ERP Software In The Multichannel World

Multichannel business managers frequently voice the​ desire to​ have one system or​ software package that is​ capable of​ managing the​ entire enterprise,​ encompassing all functional areas. Enterprise resources planning (ERP) systems have been available for years. Because the​ multichannel phenomenon—traditional brick-and-mortar businesses reaching into direct marketing,​ and traditional direct-to-customer companies developing brick-and-mortar stores as​ well as​ a​ Web presence—is so recent,​ it​ has in​ many cases outstripped the​ ability of​ software vendors to​ keep pace.

Having a​ single computer system control all functional areas in​ a​ business and use a​ common customer,​ inventory,​ order,​ and item database makes perfect sense,​ and the​ potential synergy between channels and the​ ability to​ maximize the​ customer experience are clear opportunities. Unfortunately,​ the​ search for and implementation of​ such a​ solution has frequently proved difficult.

The push to​ provide an​ overall multichannel solution has generally manifested itself in​ two ways. Traditional ERP vendors,​ whose genesis was in​ manufacturing,​ have tried to​ develop functionality geared to​ the​ specific needs of​ multichannel companies. Existing niche vendors in​ the​ direct-to-customer or​ retail worlds are trying to​ broaden their offerings to​ include more functional areas and look more like true ERPs. Both approaches have met with limited success so far. in​ general,​ niche or​ best-of-breed solutions fit more complex environments,​ while the​ ERP solutions better fit the​ very broad 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,​ staff,​ growth),​ manufacturing,​ sales,​ marketing,​ inventory control,​ fulfillment and replenishment,​ customer service,​ finance,​ and human resources. the​ system attempts to​ integrate all departments and functions across a​ company into a​ single computer system that serves independent departments’ needs.

Many existing ERP packages are geared to​ larger businesses with multinational or​ broad business control needs. Many ERP systems have come from the​ manufacturing world and are now being developed to​ handle the​ very different operational requirements of​ the​ multichannel retail world. the​ relatively unique and complex nature of​ multichannel retail,​ combined with the​ large numbers of​ small and medium-sized multichannel businesses,​ has helped to​ create a​ void between traditional,​ deeply functional niche systems vendors and the​ functionality provided by ERP vendors. Finding an​ ERP solution with deep niche functionality geared to​ a​ medium-sized multichannel business can be an​ enormous challenge. But conversely,​ finding a​ niche player with deep functionality that can manage an​ entire multichannel enterprise is​ an​ equally difficult proposition.

Recent ERP market trends
ERP vendors face several obstacles in​ their effort to​ address the​ opportunities seemingly presented by the​ multichannel business market. the​ focus of​ ERP marketing has traditionally been on​ large companies willing to​ invest significant funds.

ERP vendors trying to​ enter mid-tier markets in​ retailing have been met with resistance from potential customers concerned about the​ level of​ service attention they will receive after implementation and about the​ lack of​ industry expertise on​ the​ part of​ the​ ERP vendors. There are many examples of​ ERP implementations failing—for many reasons. Considerations of​ scale,​ cost,​ and the​ time required for implementation have led to​ customer resistance to​ ERP vendors. Companies commonly fail to​ realize the​ level of​ discipline required to​ implement and use an​ ERP successfully. Most ERP installations follow a​ “Big Bang” approach,​ since the​ functionality is​ usually far reaching and encompasses many functional areas. Another drawback is​ that the​ installation time for major systems can be 12 to​ 18 months or​ even longer. (For example,​ two recent installations of​ ERPs in​ the​ food industry were so difficult that the​ businesses missed major selling seasons and product sales were months behind schedule.)

A good fit for an​ ERP would be in​ a​ far-reaching company with somewhat basic requirements desirous of​ having a​ single system to​ fully integrate all company information and data. Many ERPs are developing features that acknowledge the​ need for niche software by making it​ easier to​ integrate the​ two.

What about the​ competition? the​ sheer pace of​ recent acquisitions and consolidations in​ the​ software industry have made it​ difficult for niche systems vendors to​ effectively integrate suites of​ products into one unified approach with a​ clearly defined target market. Niche vendors who have deep,​ specialized functionality are beginning to​ compete successfully against the​ larger,​ more all-encompassing ERPs in​ the​ mid-market arena. And a​ recent trend in​ the​ systems market is​ for multichannel businesses to​ combine the​ niche,​ best-of-breed approach with an​ overall ERP solution.

Enterprise solutions

SAP,​ the​ world’ largest business software company,​ has an​ ERP Retail solution that incorporates e-commerce with its customer relationship management (CRM) solution that allows users to​ analyze sales by channel. For direct marketers who also utilize catalog as​ a​ sales channel,​ however,​ SAP seems to​ have a​ disconnect related to​ specific functionality that is​ needed for catalogs. the​ solution lacks the​ list segmentation,​ source coding,​ catalog,​ drop,​ merchandise,​ square inch,​ contribution to​ profit functions required to​ analyze the​ success of​ mailing files,​ house and rented,​ and catalog promotions.

There are multichannel retailers,​ including ones that sell through a​ catalog,​ that are using SAP but they are also using specific direct-to-customer (DTC) software to​ set up,​ 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 one way to​ integrate sales from another application,​ such as​ catalog,​ and have this data flow into 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,​ in​ order to​ be true multichannel solutions they will need to​ adapt their software to​ include the​ functionality that is​ needed by those multichannel retailers who have a​ catalog sales channel.

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

These two companies,​ along with their parent company,​ MICROS Systems,​ are taking a​ unified,​ integrated approach to​ bringing together all of​ their many retail and direct applications. in​ 2018 CommercialWare,​ one of​ the​ leading direct-to-customer software providers,​ was acquired by Datavantage. Datavantage is​ an​ industry leader in​ retail and point-of-sale applications. Between these companies the​ objective is​ to​ fully integrate their application suites (CWSerenade,​ cross-channel and direct; Xstore,​ JAVA-based,​ open standard,​ database-agnostic; Enterprise JAVA Merchandising,​ Web-based merchandise management solution with merchandise planning,​ purchasing,​ and distribution; Relate Retail,​ with CRM functionality for marketing and loyalty clubs; XBR Analytics). Implementation will involve a​ pre-planned set of​ parameters that will allow the​ user company to​ install an​ integrated set of​ applications more quickly than best-of-breed applications have been installed in​ the​ past. the​ company expects to​ have its first user live this summer. in​ the​ fall,​ all of​ the​ related companies will adopt the​ MICROS name.

Escalate Retail’s vision is​ to​ continue to​ develop specialized applications with a​ focus on​ direct businesses,​ e-commerce,​ retail management,​ and point of​ sale that can be implemented either as​ stand-alone applications or​ fully integrated. Continued development of​ service-oriented-architecture (SOA) will allow Escalate Retail to​ develop functionality,​ such as​ payment processing,​ shipping,​ pricing and promotions,​ that can be utilized by any or​ all of​ Escalate’s suite of​ products. the​ aim is​ not to​ be a​ broad-based ERP application,​ but to​ be a​ best-in-class application for multichannel businesses with direct (Ecometry),​ retail (GERS),​ and e-commerce (Blue Martini) channels that wish to​ enhance their customer relationship and experience. Customers looking for an​ application that can support all aspects of​ the​ business with a​ single system need to​ understand that some functionality,​ such as​ financials,​ will still require a​ third-party application for AP and GL when they deploy the​ Escalate Retail Ecometry Commerce Suite.

Best of​ both worlds
A long-standing subject of​ debate is​ whether to​ try and combine best-of-breed niche software solutions or​ to​ employ an​ enterprise solution. at​ the​ moment,​ it​ appears that a​ blurring of​ industry definitions in​ the​ multichannel arena is​ occurring as​ some best-of-breed vendors try to​ expand their traditionally deep functionality to​ broader areas,​ while ERP vendors are deepening their traditionally broader offerings.

It will always be easier to​ match specific or​ unique requirements with a​ niche solution,​ but the​ integration of​ several of​ these packages is​ an​ issue. Attempts are being made to​ ease the​ burden with middleware development. in​ addition,​ some ERP vendors are now acknowledging 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​ welfare of​ a​ business depends on​ an​ effective system to​ control the​ business,​ the​ risk of​ making the​ wrong decision is​ significant.

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

Here are a​ few suggestions for anyone considering the​ purchase of​ an​ ERP solution:
1.Make sure you​ do all of​ the​ homework required.
2.Keep in​ mind that the​ “Devil is​ in​ the​ details”
3.More options are rapidly being developed,​ so keep an​ open mind.
4.Strong training and discipline are required for successful implementation.
5.Insure that the​ ERP is​ flexible enough to​ meet future,​ as-yet-unknown requirements
6.Have a​ well–thought-out five-year plan to​ minimize future surprises

The battle rages on​ but the​ options are changing. to​ read more of​ this article,​ including expanded examples of​ what was discussed above,​ we encourage you​ to​ visit our blog at: .

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