Image by Mike Mozart, CC license

Customer relationship management (CRM) and sales management are two fast-growing areas for software, with new applications frequently coming on the market as companies seek to know everything about their customers — what selling strategies work, which promotions produce the most sales lift, and how profitable their customers are.

Companies have used CRM-ware in their call centers for years to instantly display a customer’s account information, credit limits, preferences and order history. CRM is becoming more sophisticated, producing order pattern analysis, identifying distribution voids, and quantifying the impacts from competitors. Sales teams call on customers armed with more sophisticated data to support selling in a new line of products, perhaps showing the customer the product line’s potential profits across the customer’s 500 stores.

Consumer goods companies such as Kraft Foods and Procter and Gamble sell a lot of volume via specials and promotions at thousands of retail outlets across the country. It’s just the nature of how demand is driven in the industry. Shoppers love bargains and retailers use deals to generate store traffic. A particular product, such as Kraft Macaroni & Cheese, might be on sale for a week or more, say, at Kroger stores in the eastern region of the U.S., at a price of three for $1.00. Companies such as Kraft might have thousands of promotions in effect for a given quarter of the year.

Think of the possible combinations of Campbell’s soup (300 or more SKUs, 11 different brand categories), sold through most of the country’s 36,000 supermarkets, on special at any given time, and the different possible deals, such as a temporary price reduction, a percentage off invoice, buy x get y, 2-fers, 3-fers, 5-fers, and so on. Who is going to keep track of all these deals?

Software firms such as Siebel (once independent, now owned by Oracle) sell applications not only to manage these deals, account for the proper expenses and send the correct pricing to the invoicing system, but also to provide analytics to determine promotion effectiveness.

Other offerings in the CRM category include: demand estimating applications such as i2 and DemandTec (owned by IBM), whose sophisticated models predict demand lift from a given set of promotional activities; JDA’s Vista, which manages the overall promotions budget and ensures promotion spending control; and SalesForce.com, the leading CRM-in-the-cloud application.

Banks and other financial institutions need a more business-to-consumer type of CRM and sales management. The top firm in this category, by revenues, is FIS Global, described on its web site as “the world’s largest global provider dedicated to banking and payments technologies, providing software, services and outsourcing of the technology that drives financial institutions.”

Looking at several different vendors you will find noticeable differences: one or more may specialize in your industry, one may have a stronger focus on financial controls, another may have sophisticated models tied to disparate sources of data. These applications are not cheap; expect to pay $3 to $5 million or more for one of the leading application providers. The ROI here comes primarily from optimization of your marketing, promotion, and advertising dollars, where a small percentage of what is usually a very big annual budget — if saved or re-deployed — is plenty to achieve a successful ROI on the project.

You’ve heard the complaints: your systems are too clunky, slow, have too many steps, and they take too long to execute everyday transactions.

The dialogue plays out probably hundreds of times a day in offices throughout the world: users complain about to-hard-to-use systems and their IT departments tell them they just don’t know the right way to use them.

This can be a big problem, but costs and other impacts are not easy to measure. A rough estimate can be had by extrapolating the lost time per user across the enterprise.  A 15% hit to people’s productivity because the systems they use slow down their work actually means you need 1.176 people to do the work of one person.

Extrapolating this, if you have a 500-person organization, an equivalent of 88 of those people are needed only because you have sub-optimal systems.  As convincing as this seems, it’s hard to get the money to improve systems based on this argument. With perfectly-efficient systems, you wouldn’t actually need 88 fewer people because the sum of wasted time is across all 500 people.

What do you do? Two relatively low-cost options are user interface (UI – what you see when you look at the screen) tools and mobile applications.

UI Tools: There is an active market for these, which are intended to be used with widely-deployed ERP systems like SAP and Oracle. These solutions modify or enhance the system’s UI for simplified navigation and a more intuitive feel, and may combine several steps in a transaction or query into one, like an Excel macro.

One company marketing UI solutions (Winshuttle) claims to “turn everyday SAP users into heroes who transform the way their companies work.”

Solutions like this are only relevant for those companies that have full control over their systems environments – companies that own their own “instance” of the ERP system, versus those who use a SaaS ERP or one that is shared across many different business units. This is because you’ll need access “under the hood” to configure these tools.

Mobile: A shortcut (sometimes) to simplified ERP transactions is via mobile applications. A mobile application, out of necessity, must have minimal steps involving minimal data entry. No one wants a Windows version of the ERP system on their 5-inch smartphone screen.

This forces the software to consolidate steps in the transaction and pre-populate fields with user data and settings. If a given ERP transaction involves 5 or 6 steps on a desktop it will likely require only 2 or 3 steps on a mobile device.

Several of the large ERP vendors already have mobile versions of the most frequently used transactions, such as purchase orders and purchase order approvals.

You can always design your own mobile applications (there’s no shortage of people creating new smartphone apps), and doing so can lead to some very creative results that have a huge impact on user morale.

Image: Al Drago/CQ Roll Call Via AP/Associated Press

The FDA has appeared at one of your plants and would like to see your records showing how much of which products were manufactured using a particular lot of raw material, where those products were shipped, and to which customers they were sold.

(Hint: you’re supposed to be able to do this, in about two hours, preferably faster).

Many companies can’t produce what the FDA is asking for, in a complete and accurate form, and in the time the FDA expects.

Supply chain executives assume their warehouse management system (WMS) will provide the traceability they need, but many WMS applications in use today are either limited in scope or not integrated to the rest of the upstream and downstream supply chain.

The average WMS inside a plant, for example, is good for tracing lot codes of raw materials coming in and following them into batches of finished goods and out the door to customers.

But many consumer goods companies use third party logistics services and sell to multiple channels where manufacturing lots are further and further subdivided until product reaches the retail customer and the consumer. All of these handoffs occur outside the scope of your enterprise systems, including your WMS.

The trail is easily lost because downstream from the plant the product may take on several different identities – without retaining lot information — as it passes from one player in the supply chain to another.

Without all the data in one place, companies rifle through purchasing receipts, production records, and bills of lading, send urgent requests for reports from trading partners, and assemble something resembling a lot code bridge in an Excel worksheet. This might take days.

The ideal track and trace system is an information repository into which data is automatically dumped as your product travels through the supply chain – the chronicling of all the places your product went after you produced it. And for that you need connectivity to all the downstream events through which your product travels, and a place to put all the data.

Companies without the full picture are betting on dodging the bullet somehow. While the odds of a recall of your product may be low, the odds of an FDA visit are much higher. And the FDA does send warning letters for an inability to demonstrate full traceability – letters that wind up online in a very public way.

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It’s getting harder to determine which software vendors have what capabilities. This is because:

• The number of technology startups has increased;
• Big software companies have been acquiring other firms to increase the breadth of their capabilities;
• Established firms are rapidly making changes to their suite of applications – adding capabilities so quickly that it’s difficult to land on a static evaluation and comparison vs. other vendors.

The branding of specific functionality continues to proliferate. Firms don’t define their software’s features all the same way – they give them a brand name, which only adds terminology that is unnecessary and gets in the way of a clear comparison of features.

Firms are offering products and services that overlap what other firms offer, making it more difficult to weed out who truly offers what you want.

It used to be that, if your company needed software in some form – packaged or custom – it was “installed” on a server. Then a “client” for the software – a relatively small piece of software – was installed on desktops so that the software on the server could communicate with the user on the desktop.

In between the two was a local-area network (LAN), which is jargon for a wired connection. In this configuration, a user could launch the client software on a PC, and the client would, via communication over the LAN to the server, enable the user to fully use all the features of the software.

Players in this market looked like this:

• The firm that wrote the software;
• The firms or independent consultants that support the software;
• The firm(s) that helped you to install, configure, test and launch the software you bought;
• The company from which you bought your servers;
• The company that supplied your LAN and wide-area network (WA)

All of this has changed. Now there are vendors that can do all of the above, without stepping inside your building, through a web portal.

How do you get what you need in this environment?

1. Find the software vendors that know your industry and understand what they offer. Software companies are usually organized according to what they call industry verticals, such as health care, pharmaceuticals, consumer goods, banking. A company with lots of clients in your industry is a good start
2. Find the software vendors that are the best for your targeted functional area such as sales, manufacturing, finance, etc.
3. Focus on the firms that are well represented in #1 and #2 above

Image: Diagram of the control panel in the cockpit of Apollo 13’s Lunar Module Aquarius, which circled the moon in April 1970, by Steve Jurvetson. CC license.

Nearly all new applications you add to your enterprise will need some level of connectivity to your existing systems, as well as to systems outside your enterprise, and so integration is a key part of your implementation plan.

The problem is this: every software firm will tell you their application can be integrated to just about anything. Yes, anything is possible, with enough money and effort.

Here are some key areas you should be familiar with:

An Application Programming Interface (API) is a protocol used by software components to communicate with one another. It can be source code, or written specifications. A good question to ask the software vendor is whether it has developed APIs for interfacing with other programs, and which programs in particular.

You’ll still have work to do if the vendor has well-developed APIs, but at least you’ll know someone sat down, thought about, designed, built and tested some form of integration — all work you shouldn’t have to re-do. One area of the money pit avoided.

Electronic Data Interchange (EDI) is a standard for electronic messaging of commerce between two entities and frequently between two different systems. EDI was established in 1996 by the National Institute of Standards and Technology; it has widespread use around the world as a replacement for paper-based transactions between companies.

The application you’re considering or your company may use EDI as its standard method of interfacing other systems, especially outside your enterprise, and that is fine. But don’t assume that EDI means it’s as easy as plug and play, because while EDI is supposed to be a standard, it has been customized by enterprises for their own specific needs and has many formats, and in addition there are two standards for every EDI message — UN/EDIFACT, and ASCx12. It’s not unusual for companies to maintain 20 or 30 or more partner-specific EDI data maps.

EDI has limitations: It’s prone to failure if data is incorrect or not recognized by the recipient’s system, or if changes are made to its structure without thorough testing. EDI is also like sending data through a tube — no one sees the data except the sender and the recipient, so if you want to exchange data or transactions with another trading partner you have to build another tube.

Don’t underestimate the time and cost of integration via EDI. My experience with EDI is that it takes a team of people to maintain it; to monitor the pipes, to push through transactions that have stalled or encountered errors, and to develop new connections or changes to existing ones. If EDI is how you will integrate applications, just be aware of the costs and effort involved. [pullquote]EDI is not standard, not necessarily low cost, and certainly not 100% reliable.[/pullquote]

If EDI is the way your customers want to exchange with you, you will have to accommodate. To mitigate the negatives of EDI, you can contract with one of the business-to-business (B2B) commerce companies that have emerged in recent years. These firms – GXS/OpenText, SPS Commerce, IBM/Sterling Commerce – among others — will host your EDI integration, monitor your connections 24×7, react to and solve messaging failures, and map new connections to trading partners.

Image by Marcos Gasparutti, CC license

In their recently published book, “Big Data: A Revolution That Will Transform How We Live, Work, and Think,” Viktor Mayer-Schonberger and Kenneth Cukier say that big data will provide a lot of information that can be used to establish correlations, not necessarily precise cause and effect.

But that might be good enough to extract the value you need from big data.

Three examples from their book:

1. Walmart discovered a sales spike in Pop-Tarts if storms were in the forecast. The correlation was also true of flashlights, but selling more flashlights made sense; selling more Pop-Tarts didn’t.
2. Doctors in Canada now prevent fevers in premature infants because of a link between a period when the baby’s vital signs are unusually stable, and, 24 hours later, a severe fever.
3. Credit scores can be used to predict which people need to be reminded to take a prescription medicine.

Why did the people involved in the above examples compare such different sets of data? One possible reason: because they could – relatively quickly and at low cost – this was made possible by superfast data processing and cheap memory. If you could mash together all kinds of data in large volumes – and do so relatively cheaply – why wouldn’t you until you found some correlations that looked interesting?

You can begin experimenting – a process I endorse — with Big Data. You need three basic components:

1. A way to get the data, whether out of your transaction systems or from external sources, and into a database.
2. Superfast data processing (a database with enormous amounts of RAM and massively parallel processing). This can be had on a software-as-service basis from Amazon and other vendors.
3. Analytics tools that present the data in the visual form you want. Vendors include Oracle, Teradata, Tableau, Information Builders, Qlikview, Hyperion, and many others.

Correlations are usually easier to spot visually. And visualization is where the market seems to be going, at least in terms of hype and vendor offerings. New insights are always welcome, so we shall see what sells and what doesn’t.

The assessment from Gartner seems about right to me at this point in time: that big data is both 1) currently in the phase they call the “trough of disillusionment;” and 2) promising enough that its use in BI will grow sharply.

Image: Balzac Fresh Food Distribution Center, by Walmart

Few areas of the software market in the past ten years have been as hot as supply chain.

Supply chains in many industries have been trying to cut costs out of distribution networks while reducing order lead time and inventories. They want solutions for modernizing what has traditionally been a backwater: truck booking; warehouse management; pallet management; order picking; truck loading; yard management; and delivery discrepancy management.

This category also includes software for demand forecasting and optimal product deployment throughout a company’s distribution network. Demand planning software can be fraught with peril for companies lacking the discipline and attention to detail needed to master these applications. These applications can be difficult to evaluate, from a buyer’s standpoint. Proceed with caution.

Companies in the supply chain space, known as SCM, (supply chain management), include industry leaders Oracle and SAP, and firms like JDA Software, Manhattan Associates and Red Prairie (recently merged with JDA). JDA is a firm that has grown by acquiring industry-leading supply chain management applications such as i2 and Manugistics. The company claims that 6,000 firms worldwide use its SCM software.

Supply chain applications can be single-purpose or inter-connected, like an ERP system. The supply chain is like a business-within-a-business: it has at least five processes that must be interconnected in some way: 1) demand planning (what will customers order?); 2) distribution network planning (where should we store it before it is shipped to the customer?); 3) manufacturing scheduling (how much should we make, when?); 4) material requirements planning (MRP – what raw materials & supplies do we need?); and 5) warehousing, transportation, and shipping (store the product and ship it to the customer when needed).

A single-purpose application (Demand Planning, Warehouse Management, Transportation) will claim to solve your problems in one or maybe two of these areas. An inter-connected supply chain application will manage all five of these areas. Vendors that offer an inter-connected solution will present themselves as offering total SCM, or supply chain management, solutions.

It’s hard to carve up the supply chain and say one application is better in one area than another, because probably the most important thing is the integration between the five main segments of demand planning, distribution planning, manufacturing scheduling, MRP, and warehousing and shipping.

If you had to choose, the demand planning software might be most important, unless your customers place orders way in advance of shipment; on the other hand, you might have multiple manufacturing locations or warehouses and you need a solution for where to make and ship your product most efficiently.

There’s a debate going on in B2B commerce about “touchless” sales order processing. Touchless order processing just means you don’t need a human to watch, review, check, or do anything else to an order when it’s received from the customer, like making sure product codes and pricing are correct. On the one side you have touchless believers (in part because that’s what they already do), and on the other, advocates of automated checks plus a quick review by human eyes, called “click and go.”

Many companies have already achieved touchless orders on a very high percentage of their order volume, and you need to look no further than Amazon for a very simple example of completely automated order processing. On any given Saturday morning, you, along with thousands of others, made a one-click purchase on Amazon. That order made its way to a fulfilment center uninterrupted by human scanning because of interconnected software.

Getting there is not hard

Touchless order processing is best achieved with the right combination of data capture tools and algorithmic checks based on your company’s business rules and customer master data.

The key element of a touchless order is the format, quality and consistency of the message. In other words, it’s all about readability – regardless of whether it is a structured, typed form (such as a spreadsheet), a fax, or an electronic form filled out via an internet/web portal, or the standard EDI purchase order. Algorithmic checks can be written for just about anything – if customer order date is X, then send order to Y. Many companies, realising they need these kinds of checks, start building them in their ERP systems using inflexible custom code.

But before long these DIY firms end up with a lot of expensive software modifications as they seek to automate more and more of their inbound order steps. I know of one company whose order checks are so complex that some of their large customer orders can take up to several hours to process. As a result, their customer responsiveness declines.

But aren’t human checks better? No.

Read the rest of the blog here to find out why

A data visualization of LinkedIn connections. Image by Luc Legay, CC license

Frank Luntz is a professional pollster who uses the visualization of data to show the sentiments of viewers as they watch political ads. The technique uses a moving second-by-second graph to show when exactly during an ad viewers felt positive or negative toward the content of the ad. Viewers use a handheld device with buttons for positive and negative, and press each one according to their sentiment as they view the ad.

Mr. Luntz could have simply had each viewer fill out a questionnaire about the ad – what did they like and what didn’t they like? You would then see numeric totals and percentages related to each question, but you wouldn’t see exactly when during the ad viewers had positive or negative feelings. The second-by-second gathering of data draws a much clearer picture.

That is what data visualization is about.

Many software vendors offer products in this category and many of those vendors are start-ups. Some claim the ability to merge all kinds of data – including Twitter feeds — into a coherent picture. This may be the case but my advice is to treat this area as very formative – i.e. not yet mature and therefore somewhat experimental.

I think technology will make it easy to index every single event in your enterprise and to display in real time a visual interpretation of all of those events interacting with one another. Executives and managers will no longer look at static tables of numbers or even graphs or charts; they will be able to “watch” their business in real time and see a future visualized picture of their business, much like a weather forecast is shown in graphical terms.

Some advice, if you want to experiment in this area:

• Find an area of your business where there is complete mystery, and where a vivid picture holds promise for a breakthrough development;
• Make sure you have a way of capturing the data;
• Try and buy: vendors will often conduct a pilot for you at little or no cost

Photo by Krystian Olszanski, CC license

Great!  Your second biggest customer has agreed to collaborate with you to build the business through collaboration and data sharing, and you’ll be getting access to all of their point-of-sale data through a third party company.  Now what?

Fortunately there are some very good POS analytical capabilities out there, but not all are the same. Here are some tips from my own experience:

1. Use a data provider who also has an analytical/BI environment to work in – preferably an environment with pre-built reports and analyses, and to which you can add other data sources. Otherwise, you’ll need to build and maintain a database and BI “stack” of software applications and every day you’ll be importing huge data files and spending lots of time checking for accuracy. Too much time spent on mechanics.
2. Get the data aligned and normalized with your company’s customer and product master data, so that product numbers and descriptions and brands and formats are the same whether you’re looking at the shelf data or data in your internal systems.
3. Go after the biggest returns, which will be in gauging the effectiveness of merchandising and promotion spending.  For manufacturers selling to retailers this type of spending can amount to 30% or more of revenue.  If turns on the shelf are lackluster for a given promotion, you’re wasting money and it’s time to find out why.
4. Focus on the largest customers with the largest perceived gaps, on the highest-turning items.  Look for shelf voids — out of stocks — that seem to have a pattern, like day of the week, or within a certain cluster or geography of stores.  These might be fixable with an adjustment in your customer’s store replenishment settings.
5. Concentrate on shelf issues you can actually do something about.  You probably won’t convince your company to discontinue ten slow-moving SKUs because they’re wasting shelf space – those products could be there for other, more defensive reasons.  You might, however, show your customers how adding more shelf space for some of your products will benefit them.

Related: Demand Signal Applications: The Basics

To learn more about data and analytics provider capabilities, check out Orchestro, Relational Solutions, RSI, JDA, and Mindtree.