 7,477 -- -- 835.8 N/A 801.2
2021 2,603.6 1,113.9 207 146 8,156 -- -- 916.9 N/A 834.8
Annual Change Industry Establish- Domestic Priv. invest. in

Revenue Value Added ments Enterprises Employment Exports Imports Wages Demand comp. and sfwr.
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
2008 6.7 7.4 1.4 -1.8 15.9 N/A N/A 9.6 N/A 2.5
2009 0.9 3.3 -1.4 0.0 -0.5 N/A N/A -3.0 N/A -4.5
2010 13.4 -2.3 8.2 8.9 8.1 N/A N/A 14.9 N/A 4.4
2011 14.2 24.7 8.9 6.6 8.3 N/A N/A 7.1 N/A 4.1
2012 0.5 0.6 11.6 13.8 10.0 N/A N/A 7.5 N/A 5.7
2013 4.2 7.4 8.3 5.4 8.2 N/A N/A 5.9 N/A 3.5
2014 12.0 15.7 10.6 10.3 12.3 N/A N/A 15.8 N/A 5.1
2015 8.9 9.2 8.7 7.0 9.1 N/A N/A 9.3 N/A 5.5
2016 5.9 6.6 6.4 5.4 7.5 N/A N/A 6.8 N/A 2.2
2017 10.4 11.1 9.8 9.3 10.1 N/A N/A 11.2 N/A 4.0
2018 9.9 11.3 11.0 10.4 10.2 N/A N/A 11.6 N/A 5.3
2019 9.2 10.1 8.6 7.7 9.6 N/A N/A 10.2 N/A 2.9
2020 8.8 9.5 8.0 7.1 9.1 N/A N/A 9.7 N/A 2.9
2021 9.1 9.6 8.9 8.1 9.1 N/A N/A 9.7 N/A 4.2
Key Ratios Imports/ Exports/ Revenue per Share of the

IVA/Revenue Demand Revenue Employee Wages/Revenue Employees Average Wage Economy
(%) (%) (%) ($’000) (%) per Est. ($) (%)
2007 39.46 N/A N/A 360.86 31.46 33.36 113,511.29 0.00
2008 39.71 N/A N/A 332.26 32.31 38.12 107,337.82 0.00
2009 40.69 N/A N/A 336.89 31.08 38.44 104,704.21 0.00
2010 35.03 N/A N/A 353.46 31.49 38.41 111,305.21 0.00
2011 38.26 N/A N/A 372.73 29.53 38.21 110,073.04 0.00
2012 38.30 N/A N/A 340.46 31.59 37.67 107,549.78 0.00
2013 39.46 N/A N/A 327.80 32.12 37.63 105,290.06 0.00
2014 40.77 N/A N/A 326.94 33.20 38.22 108,532.42 0.00
2015 40.89 N/A N/A 326.37 33.32 38.34 108,741.92 0.00
2016 41.16 N/A N/A 321.58 33.59 38.74 108,034.15 0.00
2017 41.42 N/A N/A 322.20 33.86 38.88 109,090.91 0.00
2018 41.95 N/A N/A 321.19 34.38 38.62 110,436.31 0.00
2019 42.28 N/A N/A 320.19 34.71 38.95 111,130.56 0.01
2020 42.58 N/A N/A 319.29 35.01 39.35 111,782.80 0.01
2021 42.78 N/A N/A 319.23 35.22 39.40 112,420.30 0.01
Figures are in inflation-adjusted 2016 dollars. SOURCE: WWW.IBISWORLD.COM

Jargon & Glossary
Industry Jargon CLOUD COMPUTINGThe delivery of computing as a SOFTWARE AS A SERVICE (SAAS)An increasingly
service rather than a product, whereby shared resources, popular business model for selling software online
software and information are provided to computers whereby customers do not buy a discrete copy of
and other devices as a utility over the internet. software but instead pay a subscription fee for its use.
NEAR FIELD COMMUNICATIONS (NFC)
Communication technology that allows information to
be transmitted between a device and a contactless
payment system.
IBISWorld Glossary BARRIERS TO ENTRYHigh barriers to entry mean that INDUSTRY CONCENTRATIONAn indicator of the
new companies struggle to enter an industry, while low dominance of the top four players in an industry.
barriers mean it is easy for new companies to enter an Concentration is considered high if the top players
industry. account for more than 70% of industry revenue.
CAPITAL INTENSITY Compares the amount of money Medium is 40% to 70% of industry revenue. Low is less
spent on capital (plant, machinery and equipment) with than 40%.
that spent on labor. IBISWorld uses the ratio of INDUSTRY REVENUEThe total sales of industry goods
depreciation to wages as a proxy for capital intensity. and services (exclusive of excise and sales tax); subsidies
High capital intensity is more than $0.333 of capital to on production; all other operating income from outside
$1 of labor; medium is $0.125 to $0.333 of capital to $1 the firm (such as commission income, repair and service
of labor; low is less than $0.125 of capital for every $1 of income, and rent, leasing and hiring income); and
labor. capital work done by rental or lease. Receipts from
CONSTANT PRICESThe dollar figures in the Key interest royalties, dividends and the sale of fixed
Statistics table, including forecasts, are adjusted for tangible assets are excluded.
inflation using the current year (i.e. year published) as INDUSTRY VALUE ADDED (IVA)The market value of
the base year. This removes the impact of changes in goods and services produced by the industry minus the
the purchasing power of the dollar, leaving only the cost of goods and services used in production. IVA is
“real” growth or decline in industry metrics. The inflation also described as the industry’s contribution to GDP, or
adjustments in IBISWorld’s reports are made using the profit plus wages and depreciation.
US Bureau of Economic Analysis’ implicit GDP price INTERNATIONAL TRADEThe level of international
deflator. trade is determined by ratios of exports to revenue and
DOMESTIC DEMANDSpending on industry goods and imports to domestic demand. For exports/revenue: low is
services within the United States, regardless of their less than 5%, medium is 5% to 20%, and high is more
country of origin. It is derived by adding imports to than 20%. Imports/domestic demand: low is less than
industry revenue, and then subtracting exports. 5%, medium is 5% to 35%, and high is more than
EMPLOYMENTThe number of permanent, part-time, 35%.
temporary and seasonal employees, working proprietors, LIFE CYCLEAll industries go through periods of growth,
partners, managers and executives within the industry. maturity and decline. IBISWorld determines an
ENTERPRISE A division that is separately managed industry’s life cycle by considering its growth rate
and keeps management accounts. Each enterprise (measured by IVA) compared with GDP; the growth rate
consists of one or more establishments that are under of the number of establishments; the amount of change
common ownership or control. the industry’s products are undergoing; the rate of
technological change; and the level of customer
ESTABLISHMENTThe smallest type of accounting unit
acceptance of industry products and services.
within an enterprise, an establishment is a single
physical location where business is conducted or where NONEMPLOYING ESTABLISHMENT Businesses with
services or industrial operations are performed. Multiple no paid employment or payroll, also known as
establishments under common control make up an nonemployers. These are mostly set up by self-employed
enterprise. individuals.
EXPORTSTotal value of industry goods and services sold PROFITIBISWorld uses earnings before interest and tax
by US companies to customers abroad. (EBIT) as an indicator of a company’s profitability. It is
calculated as revenue minus expenses, excluding
IMPORTS Total value of industry goods and services
interest and tax.
brought in from foreign countries to be sold in the
United States.

Jargon & Glossary
IBISWorld Glossary VOLATILITYThe level of volatility is determined by WAGESThe gross total wages and salaries of all
averaging the absolute change in revenue in each of the employees in the industry. The cost of benefits is also
continued past five years. Volatility levels: very high is more than included in this figure.
±20%; high volatility is ±10% to ±20%; moderate
volatility is ±3% to ±10%; and low volatility is less than
±3%.

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WWW.IBISWORLD.

COM Point of Sale Software Developers in the USJuly 2016 1

Point taken: Downstream business growth will

IBISWorld Industry Report OD5897

2 About this Industry 16 International Trade 30 Regulation & Policy

www.ibisworld.com | 1-800-330-3772 | info @ibisworld.com

About this Industry

Main Activities The primary activities of this industry are

The major products and services in this industry are

Similar Industries 51121 Software Publishing in the US

51121c Business Analytics & Enterprise Software Publishing in the US

51121d Design, Editing & Rendering Software Publishing in the US

51121f Security Software Publishing in the US

Additional Resources For additional information on this industry

Provided to: Wise Business Plans (211465492) | 08 April 2017

Key Statistics Revenue Annual Growth 11-16 Annual Growth 16-21

Key External Drivers 13.0%

Industry Structure Life Cycle Stage Mature Regulation Level Light

Provided to: Wise Business Plans (211465492) | 08 April 2017

Executive The Point of Sale Software Developers entertainment businesses. Large

Provided to: Wise Business Plans (211465492) | 08 April 2017

Demand from retail trade Demand from accommodation and food

Provided to: Wise Business Plans (211465492) | 08 April 2017

Current Operators in the Point of Sale Software

Technological Over the past five years, the industry has

Provided to: Wise Business Plans (211465492) | 08 April 2017

Increased adoption Adoption of POS systems is largely

Provided to: Wise Business Plans (211465492) | 08 April 2017

Industry Revenue for the Point of Sale Software

office systems, thereby incorporating data

on accommodation and food services, will

Provided to: Wise Business Plans (211465492) | 08 April 2017

Underlying demand Demand for POS software is expected to

Provided to: Wise Business Plans (211465492) | 08 April 2017

20 Maturity Quality Growth

Key Features of a Mature Industry

Business Analytics & Enterprise Software Publishing

Provided to: Wise Business Plans (211465492) | 08 April 2017

Provided to: Wise Business Plans (211465492) | 08 April 2017

Products & Markets

Supply Chain KEY BUYING INDUSTRIES

KEY SELLING INDUSTRIES

Products & Services Products and services segmentation (2016)

Total $1.7bn SOURCE: WWW.IBISWORLD.COM

Provided to: Wise Business Plans (211465492) | 08 April 2017

Products & Markets

Provided to: Wise Business Plans (211465492) | 08 April 2017

Products & Markets

Provided to: Wise Business Plans (211465492) | 08 April 2017

Products & Markets

Major Markets Major market segmentation (2016)

Provided to: Wise Business Plans (211465492) | 08 April 2017

Products & Markets

Provided to: Wise Business Plans (211465492) | 08 April 2017

Products & Markets

Business Locations 2016

Provided to: Wise Business Plans (211465492) | 08 April 2017

Products & Markets

Business Locations The Point of Sale Software Developers

draw new and established companies

Pennsylvania and Florida.

Provided to: Wise Business Plans (211465492) | 08 April 2017

Provided to: Wise Business Plans (211465492) | 08 April 2017

COM Point of Sale Software Developers in the USJuly 2016 1