| Multichannel business managers frequently | | | | multichannel retailers, including ones that |
| voice the desire to have one system or | | | | sell through a catalog, that are using SAP |
| software package that is capable of managing | | | | but they are also using specific |
| the entire enterprise, encompassing all | | | | direct-to-customer (DTC) software to set up, |
| functional areas. Enterprise resources | | | | manage customer orders, fulfill, and analyze |
| planning (ERP) systems have been available | | | | catalog promotions. SAP also has an |
| for years. Because the multichannel | | | | integration product, NetWeaver, with many |
| phenomenon-traditional brick-and-mortar | | | | different types of functionality, including |
| businesses reaching into direct marketing, | | | | the ability to link disparate systems. This |
| and traditional direct-to-customer companies | | | | would be one way to integrate sales from |
| developing brick-and-mortar stores as well as | | | | another application, such as catalog, and |
| a Web presence-is so recent, it has in many | | | | have this data flow into the SAP Retail |
| cases outstripped the ability of software | | | | solution for merchandise analysis. However, |
| vendors to keep pace. Having a single | | | | NetWeaver does not address a key element that |
| computer system control all functional areas | | | | catalogers measure, which is demand. As SAP |
| in a business and use a common customer, | | | | and other ERP systems continue to evolve, in |
| inventory, order, and item database makes | | | | order to be true multichannel solutions they |
| perfect sense, and the potential synergy | | | | will need to adapt their software to include |
| between channels and the ability to maximize | | | | the functionality that is needed by those |
| the customer experience are clear | | | | multichannel retailers who have a catalog |
| opportunities. Unfortunately, the search for | | | | sales channel. SAP has another ERP software |
| and implementation of such a solution has | | | | offering, Business One, for small to |
| frequently proved difficult. The push to | | | | mid-sized companies. With SAP's acquisition |
| provide an overall multichannel solution has | | | | of Triversity point-of-sale (POS) software |
| generally manifested itself in two ways. | | | | and its integration to Business One ,which |
| Traditional ERP vendors, whose genesis was in | | | | also includes an e-commerce module, a small |
| manufacturing, have tried to develop | | | | to mid-sized company has a real solution to |
| functionality geared to the specific needs of | | | | explore. Once again, however, if your company |
| multichannel companies. Existing niche | | | | has a catalog sales channel there is no |
| vendors in the direct-to-customer or retail | | | | specific functionality to support this sales |
| worlds are trying to broaden their offerings | | | | channel. Since Business One integration with |
| to include more functional areas and look | | | | Triversity is relatively new, it will be |
| more like true ERPs. Both approaches have met | | | | interesting to see how its catalog |
| with limited success so far. In general, | | | | functionality progresses as new clients |
| niche or best-of-breed solutions fit more | | | | embrace this software. Datavantage |
| complex environments, while the ERP solutions | | | | CommercialWare These two companies, along |
| better fit the very broad but less complex | | | | with their parent company, MICROS Systems, |
| environments. Size matters There are many | | | | are taking a unified, integrated approach to |
| interpretations and definitions of "ERP" | | | | bringing together all of their many retail |
| floating around. One of the clearest is that | | | | and direct applications. In 2006 |
| an ERP is a business management system that | | | | CommercialWare, one of the leading |
| integrates all facets of the business, | | | | direct-to-customer software providers, was |
| including planning (merchandise, staff, | | | | acquired by Datavantage. Datavantage is an |
| growth), manufacturing, sales, marketing, | | | | industry leader in retail and point-of-sale |
| inventory control, fulfillment and | | | | applications. Between these companies the |
| replenishment, customer service, finance, and | | | | objective is to fully integrate their |
| human resources. The system attempts to | | | | application suites (CWSerenade, cross-channel |
| integrate all departments and functions | | | | and direct; Xstore, JAVA-based, open |
| across a company into a single computer | | | | standard, database-agnostic; Enterprise JAVA |
| system that serves independent departments' | | | | Merchandising, Web-based merchandise |
| needs. Many existing ERP packages are geared | | | | management solution with merchandise |
| to larger businesses with multinational or | | | | planning, purchasing, and distribution; |
| broad business control needs. Many ERP | | | | Relate Retail, with CRM functionality for |
| systems have come from the manufacturing | | | | marketing and loyalty clubs; XBR Analytics). |
| world and are now being developed to handle | | | | Implementation will involve a pre-planned set |
| the very different operational requirements | | | | of parameters that will allow the user |
| of the multichannel retail world. The | | | | company to install an integrated set of |
| relatively unique and complex nature of | | | | applications more quickly than best-of-breed |
| multichannel retail, combined with the large | | | | applications have been installed in the past. |
| numbers of small and medium-sized | | | | The company expects to have its first user |
| multichannel businesses, has helped to create | | | | live this summer. In the fall, all of the |
| a void between traditional, deeply functional | | | | related companies will adopt the MICROS name. |
| niche systems vendors and the functionality | | | | Escalate Escalate Retail's vision is to |
| provided by ERP vendors. Finding an ERP | | | | continue to develop specialized applications |
| solution with deep niche functionality geared | | | | with a focus on direct businesses, |
| to a medium-sized multichannel business can | | | | e-commerce, retail management, and point of |
| be an enormous challenge. But conversely, | | | | sale that can be implemented either as |
| finding a niche player with deep | | | | stand-alone applications or fully integrated. |
| functionality that can manage an entire | | | | Continued development of |
| multichannel enterprise is an equally | | | | service-oriented-architecture (SOA) will |
| difficult proposition. Recent ERP market | | | | allow Escalate Retail to develop |
| trends ERP vendors face several obstacles in | | | | functionality, such as payment processing, |
| their effort to address the opportunities | | | | shipping, pricing and promotions, that can be |
| seemingly presented by the multichannel | | | | utilized by any or all of Escalate's suite of |
| business market. The focus of ERP marketing | | | | products. The aim is not to be a broad-based |
| has traditionally been on large companies | | | | ERP application, but to be a best-in-class |
| willing to invest significant funds. ERP | | | | application for multichannel businesses with |
| vendors trying to enter mid-tier markets in | | | | direct (Ecometry), retail (GERS), and |
| retailing have been met with resistance from | | | | e-commerce (Blue Martini) channels that wish |
| potential customers concerned about the level | | | | to enhance their customer relationship and |
| of service attention they will receive after | | | | experience. Customers looking for an |
| implementation and about the lack of industry | | | | application that can support all aspects of |
| expertise on the part of the ERP vendors. | | | | the business with a single system need to |
| There are many examples of ERP | | | | understand that some functionality, such as |
| implementations failing-for many reasons. | | | | financials, will still require a third-party |
| Considerations of scale, cost, and the time | | | | application for AP and GL when they deploy |
| required for implementation have led to | | | | the Escalate Retail Ecometry Commerce Suite. |
| customer resistance to ERP vendors. Companies | | | | Best of both worlds A long-standing subject |
| commonly fail to realize the level of | | | | of debate is whether to try and combine |
| discipline required to implement and use an | | | | best-of-breed niche software solutions or to |
| ERP successfully. Most ERP installations | | | | employ an enterprise solution. At the moment, |
| follow a "Big Bang" approach, since the | | | | it appears that a blurring of industry |
| functionality is usually far reaching and | | | | definitions in the multichannel arena is |
| encompasses many functional areas. Another | | | | occurring as some best-of-breed vendors try |
| drawback is that the installation time for | | | | to expand their traditionally deep |
| major systems can be 12 to 18 months or even | | | | functionality to broader areas, while ERP |
| longer. (For example, two recent | | | | vendors are deepening their traditionally |
| installations of ERPs in the food industry | | | | broader offerings. It will always be easier |
| were so difficult that the businesses missed | | | | to match specific or unique requirements with |
| major selling seasons and product sales were | | | | a niche solution, but the integration of |
| months behind schedule.) A good fit for an | | | | several of these packages is an issue. |
| ERP would be in a far-reaching company with | | | | Attempts are being made to ease the burden |
| somewhat basic requirements desirous of | | | | with middleware development. In addition, |
| having a single system to fully integrate all | | | | some ERP vendors are now acknowledging the |
| company information and data. Many ERPs are | | | | requirement for niche software and are |
| developing features that acknowledge the need | | | | facilitating integration with their |
| for niche software by making it easier to | | | | solutions. The search, selection, and |
| integrate the two. What about the | | | | implementation of an ERP for a multichannel |
| competition? The sheer pace of recent | | | | company is a complex and difficult task. |
| acquisitions and consolidations in the | | | | Since the welfare of a business depends on an |
| software industry have made it difficult for | | | | effective system to control the business, the |
| niche systems vendors to effectively | | | | risk of making the wrong decision is |
| integrate suites of products into one unified | | | | significant. We believe that ultimately ERPs |
| approach with a clearly defined target | | | | will become more commonplace in the |
| market. Niche vendors who have deep, | | | | direct-to-customer, multichannel industry. |
| specialized functionality are beginning to | | | | The good news is, assuming that newer |
| compete successfully against the larger, more | | | | versions of ERPs are affordable, this |
| all-encompassing ERPs in the mid-market | | | | increased competition will give companies |
| arena. And a recent trend in the systems | | | | more system product choices. Here are a few |
| market is for multichannel businesses to | | | | suggestions for anyone considering the |
| combine the niche, best-of-breed approach | | | | purchase of an ERP solution: 1.Make sure you |
| with an overall ERP solution. Enterprise | | | | do all of the homework required. 2.Keep in |
| solutions SAP SAP, the world' largest | | | | mind that the "Devil is in the details" |
| business software company, has an ERP Retail | | | | 3.More options are rapidly being developed, |
| solution that incorporates e-commerce with | | | | so keep an open mind. 4.Strong training and |
| its customer relationship management (CRM) | | | | discipline are required for successful |
| solution that allows users to analyze sales | | | | implementation. 5.Insure that the ERP is |
| by channel. For direct marketers who also | | | | flexible enough to meet future, |
| utilize catalog as a sales channel, however, | | | | as-yet-unknown requirements 6.Have a |
| SAP seems to have a disconnect related to | | | | well-thought-out five-year plan to minimize |
| specific functionality that is needed for | | | | future surprises The battle rages on but the |
| catalogs. The solution lacks the list | | | | options are changing. To read more of this |
| segmentation, source coding, catalog, drop, | | | | article, including expanded examples of what |
| merchandise, square inch, contribution to | | | | was discussed above, we encourage you to |
| profit functions required to analyze the | | | | visit our blog at: . |
| success of mailing files, house and rented, | | | | |
| and catalog promotions. There are | | | | F. Curtis Barry & Co. |