MULTIPLE CHANNELS ONE SYSTEM

Mar 01, 2001 10:30 PM  By

Here’s how to pinpoint the software and systems that will help you coordinate customers, orders, and inventory across all sales channels

In the good old days prior to e-commerce, companies that had both catalog and retail divisions almost always kept the divisions separate. Their reasoning was sound.

Take merchandising: Maybe merchandise managers put up a good faith effort to coordinate product line and buying decisions, but at the end of the day, catalog and retail each take a very different view of market demand. Coordinating merchandise for the two channels is like herding cats, to put it kindly.

Apart from high-level image advertising, retail and catalog marketing and advertising are obviously marching to quite different drummers, too. (Ask a marketing manager from each division how he or she would invest an extra $500,000 to see how true this is.) And certainly, when it comes to customer management, the two couldn’t be more different from each other. All in all, think of a really bad case of sibling rivalry and you get the retail vs. catalog picture. Then along comes e-commerce to mix things up, like a new baby in a family with nearly grown teenage children.

Changing times While the e-commerce divisions of catalog and retail companies initially existed in a hermetically sealed vacuum, within the past year there has been a considerable overlap with the Web among catalog and retail operations, driven by practical as well as strategic imperatives.

Companies have realized that activity on the Web affects their other sales channels. That activity should be trackable, traceable, and manageable in the catalog or the retail channels as well, whether for determining the status of an order (or a line item on an order), changing or canceling an order, accepting returns, or providing customer-specific discounts and offers in multiple sales channels.

Likewise, customer activity in the store or in the catalog channel should be reflected at least in the offers and pricing available to that customer on the Web, and probably across all sales channels. And so it goes: We live in a “convergent” world, with your customers wanting and expecting you to know who they are regardless of how they do business with you.

Moreover, managing these data integration challenges within a single country and culture is hard enough, but the Internet has opened the door to multinational trade – in theory if not in practice. When you try to integrate in an international environment, you are talking about significantly greater difficulties.

Business-to-business marketers face even more complex convergence issues than business-to-consumer marketers. In the b-to-b environment, e-commerce often means participation in one or more Internet exchanges. It may also entail a closer relationship with suppliers and more nimble supply-chain management than ever before.

Not that b-to-c merchants are immune from Web-based supply-chain initiatives. To be competitive in the near future, the way all direct commerce companies manage purchasing may be every bit as critical as how they manage their customers, if not more so.

A brief history of integration Coordinating customers, orders, and inventory across sales channels and along the full length of the value chain, from manufacturer/supplier to final consumer, is a massive data management challenge. Prior to the rise of Web-based technologies, most systems integration projects were conceived in terms of point-to-point, application-to-application communications.

For example, maybe you wanted to integrate your order entry system with your warehouse management or your accounting system. Or perhaps you wanted to link a distribution system to your supplier’s enterprise resource planning system for retail vendor-managed inventory, perhaps using electronic data interchange through a value-added network. Or you wanted to link your automated call distribution with order management and customer service platform through computer telephony integration.

Any one of those projects was difficult enough. Then, in the late 1990s, along came enterprise application integration, or EAI. With EAI, you no longer had one-to-one systems integration; you had many-to-many. The purpose of EAI was to make it possible for data entered by one department, using one system, to be used by all other departments, as needed. You could create a single inventory database, for example, and use that data for inventory management, purchasing, order processing, and catalog design.

Even today, few companies have brought all their departments – especially the design folks – into the integration fold. But again, the Internet is forcing many to rethink the wisdom of having separate product databases for catalog production, call center order management, and the Web.

Better, but far from perfect Of the three primary sales channels, cataloging has the distinct advantage of a long history of enterprise integration, or at least a head start toward that goal. Since the mid-’70s there have been comprehensive, integrated catalog solutions available to handle customers, orders, and inventory, from order entry through fulfillment (including manifesting), on a single consolidated platform. Some of these “catalog management systems” even include merchandise-forecasting modules.

Even so, catalog management systems don’t always include an integrated accounting module. And they don’t always serve the needs of high-volume fulfillment environments, which then must interface a warehouse management solution to the catalog system.

Nor for the most part do the catalog systems include a full-fledged data warehouse. They may offer the option to buy a “bundled” analytical module from a third-party vendor, but a separate reporting tool often handles even daily reporting.

Granted, it is quite simple to export data to these analytical engines, and this can be done on a batch-transfer basis, so technically we’re not talking about systems integration in such cases. Nevertheless, even companies with a comprehensive catalog management system are usually struggling in some fashion to coordinate multiple applications.

What’s more, a system designed to work across multiple channels (see “What’s Available Now,” below) rarely offers all the features and functions a multichannel marketer may need. Not all modules within a system are created equal, and some are so crippled, they need to be put out of their misery. Multichannel marketer Nordstrom, to name just one, uses solutions from both Ecometry and Retek, as well as several other systems.

What’s more, it is a rare system and system vendor that can truly understand and support multichannel sales, marketing, and inventory management. Merchandise forecasting tools designed for retail most often fail to address the needs of catalog marketers (for managing demand curves, percent-complete, and fill rates). To achieve that sort of life-cycle merchandise management, almost all multichannel marketers need to coordinate several systems, which poses an integration challenge.

Also, if your site is supported by multiple applications, from personalization servers to collaborative filtering tools, these features should be available for the call center and point-of-sale too. Then, too, companies usually have large investments in legacy applications that they choose (usually wisely) not to abandon, and that must be integrated with other applications.

Finally, and most critically, while it may be appealing to think that there is a “magic bullet” out there, it is my sad duty to report that not one vendor offering solutions for multichannel order and customer management is ready with truly Web-enabled applications (except, of course, the Web-based customer and order management tools). Yes, read that sentence again. Then get ready for a very quick tour of the technology required to meet the needs of multichannel marketers.

Middleware for beginners The resources used to achieve enterprise integration are in a category called middleware. They consist of message managers, object request brokers, application servers, and application programming interfaces (APIs).

We’ve already discussed the concepts of one-to-one and many-to-many systems integration. In a Web-enabled world, we are dealing not only with many-to-many, but also with any-to-any, often in an environment known as business process integration. To achieve that nirvana requires application frameworks that rely on multitier, object-oriented, open-systems architectures.

Right now, no vendors in direct commerce customer and order management have such systems, except those designed exclusively for the Web. Catalog systems vendors such as Page, Rev2, Cayenta, and Orderfusion, among others, are well on the way to achieving that goal, as are catalog management systems providers CommercialWare and Ecometry. But they’re not completely there yet.

What to watch for? You want multitier, rules-based applications with XML data management in which all business rules are maintained in an object-oriented business logic repository. Note: APIs, which are now quite common, do not offer true any-to-any integration capabilities and may in fact offer very little other than a key to unlock each door to a system one by one, requiring lots of customized programming.

XML is a method of “tagging” the elements of any data set, whatever its content, to identify the purpose of the data (an SKU number, a price, a product description, etc.). For XML to be truly enabling, everyone has to agree on a common set of tags, and we’re not there yet, either. But we will be soon, so your systems had better be XML-enabled.

Sooner or later There’s one consolation for the present. If you are willing to invest at least several hundred thousand dollars, there are a number of systems integration platforms available that can “enable” your call center and retail applications for Internet-based or business process integration. The ones most likely to have solutions of interest to multichannel marketers are BEA, Bluestone, Level8, NEON, SeeBeyond (STC), Tibco, Webmethods (which also owns Active, another major player), and Vitria.

Be prepared for the massive “business process reengineering” that will almost always accompany any good business process integration project. Moreover, it will be up to you to keep the various systems vendors focused on your direct commerce business needs, rather than the business logic of their own solutions.

Enterprise integration of multiple sales and marketing channels is a daunting task, but one that sooner or later every successful multichannel marketer will undertake. Doing it sooner entails taking greater risks. But with risk comes reward, because doing it later can mean “never,” either because top management just can’t pull the trigger, or because they are hoping that if they wait long enough they won’t have to hit a moving target. If that’s the assumption at your company, take heed: The target is accelerating, not slowing down. So proceed cautiously – but do proceed!

Some catalog management systems vendors have recently extended their solutions not only to encompass e-commerce but to embrace retail/point-of-sale (POS) management as well. Likewise, some retail systems vendors have added e-commerce and catalog management modules. These may prove to be the path of least resistance for some multichannel enterprises.

CommercialWare has a comprehensive solution called retail.dot.commerce, or RDC, which runs on the IBM AS/400 and includes modules for managing kiosks and wireless devices, as well as catalog, e-commerce, and retail sales. More than 80 companies, including Target, Saks Fifth Avenue, Starbucks, EBWorld.com, Disney, Brooks Brothers, J. Jill, Frederick’s of Hollywood, and Patagonia, use RDC. Target, for instance, uses RDC as an enterprisewide infrastructure for retail operations, including order management, customer service, inventory management, and merchandising. A new collaborate.dot.commerce module also facilitates supply-chain collaborative forecasting and planning.

Ecometry (formerly Smith-Gardner) offers the Ecometry Retail Enterprise suite of applications. It runs on the HP-3000 and offers a similar set of modules as CommercialWare’s RDC. In use at more than 300 companies, including Ethel M. Chocolates, Delia’s, Urban Outfitters, Brookstone, Frontgate, Nordstrom, RedEnvelope, and Barnes & Noble, Ecometry uses a multitier architecture with a “universal data interchange” component, written in C and C++, that uses a proprietary “talker/listener” methodology to exchange data between the order management core and modules (on NT or Unix) for e-commerce, campaign management, merchandise forecasting, and database analysis. Ecometry also offers some support for XML (extensible markup language) and Java interfaces for data exchange with external applications. But an independent vendor, Marketing Concepts, which provides a variety of services to Ecometry users, has developed a “middleware” module in C and C++ for Ecometry that provides a more “open,” fully enabled XML interface on a SQL Server platform to link Ecometry to any XML-enabled or SQL-compliant application.

Neither RDC nor Ecometry offers robust POS solutions, however. If you’re coming at this from the retail perspective, you should also take a look at retail solutions vendors that have multichannel modules. SVI has incorporated the MarketPlace Solutions catalog management package into its comprehensive suite of retail-oriented solutions, rebranding it as SVIDirect. SVI also has an E-Store module, plus a full range of merchandise management, logistics, accounting, and analytical tools.

GERS, with systems are written in Oracle, has a similar range of applications, including RetailDirect, a catalog management module, and RetailAlert, an enterprisewide workflow management module.

Taking a slightly different approach, Retek focuses on managing merchandise across the enterprise in all channels, with merchandise planning, forecasting, design, production, purchasing, logistics, instore merchandising, reverse logistics, and analysis tools. Although Retek does not support a POS solution per se, it does virtually everything else related to retail management and includes a robust catalog and Web order processing module. Users of Retek applications, such as J.C. Penney, Nordstrom, Home Shopping Network, Family Dollar, Tupperware, Ames Department Stores, and Selfridge’s, are household names on several continents.