Have hosted systems finished their 15 minutes of fame? They’ve been in the limelight long enough for the novelty to wear off and be replaced by close scrutiny of their flaws.
Yes, it’s our old friend the hype cycle: initial enthusiasm followed by disillusionment followed by slow but steady progress in the real world. But knowing about the hype cycle doesn’t prevent it from happening, and no one likes to recommend a technology that is out of fashion. So this will not be yet another article about hosted marketing systems.
It will be about hosted order processing instead.
Profitability Software Suite (ProfitCenter Software, 888/446-6240, www.profitcentersoftware.com) does both order processing and marketing. Like other systems built for catalog companies, it provides nearly all of the functions needed to run the business. These include product management, inventory, order processing and fulfillment on the operations side, and sales management, customer service, outbound promotions and Web site presentation for marketing. Accounting and human resources are missing, but this is also typical of catalog software.
The suite shares the same basic functions as other catalog systems, so what makes it special? Three elements: the depth of its functions, tight integration of the Web with other channels and its hosted delivery method.
The system’s functionality reflects its origins as an in-house project for Systemax Inc., a billion-dollar direct marketer whose main operating units are Global Computer Supplies, Global Industrial Equipment and Tiger Direct. The system had to support sophisticated business-to-business sales and marketing including separate levels to track contacts, accounts, opportunities and sales quotes; import and distribution of sales leads; pipeline reporting; and account-specific price lists.
Similarly, product management had to allow detailed product documentation and serial number tracking; purchases from distributors and manufacturers; automated inventory tracking, reorders and substitutions; product receipt and warehousing; various types of electronic data exchange; and reconciliations among requisitions, purchases, stock receiving and payments.
Order processing needed customer purchase orders, real-time inventory updates, rule-based configuration, cross-sell and upsell recommendations and sales of services such as warranties. These functions had to be delivered in a highly scalable environment: Global Industrial alone has more than 350 users on the system.
The same functions had to be delivered for Web marketing, which accounts for nearly half of Systemax’s revenue. Though many companies have folded the Web into core operating units, Web systems themselves still often remain separate.
ProfitCenter runs both Web and conventional order processing against the same underlying data files, automatically ensuring consistency in pricing, inventory reporting, product details and other information. It also gives marketers tools to directly control the offers and products shown on the Web without intervention by technical support staff.
This is critical because it means users can manage their Web site with the suite. Otherwise, even if data sharing were possible, users still would need a separate Web management system and thus lack close integration of the Web with other channels.
ProfitCenter’s third distinctive element is hosting. This means that ProfitCenter sets up and runs software. Clients need only send their data and connect through a Web browser. Hosting has intrinsic advantages of quick installation, easily distributed access and low demands on in-house technical staff.
It typically is offered with per-user, per-month pricing that adds financial flexibility and lower initial cost, though long-term savings are a matter of debate. For smaller companies, hosting also gives access to more sophisticated systems than they could buy and maintain independently.
Perhaps the main criticism of hosting is the difficulty of integrating hosted systems with other software. This may be less important with catalog systems than some categories because catalog systems tend to provide so many functions by themselves. Several catalog software vendors offer hosted options.
Most of hosting’s advantages and disadvantages apply to ProfitCenter. But while many hosted systems require little or no implementation expense, ProfitCenter charges a substantial amount, typically equal to three years of projected user fees. Pricing starts at $125 per user per month for a minimum of 10 users, so implementation for a minimum system would be about $45,000. This is more than some conventional mid-market catalog software and too expensive for many small direct marketers.
ProfitCenter has other interesting features, notably personalized “dashboards” that let each user choose the combination of data and reports to view at log-on. The system includes more than 600 standard reports, which are further customized during implementation. Users also can create their own reports by using a report writer against the underlying data tables. The tables contain large numbers of extra fields for users to assign as needed – a standard approach in packaged software, allowing customization without physically changing the data structure.
The underlying technology includes the usual enterprise-class components: Oracle relational database, Linux servers, BEA WebLogic application server, HTML and J2EE for end-user screens. Actual hosting is outsourced by ProfitCenter to AT&T.
Perhaps ProfitCenter’s least impressive feature is its outbound marketing. Users can define catalog, Web, e-mail and fax campaigns, each with an attached mailing list, source code and offers. But there is only one list per campaign, and everyone gets the same offers. This means targeted offers require a different campaign for each group.
Because lists for each campaign are generated independently, it takes considerable care to ensure each customer is selected only once. The system maintains a unified history of customer contacts, simplifying efforts to coordinate contacts over time. ProfitCenter also lacks any kind of integrated predictive modeling. Even cross-sell and upsell recommendations must be based on manually entered rules rather than any automated affinity analysis.
These limitations are shared by other catalog systems. ProfitCenter users do run large and successful DM programs through the system. ProfitCenter was developed in 2002 and signed its first external client in 2004. It has about a half-dozen implementations with more than 1,200 seats.