Technology: How to Assess Catalog Systems

Selecting enterprise software such as large-scale systems for order management, customer database management, warehouse management and fulfillment is a lot like getting married. Impulse relationships, or hasty choices made on the rebound, may be successful, but the odds are significantly against it.

Even those marriages based on true love, appreciation of real personalities and full knowledge of one another’s strengths and weaknesses require ongoing maintenance to succeed. While a good marriage is based on love, a fulfilling relationship requires that you like your partner, too. Similarly, you may love your computer system, but if you don’t actually like the vendor who produces it, there may be trouble down the road. Here’s what to look for when selecting a new enterprise application for your catalog company.

First Things First

Define the application’s purpose and scope. Direct-commerce companies are fortunate to have the option of implementing comprehensive solutions that cover essential aspects of order entry, customer database and list management, inventory, fulfillment, and reporting. All-in-one catalog management or direct commerce management systems are like jacks-of-all-trades, usually masters of none.

Against the ease of using a comprehensive integrated application, weigh the possible need for a more fully functional warehouse management system (WMS), for example. If you acquire a separate WMS, do you need it to supplement a catalog management system, or would a best-of-breed order entry and customer relationship management application make more sense in conjunction with your specialized WMS?

To succeed at the best-of-breed approach, you need a substantial in-house IT staff. And you must prepare your company to handle more complex system-maintenance tasks, as well as all the challenges that any system integration entails. The best-of-breed approach is an expensive option but worth the investment if you need the greater functional efficiency and scalability a set of high-quality, focused systems can provide.

Hosted Solutions vs. ASPs

Another challenge when selecting the right system is determining the viability of a hosted solution versus an application service provider (ASP). You don’t buy a set of user licenses from ASPs but rather “pay as you go” based on transaction volume (plus a monthly service fee in most cases). You access the system via a browser interface on a secure broadband Web connection.

Pricing for hosted solutions may seem high, but the key to cost-justification is determining your real fully loaded costs for managing a system in-house. On the flip side, ASP-based systems usually are competitively priced, and you don’t have to maintain and upgrade a system in-house.

Evaluation Checklist

- Establish the proposed system’s objectives and priorities. There are many reasons for acquiring a new system: managing increased capacity, improving customer service, introducing new business methods (e.g., continuity shipments), lowering processing costs, improving inventory efficiency, reducing paperwork, supporting better e-commerce integration, and so on.

Specify your objectives. Chances are you won’t be able to achieve all of them, so it’s also important to prioritize your goals. When it comes time to select among alternatives, your prioritized goals will make the process easier.

- Assess your operations and budgets. All systems demonstrate well, so it’s up to you to focus on what’s actually important. Spell out how the software should serve your business needs in a formal functional needs analysis.

- Produce a written Request for Proposal (RFP). The results of your functional needs analysis will form the heart of a formal RFP. In addition to the functional requirements, the RFP should provide:

• a request to the vendors who get it to indicate if they can meet your requirements as stated; how much and how long it would take to make modifications, and where necessary, to meet some of your needs;
• a profile of the number of orders, customers, SKUs and vendors you must maintain;
• your daily and weekly average and peak order volumes;
• a list of all computer hardware, software and networks in-house;
• an overview explanation of how your business works;
• a timeline for the systems-acquisition process; and
• requests for information about the vendor, including the number of systems installed and terms for training and support.

- Investigate systems options. Now that you’re properly prepared, you’re ready to start looking at systems and determine which vendors should get the RFP. An initial list of six to eight contenders is a good number to whom to send the RFP. Allow about four weeks to get back formal responses.

- Evaluate responses. The RFP helps keep vendors honest (some vendors will be more optimistic than others). Once you have the formal responses, develop a quantitative method to score them based on the stated ability of the vendor to meet your needs as is, or with modifications, and on factors such as system cost or ability to meet your time frame.

- Review trade-offs. There probably won’t be one ideal candidate. Price and features alone won’t tell the whole story. Take into account the full measure of the relationship to assure that you can live with your betrothed long after the honeymoon is over.

Ernie Schell is the author of “The Guide to Catalog Management Software” and president of Southampton, PA-based Marketing Systems Analysis, which helps catalogers specify and select order-processing software. Contact him at (215) 396-0660, or e-mail: ernie@schell.com.