ERP for the SMB: Part Three - Complexity continued
By Ann Grackin
on Sep 20, 2011
ERP for the SMB: Sales and Marketing business models should drive your choice for an ERP. This series is for SMBs that are contemplating ERP.
Full Article Below -
This ERP for the SMB series is now combined in the FULL REPORT.
Complexity in Sales and Marketing Models
In the Part Two, we discussed today’s business complexities from a manufacturing perspective and how they impact your ERP requirements. We also discussed ERP requirements from an industry perspective.
In this article, we will continue the discussion about businesses’ increasingly complex relationships to markets and customers. In other words, we will delve into the world of Marketing, Sales and Channels.1
Marketing, Sales, and Channels is a complex world of diverse relationships:
Market Reach—through a myriad of marketing opportunities and marketing programs that include both direct and indirect communities: media, mobile channels, social networks, web directories, events, joint partner activities, as well as promotions with trading partners and retail channels.
Sales/Customer Relationships Management—diversity in sales models, from B2B to web-based B2C models, which include complex modes of selling, often called multi-channel; also includes management of the sales professional, including goal setting and compensation models.
Channels—a rich assortment of 3rd party partnerships and models of selling through them. Although some companies sell exclusively direct, the importance of channel automation cannot be overlooked.
Service Management/Services—often performed by a rich network of distributors, 3rd party service experts, and often logistics companies. In addition, retailers such as Sears, Best Buy, Home Depot, Lowes and many others manage 3rd party networks and need warranty systems as well as dealer network management and logistics.
Today, the business is ever more impacted by these complex networks of trading partners, so a monolithic approach for ERP won’t work.2
In this article, we have attempted to identify some elements of the complexity and integration that need to be met by the ERP.
Now let’s look at each of these functional areas and delve into this complex world.
Sales and Marketing—Getting More Complex All the Time
As globalization and virtualization grow in strength, businesses cannot afford to ignore the many business opportunities and the challenges of engaging in these relationships. From the first decision to engage in a partnership through a successful execution, the flow of real-time information to understand, manage, grow, and preserve market success is critical.
It All Begins with Marketing
In contrast to Mad Men—portrayed as a hot bed of creativity and big media deals, marketing today has become a technology and data-driven function, managed through a rich array of sources and information channels.
Mad Men . . . and women . . .
Creativity may still be alive, but ‘customer engagement data’ from web sites, mobile devices and social media (analyzed for market tastes and trends), is the way to a marketing executive’s heart. Opt-in numbers, audience, demographics, wallet size and loyalty metrics rule. Data and linking the data to the lifecycle of customer interest, promotions, and campaign success is so important, that many firms have given up the traditional marketing methods of old—TV advertising and Sunday circulars.3 Marketing Automation has become a critical element, though strategies vary based on B2B vs. B2C businesses. (Read Marketing Automation—What It Is and What It Should Be.) Promotions are used to create traffic and attract new customers and to reward those loyal to the brand.
All this data is translated into demand plans for markets and products. For those who sell through retailer channels, the need for merchandising based on customer analytics such as demographics and specific clusters of customer groups is critical. That data is used to support enterprise activities ranging from product design to supply chain and sales.
Today, ERPs are in the early stages of understanding and adapting to this complex world. (See Figure 1.)
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Figure 1: ERP for the SMB
Sales/Customer Relationship Management
This is a mature area for the ERP market. In fact, a few ERP firms got their start as ecommerce and sales force automation firms. Or they acquired CRM leaders and incorporated their solutions into their own offerings.
Here, complexity centers on dealing with multi-channel sales, and many firms still have not come to terms with the challenges this poses. Multi-channel sales require firms to have a high level of integration with their trading partners. They also require complex fulfillment capabilities to assure that everything: order taking, administration, successful delivery, and installation of products (often done by 3rd parties) all works together.
Further, the special circumstances created by multi-channel pose challenges in sales, as prospects shop the channels and do find variety in the offerings, add-ons, promotions, and price. Sales transactions and compensation based on channels, and various sales campaigns can challenge a firm’s internal sales management ability to deal with all the complexity.
Also, sales force automation has gone social and mobile, integrating sales professionals with all the data about their customers: personal sales information, meetings management, and sales administration, as well as post-sale activities such as customer satisfaction surveys and new sales opportunities such as upgrades and extensions. Sales is a very human-to-human business function and technology needs to reflect the communication style—mobile and social—that is the standard M.O. of the sales professional.
Today, interconnectivity with channels traverses marketing, sales, supply chain, service management, and human resource training programs. Underpinning these outbound processes are revenue management and pricing. Most firms have growing networks of channel partners and along with that, more complex relationships that potentially encompass the total sales life cycle—product, packaging, pricing, markets served, and after market. In addition, well run partnership programs include sales and service training, visibility to supply chain operations/inventory management, and special compensation agreements.
Technology that supports these various functions includes both web-partner automation solutions (read about marketing and partner automation systems) as well as the ERP sales inventory systems. Although much technology exists in these two platforms, the implementation rate of marketing automation is low (though its growth rate is high). But as we talk to users, we find that they are increasingly turning to channels for sales growth (read about sales and channel priorities for 2011 here). Ultimately, that will lead to greater usage of channel and marketing technologies.
Successful service management today incorporates integration between multiple enterprises and customer processes, but often is outsourced to distributors or 3rd party service partners. Creating a physical and data-optimized set of integrated processes (often called Total Life Cycle Management or Service Life Cycle Management), in which firms think about service management from the point of view of supply chain design, product design, as well as customer service execution is a substantial challenge. Even enterprises that have been working internally to integrate this life cycle have big data and workflow problems, which are exacerbated by outsourcing.
Figure 3: Service Integration and Execution
Service execution is all about optimizing the service experience. It includes inventory planning, logistics, customer-direct ordering of consumables, service-professional labor/skills management, and call center performance as well as employee decorum/customer satisfaction.
To be successful, integration across 3rd party services and enterprise processes is essential. Here again, ERP may have call centers and great enterprise inventory, but building a service supply network might be out of reach for some ERPs today. We will talk more about that topic in future chapters.
Conclusions—ERP and Partner Systems
Success in market/customer-facing processes requires cohesive cross-functional data and enterprise workflow as well as successful integration with a great variety of partner systems. Within the enterprise, a data-centric approach is required. Externalized processes increasingly are managed through 3rd party platforms. Enterprise systems need a way to map to these platform providers to ensure the data synchronization required to manage, in real-time, moment-by-moment customer interactions.
End-users making ERP choices need to take these critical processes into account and determine what is most critical for their business. In addition, they need to determine which providers will offer not only great internal technology for the enterprise, but also best provide the bridges required to integrate to 3rd party platforms such as EDI, or Marketing relationship/web partners, or other 3rd party services. In the past, many firms thought that supply chain—the supply or procurement side—was the sole domain for these platforms, but going global and going channel means leveraging sales and market platforms like never before. So now, 3rd party or SaaS platform integration is on the sell-side, not just the supply-side. Your systems need to provide you with these 21st century capabilities.
1This article is not a treatise on Marketing and Sales functions. We have provided links for more detailed information in those areas. Here, our goal is to provide an overview of what users need to consider in terms of ERP and systems requirements to support these business functions.
2In fact, some providers are trying to move away from an ERP corporate identity.
3Soap operas were invented to market home cleaning supplies to housewives, using daytime TV commercials. Firms like P&G have cancelled this type of advertising. We now have retailers such as Michaels that only put coupons on the web, not in newspapers anymore.
To view other articles from this issue of the brief, click here.