From OMS to IPR

As the direct marketing industry has evolved into multichannel selling, its system requirements have evolved as well, says systems guru Ernie Schell.

“It’s important to keep in mind that prior to e-commerce, the main focus of a direct commerce business was to have a call center interface, and a method to fulfill the orders and manage the inventory,” says Schell, executive director/founder of Ventnor, NJ-based Marketing Systems Analysis.

These systems have developed during the past 25 to 30 years, says Schell. “The most accurate, current label is multichannel order management systems, because they are integrating with retail and e-commerce platforms.”

Multichannel order management systems are capable of managing large and sophisticated enterprises. But they do not come cheap: A system for a large-scale operation can run into millions of dollars.

Once the Internet came along, says Schell, there was increasing competition between the order management systems and e-commerce platforms for scarce dollars, “but you’re really robbing Peter to pay Paul.”

With Web analytics, Web 2.0 and something seemingly as simple as e-mail marketing, Schell says, “it becomes more expensive to support both systems.”

The dilemma, then, is that companies can’t keep building e-commerce up to what it needs to be while continuing to support the call center. “Ideally you’d like to invest less in the call center and provide more support for e-commerce,” Schell notes. And of course, such investment decisions are even more crucial with the current strain on resources.

Schell’s March 24 NCOF session, “Honey, I Shrunk the System: The Future of Direct Commerce Order Management Solutions,” will look at how some order management systems (OMS) are morphing into potentially less expensive integration, processing and reporting (IPR) platforms.

“The transition to the system of the future occurs when you take the e-commerce solution and put a call center interface on it,” Schell says. “You’ve essentially turned the call center into a utility that manages three key functions.

Once the system that used to be the heart and soul of the company is downgraded to more of a utility player, he notes, “you theoretically don’t need to spend as much to install and maintain it.”

Are there systems on the market today that accommodate themselves to this IPR platform? Yes, Schell says, noting that there’s at least one highly ranked solution that has a call center interface.

But it’s going to take several years for integration, processing and reporting platforms to really catch on.

“Even if we were on an even keel in the economy, I would never suggest this is something that will happen in the next two to three years,” Schell points out.

He thinks it’s more likely that it will take five or more years for IPR be widely adopted. And it will probably be 10 years before it’s considered the norm.

“It’s certainly not inconceivable that some of the more aggressive e-commerce providers will say, ‘Let’s take over the whole shootin’ match and do everything ourselves,’ but I think that’s unlikely,” Schell says. And if they do, he adds, “they will find out they’ve bitten off more than they can chew.”

While multichannel selling still has a long way to go for this type of systems architecture to become firmly established, Schell says, “there’s a definite value to talking about it now.”