Ernie Schell
Ernie Schell is Executive Director of Marketing Systems Analysis. He has over twenty years experience consulting with more than 200 direct marketing, eCommerce, and fulfilment companies in specifying, selecting, and implementing order entry and fulfilment systems. Ernie was Editor of Target Marketing from 1981 to 1983. Since founding his own consulting firm, he has contributed hundreds of articles and reviews to US publications Catalog Age, Operations and Fulfillment, Target Marketing, Catalog Success, and Multichannel Merchant, and to Catalogue & eBusiness magazine in the UK. He is a regular speaker at the National Conference on Operations & Fulfillment (NCOF, US) and European Catalogue & Mail Order Days (ECMOD, UK), and regularly makes presentations at other business and marketing conferences in the US and the UK.
Top Tips for Selecting Order Management Systems/Warehouse Management Systems
The typical direct merchant selects systems rather haphazardly, making two critical mistakes that can lead to the wrong systems at the wrong place at the wrong time – and a major waste of time and money, to say nothing of lost opportunities for growth had the selection process been pursued more strategically.
The first critical mistake is failing to leave enough time for the entire project. You really should allow 18 – 24 months from start to finish (i.e., when you ‘go live’ on the new system or systems), but most companies try to shoehorn the project into half that time. This can doom an otherwise good system to ultimate failure, particularly if training on the new system turns out to be rushed.
The second big mistake is shopping for a system by looking at vendor demos, rather than carefully specifying your own needs and requirements and having the software vendors demonstrate their ability to meet them.
So then, how does one go about finding the right solution(s)?
Map out all the systems you currently have in place, evaluate their strengths and weaknesses, and prioritise which ones need to be supplemented or replaced.
As a follow-up to the first step, specify the features and functions you would like an enhanced or replacement system to provide that will improve your operations and support new and existing business rules as efficiently as possible. Several hundred such features and functions (arranged by categories) is a good balance between over-specifying and under-specifying. Each feature/function should be described in enough detail to be self-explanatory.
You will also have to consider what type of applications are needed. There are many bits and pieces that make up direct commerce operations – order capture, customer service, customer relationship management, stock management, purchasing, fulfilment, customer database management, customer segmentation and analysis, demand analysis, eCommerce platforms. . . even gift registries and loyalty scheme management – and these are often part of a bigger ‘picture’ that includes supply chain management, accounting, lead management, manufacturing, and other business components.
If you are looking for a new order management system, should you be looking for a system that handles all your pick/pack fulfilment requirements, as well, or do you need a separate warehouse management system? The answer depends on the complexity of your warehouse operations and the degree of automation you need to manage in the warehouse.
Looking at the challenge slightly differently, what about demand analysis? Do you need a separate merchandise forecasting package, or will a robust demand analysis module in a comprehensive order management system do the job adequately?
You may need several months to sort through these options – and you probably won’t know for sure until later in the process -- which is one of the reasons you need to leave enough time to get things done right.
Use the Requirements Analysis as the core of an Invitation to Tender (ITT) that you can send to system vendors, which should also include a business profile, summary of your enterprise systems plan, a roster of your systems hardware infrastructure, and a profile of your operations (order volumes, number of customers, number of SKUs etc.)
The ITT won’t be a useful document unless you get in put from every key manager in the company who will be using the new system. A representative from each functional area should be designated to serve as a member of the Project Team, should help identify and articulate the Needs and Requirements, and should participate in the evaluation and selection process.
The time to look at vendor demos is when your ITT is completed, so you will be able to focus on critical areas that you know will need to be addressed by a new system.
Based on these demos, select the six to ten vendors whose systems appear to be best suited to meeting your requirements and invite them to respond to the ITT. Allow a month to receive formal, written responses
- The vendor proposals should be evaluated by your Project Team on the basis of:
how well the vendor appears to understand your needs and requirements - how well the system can meet your needs without modifications
- cost of the proposed solution
- technology (operating system, databases, programming languages)
- terms of usage (licenses vs. Software-as-a-Service, for example)
- support terms and costs
- implementation terms: how thorough are they, what will it cost, how much will the vendor be responsible for, how much will you have to do?
- time required for data conversion, implementation, and training
- size of vendor, number of users (total, and on the version of the system you would be using)
- last but not least, discussions with current users; have each member of your Team speak with a counterpart in at least three user companies
Finally, most software vendors promise very little in their contracts, and provide you with few safeguards. At the very least, include their formal proposals as a legal and binding addendum to the contract (amended to reflect any phased implementations you have agreed to, and highlighting what is to be delivered when the system goes live). Also, specify payment terms that include a ‘hold-back’ of at least ten percent of the initial system cost, to be paid no less than 30 days (and perhaps 60 or 90 days) after the go-live date. This is to insure that the system handles month-end and quarterly reporting and accounting functions properly.
As you can see, specifying, selecting, and implementing a new enterprise system can be a daunting challenge. Patience and persistence will be your best assets in getting through this process.