Pay as You Go

Dec 01, 2002 10:30 PM  By

OrderMotion from Transaction Smartware Inc. is a fully functional order management system with essential inventory management and fulfillment capabilities. The big story is that OrderMotion is available only on an application service provider basis.

In most cases, including this one, the ASP approach relies on software with a browser interface that runs on the vendor’s servers, and system users have broadband access to the Internet. And in most cases, including this one, you don’t buy or lease the system outright. Instead, you operate on a pay-as-you-go basis.

Transaction Smartware offers OrderMotion in three versions: Pro, Premium, and Enterprise. The main differences between them are the modules they offer and the number of customer records they manage (25,000, 250,000, and unlimited, respectively). OrderMotion’s monthly hosting and access fees (there is no per-seat cost) are $249, $749, and $1,495 per month, respectively, for each version. A sliding-scale transaction fee starts at 65 cents for up to 2,000 orders per month and drops to as low as 40 cents at 20,000 orders per month. Even lower prices are available for higher volumes.

Do the math

If you immediately reject such a pricing model because it is a pay-as-you-go solution, try looking at this proposition more strategically. The lowest per-order pricing bracket for OrderMotion averages 500-1,000 orders per day. In all likelihood, if you are managing an in-house system, your IT staffing costs alone exceed the monthly base fee for the use of OrderMotion Enterprise. At 1,000 orders a day, you will probably need a WMS to handle fulfillment, and ancillary systems to support your operation. But you can probably eliminate one or more IT staff positions if you outsource management of the order entry system.

You would eliminate the cost of all server hardware and operations associated with maintaining the system, and if you have already outsourced any part of your operations, you would also eliminate many of the administrative costs associated with those services.

So let’s say that your fixed costs with OrderMotion are going to be less than your fixed costs with an application that you maintain in-house. What about the variable cost of 40 cents per order, or $8,000+ per month? Are you already paying that much in monthly support fees for software that you own or license in-house? With OrderMotion, support is covered in the price of using the software.

Plus side

An ASP-based system offers distinct advantages. For one thing, you don’t run the risk of being on an outmoded version of the software. Everyone is upgraded simultaneously when new versions are available. Other than maintaining thin-client workstations and a broadband Web connection, there is no in-house system maintenance. Use of an ASP reduces security issues, since the greatest threat to most systems is from in-house systems staff, not outside hackers, and Transaction Smartware’s systems security is second to none.

Finally, the risks of software scalability are virtually eliminated. If unexpected growth boosts order volume, you don’t have to worry about server load or upgrading your hardware; OrderMotion can handle any volume you push at it. On the other hand, if order volume should fail to meet expectations, not only have you avoided high fixed hardware costs, but your marginal costs are actually reduced.

If you use a third-party call center for overflow and weekends, OrderMotion makes it relatively easy to set it up on the very same system you use in-house. This increases the data integrity of your customer file by reducing the number of duplicate customer records, and improves service besides, since customers will have always have access to order information when they call.

Finance or function

There is no mumbo-jumbo on the financial side of this deal. If you chart all your costs on a spreadsheet, OrderMotion is likely to reduce your per-order processing costs. If you can get over not “owning” the software, it makes financial sense to rely on the ASP solution.

But does it make functional sense? That, of course, is entirely dependent on what you need in a system.

The program’s Web foundation also facilitates supplier access to the system, in cases where you might want to experiment with vendor-managed inventory. If you make it the vendor’s responsibility to maintain seven days of inventory on hand, the system can be configured to give the vendor access to only the data needed to track order flows, usage, and forecasts.

Indeed, reporting in general is one of OrderMotion’s greatest strengths. The system provides real-time access to detail and summary operations data, and it also offers sophisticated financial analyses, plus customer database management capabilities.

Functional challenges

Since a list of OrderMotion’s functional capabilities is conveniently available online, let me focus here on some of the functions the system does not support, to present a realistic picture of what is clearly an impressive order management solution:

  • Prompts can be triggered by source code or catalog code but not by customer type.
  • E-mail management is exceptionally strong in terms of campaign management.
  • Orders have a bill-to and ship-to, but not an ordered-by (i.e., this a better B2C than B2B system).
  • There is only one ship-to per order.
  • Fulfillment options are limited, and there is no support for bulk and primary locations in the warehouse (although each location does have min/max/replen levels).

Among the strengths of the program worth highlighting are these:

  • OrderMotion is strong on offer management and execution.
  • The system supports square-inch analysis.
  • The system supports size and color options within any SKU style.
  • Vendor/supplier tools are well-designed, except for “return to vendor” functions.
  • The system manages and collects more than enough marketing data to drive a sophisticated marketing program.

The bottom line is easy enough to read. If you are reevaluating your systems options, OrderMotion deserves consideration on its impressive competitive merits, and should not be dismissed just because of its ASP platform.

Ernie Schell is president of Marketing Applications Analysis, Inc. He can be reached by phone at (215) 396-0660, by fax at (215) 396-0696, and by e-mail at ernie@schell.com.

Transaction Smartware Inc.
65 West 83rd Street
New York, NY 10024
(212) 877-3920
www.ordermotion.com