How e-commerce works


ERP Software In The Multichannel World

Multichannel business managers frequentlymultichannel retailers, including ones that
voice the desire to have one system orsell through a catalog, that are using SAP
software package that is capable of managingbut they are also using specific
the entire enterprise, encompassing alldirect-to-customer (DTC) software to set up,
functional areas. Enterprise resourcesmanage customer orders, fulfill, and analyze
planning (ERP) systems have been availablecatalog promotions. SAP also has an
for years. Because the multichannelintegration product, NetWeaver, with many
phenomenon-traditional brick-and-mortardifferent types of functionality, including
businesses reaching into direct marketing,the ability to link disparate systems. This
and traditional direct-to-customer companieswould be one way to integrate sales from
developing brick-and-mortar stores as well asanother application, such as catalog, and
a Web presence-is so recent, it has in manyhave this data flow into the SAP Retail
cases outstripped the ability of softwaresolution for merchandise analysis. However,
vendors to keep pace. Having a singleNetWeaver does not address a key element that
computer system control all functional areascatalogers 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 makesorder to be true multichannel solutions they
perfect sense, and the potential synergywill need to adapt their software to include
between channels and the ability to maximizethe functionality that is needed by those
the customer experience are clearmultichannel retailers who have a catalog
opportunities. Unfortunately, the search forsales channel. SAP has another ERP software
and implementation of such a solution hasoffering, Business One, for small to
frequently proved difficult. The push tomid-sized companies. With SAP's acquisition
provide an overall multichannel solution hasof 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 inalso includes an e-commerce module, a small
manufacturing, have tried to developto mid-sized company has a real solution to
functionality geared to the specific needs ofexplore. Once again, however, if your company
multichannel companies. Existing nichehas a catalog sales channel there is no
vendors in the direct-to-customer or retailspecific functionality to support this sales
worlds are trying to broaden their offeringschannel. Since Business One integration with
to include more functional areas and lookTriversity is relatively new, it will be
more like true ERPs. Both approaches have metinteresting to see how its catalog
with limited success so far. In general,functionality progresses as new clients
niche or best-of-breed solutions fit moreembrace this software. Datavantage
complex environments, while the ERP solutionsCommercialWare These two companies, along
better fit the very broad but less complexwith their parent company, MICROS Systems,
environments. Size matters There are manyare 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 thatand direct applications. In 2006
an ERP is a business management system thatCommercialWare, 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 andapplications. Between these companies the
replenishment, customer service, finance, andobjective is to fully integrate their
human resources. The system attempts toapplication suites (CWSerenade, cross-channel
integrate all departments and functionsand direct; Xstore, JAVA-based, open
across a company into a single computerstandard, database-agnostic; Enterprise JAVA
system that serves independent departments'Merchandising, Web-based merchandise
needs. Many existing ERP packages are gearedmanagement solution with merchandise
to larger businesses with multinational orplanning, purchasing, and distribution;
broad business control needs. Many ERPRelate Retail, with CRM functionality for
systems have come from the manufacturingmarketing and loyalty clubs; XBR Analytics).
world and are now being developed to handleImplementation will involve a pre-planned set
the very different operational requirementsof parameters that will allow the user
of the multichannel retail world. Thecompany to install an integrated set of
relatively unique and complex nature ofapplications more quickly than best-of-breed
multichannel retail, combined with the largeapplications have been installed in the past.
numbers of small and medium-sizedThe company expects to have its first user
multichannel businesses, has helped to createlive this summer. In the fall, all of the
a void between traditional, deeply functionalrelated companies will adopt the MICROS name.
niche systems vendors and the functionalityEscalate Escalate Retail's vision is to
provided by ERP vendors. Finding an ERPcontinue to develop specialized applications
solution with deep niche functionality gearedwith a focus on direct businesses,
to a medium-sized multichannel business cane-commerce, retail management, and point of
be an enormous challenge. But conversely,sale that can be implemented either as
finding a niche player with deepstand-alone applications or fully integrated.
functionality that can manage an entireContinued development of
multichannel enterprise is an equallyservice-oriented-architecture (SOA) will
difficult proposition. Recent ERP marketallow Escalate Retail to develop
trends ERP vendors face several obstacles infunctionality, such as payment processing,
their effort to address the opportunitiesshipping, pricing and promotions, that can be
seemingly presented by the multichannelutilized by any or all of Escalate's suite of
business market. The focus of ERP marketingproducts. The aim is not to be a broad-based
has traditionally been on large companiesERP application, but to be a best-in-class
willing to invest significant funds. ERPapplication for multichannel businesses with
vendors trying to enter mid-tier markets indirect (Ecometry), retail (GERS), and
retailing have been met with resistance frome-commerce (Blue Martini) channels that wish
potential customers concerned about the levelto enhance their customer relationship and
of service attention they will receive afterexperience. Customers looking for an
implementation and about the lack of industryapplication 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 ERPunderstand that some functionality, such as
implementations failing-for many reasons.financials, will still require a third-party
Considerations of scale, cost, and the timeapplication for AP and GL when they deploy
required for implementation have led tothe Escalate Retail Ecometry Commerce Suite.
customer resistance to ERP vendors. CompaniesBest of both worlds A long-standing subject
commonly fail to realize the level ofof debate is whether to try and combine
discipline required to implement and use anbest-of-breed niche software solutions or to
ERP successfully. Most ERP installationsemploy an enterprise solution. At the moment,
follow a "Big Bang" approach, since theit appears that a blurring of industry
functionality is usually far reaching anddefinitions in the multichannel arena is
encompasses many functional areas. Anotheroccurring as some best-of-breed vendors try
drawback is that the installation time forto expand their traditionally deep
major systems can be 12 to 18 months or evenfunctionality to broader areas, while ERP
longer. (For example, two recentvendors are deepening their traditionally
installations of ERPs in the food industrybroader offerings. It will always be easier
were so difficult that the businesses missedto match specific or unique requirements with
major selling seasons and product sales werea niche solution, but the integration of
months behind schedule.) A good fit for anseveral of these packages is an issue.
ERP would be in a far-reaching company withAttempts are being made to ease the burden
somewhat basic requirements desirous ofwith middleware development. In addition,
having a single system to fully integrate allsome ERP vendors are now acknowledging the
company information and data. Many ERPs arerequirement for niche software and are
developing features that acknowledge the needfacilitating integration with their
for niche software by making it easier tosolutions. The search, selection, and
integrate the two. What about theimplementation of an ERP for a multichannel
competition? The sheer pace of recentcompany is a complex and difficult task.
acquisitions and consolidations in theSince the welfare of a business depends on an
software industry have made it difficult foreffective system to control the business, the
niche systems vendors to effectivelyrisk of making the wrong decision is
integrate suites of products into one unifiedsignificant. We believe that ultimately ERPs
approach with a clearly defined targetwill become more commonplace in the
market. Niche vendors who have deep,direct-to-customer, multichannel industry.
specialized functionality are beginning toThe good news is, assuming that newer
compete successfully against the larger, moreversions of ERPs are affordable, this
all-encompassing ERPs in the mid-marketincreased competition will give companies
arena. And a recent trend in the systemsmore system product choices. Here are a few
market is for multichannel businesses tosuggestions for anyone considering the
combine the niche, best-of-breed approachpurchase of an ERP solution: 1.Make sure you
with an overall ERP solution. Enterprisedo all of the homework required. 2.Keep in
solutions SAP SAP, the world' largestmind that the "Devil is in the details"
business software company, has an ERP Retail3.More options are rapidly being developed,
solution that incorporates e-commerce withso keep an open mind. 4.Strong training and
its customer relationship management (CRM)discipline are required for successful
solution that allows users to analyze salesimplementation. 5.Insure that the ERP is
by channel. For direct marketers who alsoflexible 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 towell-thought-out five-year plan to minimize
specific functionality that is needed forfuture surprises The battle rages on but the
catalogs. The solution lacks the listoptions are changing. To read more of this
segmentation, source coding, catalog, drop,article, including expanded examples of what
merchandise, square inch, contribution towas discussed above, we encourage you to
profit functions required to analyze thevisit  our  blog  at: .
success of mailing files, house and rented,
and catalog promotions. There areF. Curtis Barry & Co.