Software Integration – Fundamental to Effective Management

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In the book, Tools and Weapons:  The Promise and Perils of the Digital Age” by Brad Smith, President of Microsoft, the major theme is that the benefits of technology come with a commensurate risk.

One of the problems golf courses are encountering today is that they depend on multiple independent software vendors.  Many do not integrate into the central Point of Sale System.

There are a lot of possible interfaces to a POS system, including but not limited to:

  • Credit card processing, i.e., Clover by Clover Connect, Card Connect by Fiserv, Deluxe Payments by First American through Worldpay, and Sound Payments by Pax
  • Online tee time, lesson, and dining reservations
  • Thirty-party booking engineers, i.e., GolfBack
  • Website Merchandise Sales via Stripe payment
  • Marketing/Email Inventory driven by POS database, i.e., PitchCRM
  • Report Writer/Query Tool, i.e., Microsoft Business Intelligence, Oracle Query
  • Inventory Open to Buy with purchase orders
  • Range ball tokens
  • Tournament and Outings Contracts/Invoices/Payments
  • Catering
  • Food and Beverage POS
  • Food and Beverage Consumer Ordering and Payments, i.e., Clover
  • Virtual Consumer Apps, i.e., Digital Punch Cards
  • Golf Handicaps

There are two challenges.  First, each independent processor adds to the administrative workload level to reconcile.  The second conundrum is that many vendors are trying to tap into the revenue stream of golf courses in exchange for their services, i.e., credit card processing, barter, etc.

In our December 2022 blog, I Should Know Better.  Still, I Can’t Resist – JJKeegan+, I chronicled how GolfNow appears to be utilizing the credit card process as an additional revenue channel for themselves.

For the industry, that raises the question of what is the cost of the software license vs. the expense of credit card processing?  Are software vendors up-charging for providing a credit card interface masking the actual cost of their solution?   In all likelihood, the golf software vendor generates more revenue from the markup on their credit card interface than the core functionality of their software.

Some believe that in all industries, the Point of Sale software is priced assuming that the POS vendors make money on credit card payments. They claim that decreasing the independent software vendors’ surcharge for credit cards will increase the license price.

What is reasonable?

For the software vendor, providing interfaces to multiple gateways is expensive.  One firm we interviewed stated that they have two full-time software developers incurring $250,000 annually in salaries to ensure the stability of payments for their clients.  Every time the third-party processor changes their interface requirements, it is incumbent on the golf software provider to update its software.  Should they not be compensated for such?

Thus, it is not unreasonable for golf software vendors, i.e., Club Prophet, ForeUp, and Lightspeed to provide a single option for credit card processing.  The programming and support cost of maintaining multiple third-party gateways far exceeds the current price golf software vendors are charging to license their software.

It should be noted that Club Caddie is able to offer clients select from multiple payment processors only due the financial commitment of their parent, Jonas Software.  However, this feature facilitated Club Caddie winning the recent competitive bid for the City of Charlottesville, VA.

I believe it is preferred if a golf course owner has the flexibility of selecting from multiple platforms for each desired interface.

However, the far more critical issue is transparency.  This is very sensitive subject to members of the NGCOA who were allegedly defrauded by a credit card firm it appears based on an indictment in the United States of America District Court for Eastern District of Texas Sherman Division vs. Electronic Transactions Systems Corporation (ETS).  The two counts in the indictment are for:

  • 18 U.S.C. § 1349 (Conspiracy to Commit Wire Fraud) Count 1:  Imprisonment for a term not more than 20 years, a fine not to exceed $250,000.
  • 18 U.S.C. § 1956(h) (Conspiracy to Commit Money Laundering) Count 2:  Imprisonment for a term not more than 10 years, a fine not to exceed $250,000.

The 17-page indictment can be downloaded here:  Download.

Jay Karen, Executive Director of the National Golf Course Owner’s Association, is to be congratulated for spearheading the initiatives on behalf of his members to alleviate the apprarent damages caused to them by ETS.

Software vendors, I believe, should disclose the cost of their core product and any supplemental revenue they may earn from providing interfaces to third-party solutions.

That is what I think.  What is your opinion?

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2 comments

  1.    Reply

    Jim,

    As a PGA Professional, former golf course owner, former economist, and current software developer, I can’t say I agree with you. I don’t believe a private company should be obliged to disclose their internal costs. In the ETS case, they misrepresented their fees to customers (I’m also a former defrauded ETS client), claiming they were pass-through costs when indeed they were marked up fees. My software, which I developed to help golf shops predict profitable inventory and ordering levels, is priced based on its value to my clients, not the cost required to develop and maintain it. If my product is priced too high, no one will buy it. If it is priced too low, I forego profit. Ultimately the market determines what my product is worth.

    A golf course owner holds the decision to purchase any particular software package. While you prefer flexibility, other owners may value price more. As you noted, providing that flexibility comes with a cost. Not surprisingly, in recent years the majority of golf course owners chose to reduce costs rather than increase flexibility. But that was still the owners’ choice. As soon as flexibility becomes important to a majority of golf course owners, it will not be long before a majority of software companies provide it.

    1.    Reply

      Mark I agree with your position. What we were addressing is when a vendor states that an item is a pass-through cost when indeed they were marked up fees. The issue deals with credit cards in the POS modules. I am amazed at the vast range of fees charged by the current providers from 2.2% to 2.9% for the same commodity. Thank you for taking a moment to comment.