Multichannel business managers often express a desire for a software package or system that is capable of managing the entire company, spanning all functional areas. Enterprise resource planning (ERP) systems have been around for years. Because the multichannel phenomenon (traditional brick and mortar businesses going to direct marketing and traditional direct-to-customer companies developing physical stores and Web presence) is so recent that in many cases it has exceeded the capacity of software providers to keep up.

Having a single IT system that controls all functional areas of a company and uses a common database of customers, inventory, orders and items makes perfect sense, and the potential synergy between channels and the ability to maximize the customer experience are clear opportunities. Unfortunately, finding and implementing such a solution has often proven difficult.

The drive to provide a comprehensive multi-channel solution has generally manifested itself in two ways. Traditional ERP providers, whose genesis was manufacturing, have tried to develop functionalities tailored to the specific needs of multichannel companies. Existing niche providers in the direct-to-customer or retail world are trying to expand their offerings to include more functional areas and look more like true ERP. Both approaches have had limited success so far. In general, niche or best-in-class solutions are suited to more complex environments, while ERP solutions are better suited to very large but less complex environments.

Size Matters

There are many interpretations and definitions of “ERP” floating around. One of the clearest is that an ERP is a business management system that integrates all facets of the business, including planning (merchandise, people, growth), manufacturing, sales, marketing, inventory control, fulfillment and replenishment, customer service. client, finance and human resources. The system tries to integrate all the departments and functions of a company in a single computer system that serves the needs of the independent departments.

Many existing ERP packages are geared toward larger companies with multinational or broad business control needs. Many ERP systems come from the world of manufacturing and are now being developed to handle the very different operational requirements of the multi-channel retail world. The relatively unique and complex nature of multichannel retail, combined with the large number of small and medium-sized multichannel companies, has helped create a gap between traditional and deeply functional niche system providers and the functionality provided by ERP providers. Finding an ERP solution with deep niche functionality geared towards a midsize multichannel business can be a huge challenge. But conversely, finding a niche player with deep functionality who can run an entire multichannel business is an equally difficult proposition.

Recent ERP Market Trends

ERP vendors face several hurdles in their effort to address the opportunities that the multi-channel enterprise market appears to present. The ERP marketing approach has traditionally been focused on large companies willing to invest significant funds.

ERP vendors trying to enter mid-tier markets in retail have encountered resistance from potential customers concerned about the level of service attention they will receive after implementation and a lack of industry experience. by ERP providers. There are many examples of failures in ERP implementations, for many reasons. Considerations of scale, cost, and time required for implementation have led customers to resist ERP vendors. Companies often do not realize the level of discipline required to implement and use ERP successfully. Most ERP installations follow a “Big Bang” approach, as the functionality is often powerful and encompasses many functional areas. Another drawback is that the installation time of the main systems can be 12 to 18 months or even more. (For example, two recent ERP installations in the food industry were so difficult that companies missed important sales seasons and product sales were months behind.)

A good fit for an ERP would be in a powerful company with somewhat basic requirements that want to have a single system to fully integrate all the information and data of the company. Many ERPs are developing features that recognize the need for niche software by making it easy to integrate the two.

And the competition? The high pace of recent acquisitions and consolidations in the software industry has made it difficult for niche system vendors to effectively integrate sets of products into a unified approach with a clearly defined target market. Niche vendors that have deep and specialized functionality are beginning to compete successfully against larger and more comprehensive ERPs in the mid-market arena. And a recent trend in the systems market is for multichannel companies to combine a best-in-class, niche approach with an overall ERP solution.

Business solutions

SAP

SAP, the world’s largest business software company, has an ERP Retail solution that incorporates e-commerce with its customer relationship management (CRM) solution that enables users to analyze sales by channel. However, for direct marketers who also use the catalog as a sales channel, SAP seems to have a disconnect related to the specific functionality that is needed for catalogs. The solution lacks the list segmentation, source encoding, catalog, delivery, merchandise, square inch, profit contribution capabilities required to analyze the success of mail archives, homes and rentals, and catalog promotions.

There are multi-channel retailers, including those that sell through a catalog, that use SAP, but also use specific direct-to-customer (DTC) software to configure, manage customer orders, fulfill, and analyze catalog promotions.

SAP also has an integration product, NetWeaver, with many different types of functionality, including the ability to link disparate systems. This would be a way to integrate sales from another application, such as the catalog, and have this data flow to the SAP Retail solution for merchandise analysis. However, NetWeaver does not address a key element that catalogers measure, which is demand. As SAP and other ERP systems continue to evolve, to be true multichannel solutions, they will need to adapt their software to include the functionality needed by multichannel retailers with a catalog channel.

SAP has another ERP software offering, Business One, for small and medium-sized businesses. With SAP’s acquisition of Triversity point-of-sale (POS) software and its integration with Business One, which also includes an e-commerce module, a small and medium-sized business has a real solution to explore. Again, however, if your business has a catalog sales channel, there is no specific functionality to support this sales channel. Since the Business One integration with Triversity is relatively new, it will be interesting to see how your catalog functionality progresses as new customers adopt this software.

Datavantage / CommercialWare

These two companies, along with their parent company, MICROS Systems, are taking a unified and integrated approach to bring together all of their many retail and direct applications. In 2006, Datavantage acquired CommercialWare, a leading provider of direct-to-customer software. Datavantage is an industry leader in retail and point of sale applications. Among these companies, the goal is to fully integrate their suite of applications (CWSerenade, cross-channel and direct; Xstore, JAVA-based, open standard, database agnostic; Enterprise JAVA Merchandising, web-based merchandise management solution with merchandise, purchasing, and distribution planning; Relate Retail, with CRM functionality for marketing and loyalty clubs; XBR Analytics). Deployment will involve a pre-planned set of parameters that will allow the user business to install an integrated set of applications more quickly than the best applications have been installed in the past. The company hopes to have its first live user this summer. In the fall, all related companies will adopt the MICROS name.

Climb

Escalate Retail’s vision is to continue developing specialized applications with a focus on direct business, e-commerce, retail management and point of sale that can be implemented as stand-alone or fully integrated applications. The ongoing development of service-oriented architecture (SOA) will allow Escalate Retail to develop functionality, such as payment processing, shipping, pricing, and promotions, that can be used by any or all of Escalate’s products. The goal is not to be a broad-based ERP application, but rather a best-of-breed application for multi-channel companies with direct channels (Ecometry), retailers (GERS) and e-commerce (Blue Martini) who want to improve their customer relationship and their experience. Customers looking for an application that can support all aspects of the business with a single system should understand that some functions, such as financials, will still require a third-party application for AP and GL when implementing Escalate Retail Ecometry Commerce Suite.

The best of both worlds

A long-standing topic of debate is whether to try and combine the best niche software solutions or to employ an enterprise solution. At the moment, there seems to be confusion in the industry definitions in the multichannel realm as some of the best vendors try to expand their traditionally deep functionality to broader areas, while ERP vendors are deepening their offerings. traditionally more spacious.

It will always be easier to match specific or unique requirements with a niche solution, but integrating multiple of these packages is a problem. Attempts are being made to ease the burden of middleware development. Additionally, some ERP vendors now recognize the requirement for niche software and are facilitating integration with their solutions.

The search, selection and implementation of an ERP for a multichannel company is a complex and difficult task. Since the well-being of a business depends on an effective system to control the business, the risk of making the wrong decision is significant.

We believe that ERPs will ultimately become more common in the direct-to-customer multichannel industry. The good news is that, assuming the newer versions of ERPs are affordable, this increased competition will give companies more system product options.

Here are some suggestions for anyone considering purchasing an ERP solution:

-Make sure you do all the required homework.

-Keep in mind that the “devil is in the details”

-More options are developing rapidly, so keep an open mind.

-Strong training and discipline is required for successful implementation.

-Make sure ERP is flexible enough to meet as yet unknown future requirements

-Have a well thought out five-year plan to minimize future surprises

The battle continues, but the options are changing. To read more of this article, including expanded examples of what was discussed above, we recommend that you visit our blog at: http://www.fcbco-blog.com.