22019 MCM_ExecSummary_PIM_p3 - Multichannel Merchant

multichannelmerchant.com

22019 MCM_ExecSummary_PIM_p3 - Multichannel Merchant

EXECUTIVE SUMMARY REPORT: Product Information Management (PIM)Streamlined workflows translateto faster time-to-market for newcatalogs, new product introductions(NPIs) and merchandisingstrategies across channels.management (PLM) systems, as well as thefrequently separate catalog and web productionfunctions (content managementor CMS systems), physical stores, buying/merchandising, marketing/sales, inventoryand warehouse/fulfillment.Over the past decade or so, this has resultedin a constellation of “pain points”for merchants. These start with mountingcosts associated with inefficient, redundantprocesses. But it’s the huge potentialfor lost sales/revenue opportunities, particularlyin ecommerce, that tends to galvanizeretailers to seek out better solutionsfor managing product information.By the early- to mid-2000s, a growingnumber of solution providers had begundeveloping product information management(PIM) solutions designed to addressmultichannel retailers’ specific needs.PIM refers to technologies and processesthat enable a single repository of productinformation, starting with automatedinformation collection from suppliers andother feeds (plus information added by retailersthemselves). This information canthen be automatically synched and updated/maintainedwithin the central hub, anddistributed across the organization andback out to suppliers/partners as needed.Bottom line: By providing “a single versionof product truth,” the right PIM solutionshould enable a merchant to dealwith the volume/complexity of productinformation needed for daily operationsand strategic marketing. It should fill incapability gaps resulting from much of thisinformation being housed in existing systemsthat weren’t designed to handle complexproduct data and workflows.“Retailers sometimes think they need aCMS, when in fact they need a PIM,” observesTim Toews, senior consultant withprovider-independent solutions consultancyFitForCommerce. “If you have timeto-marketchallenges, insufficient product-attributeinformation for consumers,or fulfillment problems, a PIM can helpaddress those.”Potential Marketing, CostBenefitsWhile the actual benefits/results of implementinga PIM solution vary by company,these are the benefits most cited byconsultants, users and providers:*Enhanced operational efficiencies:The near perfect accuracy and consistencyof product data updated in near real-timeminimizes costly errors—such as pricingor product-attribute errors that can maketheir way into online stores, and marketingof out-of-stock items. (For example,if an ERP is handling inventory management,interfacing it with a PIM enables theretailer to communicate accurate inventorystatus to all marketing channels.)Minimizing redundant internalprocesses and enabling efficient sharingof consistent product data shouldallow for reallocating staff/staff timewithin various departments to moreproductive, marketing/sales-enhancingactivities. It should also facilitatemore productive, strategic internal collaboration.Benefits can extend all the waythrough to the warehouse. For example,access to accurate product dimension/weightdata can assist inventory spacemanagement and shipping-cost calculations.Accurate, consistent product informationalso helps streamline and improvethe accuracy of invoicing, strategic businessplanning and financial reporting.*Reduced time-to-market: All retailersare pushing to get new or enhanced productsinto their marketing channels/vehiclesas quickly as possible—not only online, butfor seasonally-oriented and “micro” printcatalogs and other promotions.PIM should eliminate most or all manual,redundant product information onboarding/inputtingfor buyers/merchandisingby integrating suppliers’ varyingformats and inputs (electronic feeds/exchanges,as well as spreadsheet/flat-file supplierinformation) into the retailer’s system.In production as well, automated syndicationof the latest, accurate product datato the CMS should eliminate manual inputting,corrections and updating of productdata. That helps minimize the proofing/correctionscycles required for print,and enables delivery of ecommerce-readycontent to digital channels.Streamlined workflows translate tofaster time-to-market for new catalogs,new product introductions (NPIs) andmerchandising strategies across channels.Experts say that the time between when anew product is onboarded into the systemand when it’s transaction-ready for variouschannels frequently drops by 40% to 80%.2Part of:


EXECUTIVE SUMMARY REPORT: Product Information Management (PIM)One large merchant that realized an 80%reduction saw NPI time-to-market dropfrom two weeks to two days.*Assortment growth: CommercialPIMs are scalable—capable of managingmany millions of SKUs—and providers aredeveloping solution iterations that manageever larger numbers of SKUs, with moreassociated product attributes.In ecommerce, in particular, this meansthe ability to market exponentially largernumbers of products (to leverage specialized/long-tailand international opportunities,for example). One merchant, for instance,doubled its SKUs from 800,000 to1.6 million; another increased its annualNPIs by 300%.*Enhanced cross-selling/upselling andmarketing analysis: PIMs also handlelarge numbers of complex product datagroupings/relationship associations, enablingenhanced cross-selling/upsellingin ecommerce and other channels. Oncecross- or upselling rules are established(these can be adjusted/expanded), they aresyndicated across channels.Another benefit for cross-/upsells andsales in general: Call-center CSRs nolonger have to consult multiple systemsto answer customers’ product questionsand suggest relevant (in-stock) additionalpurchases.PIM solutions generally don’t link to customertransactional data such as credit cardinformation—and thus don’t generate realtimeanalytics for marketing, or demandforecasts. But they do capture by-customerrelationships with products (specific productpurchased, price). That information canbe fed into systems that analyze merchandising/pricing/offersand help guide buyingand marketing decisions.*Data globalization: Enhanced ecommercemarketing by country and withincountrysegments, through automatedtranslation of pricing/currencies andproduct metrics. Another, emerging capability:one-click copy translation via integrationwith third-party automated translationengines.*Brand consistency: Enhanced abilityto ensure that a retailer’s brand—and theproduct brands it offers—are consistentlypresented across all channels.*Data consolidation in M&A’s: Abilityto expediently integrate an acquired company’sor brand’s product information intothe acquirer’s systems/processes.*Media assets management: In ecommerce,enhanced, up-to-date media assetstranslate to sales. PIMs can manage/updateimages and video/multimedia assetsfor feeding into the CMS and syndicatingto ecommerce and other functions/departments.Emerging capabilities also enablemanipulation of media assets withinthe PIM, if desired. These may includeauto-generation of watermarks and imagesof specific resolutions and sizes, and oneclickcolor swatching/changes.*Additional functionality/collaborationwith vendors: Automated productdata onboarding and vendor self-serviceyield operational benefits and channelinsights for vendors, as well as retailers.This should enable more time for (betterinformed) collaboration between the partners.In addition, some newer PIM solutioniterations offer portal capabilities thatinclude social media tools where retailerand vendor staff can post comments andshare information.*Enhanced online discovery: Search isever more crucial in driving ecommerce—and increasingly, consumers are searchingby a variety of product attributes. Themore accurate your product data, the morelikely consumers are to find and purchasethe product on your site.*Leveraging consumer insights: SomePIM/MDM solutions can now capturefeedback from customers/prospects. Thiscan be used to help analyze the demandfor and pros/cons of specific products, tohone product offers/presentations, and tomake marketing decisions.When Does It Make Sense toInvest in a Commercial PIMSolution?As is always true with IT solutions,there is no simple answer to this question.Size, in some respects, does matter. Butthere are also other key factors involved indetermining whether a commercially marketed,on-premise enterprise PIM solutionis a viable investment for a given company.Moreover, on-premise enterprise solutionsare not the only provider-based option.To date, adopting licensed, on-premiseenterprise PIMs has been most commonamong large ($500 million and over in annualsales) and medium-size ($250 millionto $500 million) multichannel merchants.However, consultants cite a growing numberof cases in which companies with between$50 million and $250 million in annualsales have been able to cost-justify anon-premise enterprise PIM.Beyond annual sales, the other key factorsdetermining the ROI for investing in a commercialPIM solution (whether on-premiseenterprise or other) include the following:*SKU count and assortment diversity:1 million or more SKUs demand sophisticatedPIM capabilities. (Some PIM solutionscan scale to 50 million or moreSKUs to accommodate companies withwide product-category assortments/largeSKU numbers, such as department storechains.) SKUs of 250,000 to 1 million areconsidered to be in the medium range, andthose under 250,000 in the smaller range.*Product complexity: Even if they fallinto the mid- to smaller-ranges in terms ofSKU counts, some merchants (e.g., electronics,fashion, automotive parts/accessories)are marketing products with complex attributesthat require providing consumers withfar more than typical SKU information.*Relationships between SKUs: Themore relationships there are between products/productcategories, and the more complexthese are, the more a PIM solutionpays off. For example, product relationships3Part of:


EXECUTIVE SUMMARY REPORT: Product Information Management (PIM)need to be intelligently defined and linkedin order to effectively market and cross-sell/upsell apparel and accessories, or compatibleelectronics systems/enhancements.*Number of channels: The more channels,the more marketing and operationalbenefits realized from syndication of accurate,consistent product data across those channels.*Process complexity and go-to-marketdemands: The more pressure to minimizego-to-market time (due to market competitionand/or contractual obligations withvendors)—and the more departments/staff involved in getting NPIs and marketingefforts to the transaction-ready stageacross channels—the more a PIM pays off.*Number of vendors/onboarding complexity:The larger the number of vendorsand the more onboarding formats/channelsbeing used, the more benefits fromPIM. PIMs can also facilitate drop-shipping,and rationalize differing/conflictinginformation on the same product as providedby multiple vendor sources.*Globalization: International ecommerceexponentially increases product informationsystem/management demands.Automated currency and product metricsconversion, and copy/language translation,should slash staff coordination time andother costs, and enable quicker time-tomarketand a better consumer experience.“Plug-In” Enterprise and“On-Demand” SolutionsPIM solution providers are offering anincreasing number of prebuilt “plug-in” solutionsfor integrating a PIM solution on anon-premise, enterprise basis with existingsystems. These are designed to be faster, lesscostly alternatives to traditional customizedintegrations. However, consultants cautionthat all PIM tools must be customized/tailored,to some degree, to each unique business/technologyscenario. (“Plug-and-play”should not be taken too literally.)In addition, some solution providers offer“on-demand” or cloud-based/SaaS solutions.These are designed for companiesthat don’t want to invest in the IT staff/expertiseto support ongoing maintenance/updating of the complex relationships betweena PIM and other systems in a company,and/or want a faster, more “turnkey”PIM solution.With on-demand, the solution providersets up the hardware, software and networkinfrastructure needed, works withthe user to customize a data model forcapturing all attribute, workflow and vendoronboarding needs, and implementsthe system. Thereafter, the provider doesongoing administration of the hardware/infrastructure, while the user can furthercustomize workflows or data models usingtools within the PIM.While some large and mid-size retailersopt for on-demand solutions, they’re oftenparticularly attractive to smaller ($50 millionand below) merchants, who can startwith one or two applications (e.g., just online,or just print and online), and expandfunctionality to other channels/media aswarranted over time.Monthly subscription fees for on-demandPIM solutions can range anywherefrom $6,000 to $50,000, depending onSKU and system-user numbers, as well asthe fee structures and capabilities of individualproviders, reports one source.Build vs. BuyOccasionally, integrating highly specialized,internally developed existingsystems/processes with commercial PIMsolutions presents challenges, causing amerchant to weigh the alternative of developinga proprietary solution to addressproduct information needs.However, the ability to find viable commercialsolutions has expanded, alongwith the number of commercial PIM providersand platforms available. Further,consultants emphasize that it’s become extremelydifficult to objectively ROI-justifyinternally built solutions. Such solutionsrequire costly, ongoing maintenance/upgrading,and their capabilities/scalabilitylimitations translate, sooner or later, to lostmarketing/sales opportunities. In comparison,commercial solutions can in somecases (depending on system complexityand user base) begin yielding ROI in 18months or less—and continue to yield costand marketing advantages over time.“Over the years, many companies—includinglarge multichannel merchants—have tried to develop and implement their4Part of:


EXECUTIVE SUMMARY REPORT: Product Information Management (PIM)own enterprise PIM solutions,” says one consultant.“But there is tremendous expertiseinvolved in importing information acrossvendor formats, validating and formattingdata, and so forth, before you can achievecustomized distribution to various channelsand enhance workflows and efficiencies.“Internally developed solutions nearlyalways fall far short of the capabilities possiblethrough providers that have spentmany years and millions of dollars developingsolutions,” he continues. “Not tomention the system flexibility and ongoingmaintenance required to adapt to consumers’changing channel preferences andother marketplace changes. Today, largeretailers looking at re-engineering theirsystems, as well as medium-size and evensmaller retailers, nearly always benefit overthe long term from finding the right commercialsolution. Systems development isnot their core competency. They want tofocus on the business of retailing.”Consultants also note that mid- tosmaller-size companies tend to overestimatethe initial costs of commercial PIMsystems. Today, depending on the company’ssize, complexity and needs, evenenterprise, premise-based PIM solutions,implemented on a tiered or priority-needsbasis, might initially cost $500,000 or less.ROI AnalysisMost retailers already have some ideaof the time required for specific tasks orfunctions within departments (such asinformation onboarding and correctionsin production), or can determine thesetimes by tracking them and calculatingestimated productivity benefits using averagesalaries. Data-quality benefits can beprojected by using metrics for key factorssuch as the costs of returns (time spent onvarious functions, as well as reshippingcosts), and costs of non-revenue-yieldingcustomer contacts. In some cases, a companycan realize savings from decommissioningone or more legacy systems.Retailers need to dig deeper to tryto accurately quantify what are likely tobe more significant benefits, such as increasedsales/conversions, margins andretention rates resulting from better, moreconsistent product information and mediaassets for prospects/customers, widerassortments, and faster time-to-market.Quantifying the broader, major long-termbenefits of enhanced enterprise integrationand data governance can be evenmore challenging.Some Key Best PracticesCovering the complex topics of the vendorselection and implementation processesis beyond the scope of this summary.However, on the provider-selection front,some key research/resources include VentanaResearch’s Product Information ValueIndex; The Information Difference’s MDMLandscape reports; and Gartner’s MagicQuadrant and MarketScopes research, includingMagic Quadrant for Master DataManagement Customer Data Solutions.One of many resources/white papersavailable (including through various consultants’and providers’ sites) on the tool selection/implementationprocesses is “SuccessfulProduct Information ManagementImplementations” (by Adastra’s Fisla).A few key points and best practicesstressed by consultants and providers:*A PIM will have implications/benefitsfor all areas of an organization. This makesthe support of C-level management—andthe involvement/collaboration of both ITand all key business managers—critical tothe success of the selection and implementationprocesses.*Even for larger retailers, deploymentin phased increments is generally recommended.Identify the company’s biggestpain points or areas of largest value/benefitsand deploy those capabilities first.Measure results/benefits, and then proceedto other high-priority capabilities.*Defining and formally documenting, indetail, all existing functional/business andtechnical requirements, users, workflowsand business rules—as well as all systemsin which product information exists andthe associated formats—is crucial. This isthe foundation for determining detailedrequirements/needs/gaps for the providerRFP process and ensuring that the chosenprovider has all of the information it needsfor successful implementation.Fisla says that deployment problemsor unmet expectations/goals are nearlyalways caused by insufficiently detailedupfront requirements analysis, perhapscoupled with an insufficient proof-of-conceptstage.Toews stresses that the PIM selectionprocess is an excellent opportunity for acompany to analyze every aspect of itscurrent workflows and operations—ananalysis that can yield important benefitsin and of itself. (He also cautions first-timeusers of automated workflows not to makethe common mistake of making workflowstoo complex.)*Organizational planning is required,including an organizational roadmap andretraining plan tied to defined functionsand performance metrics.*Data governance issues are critical. AsToews points out, virtually every department/functioncan claim some “ownership”in product information master data,and each has its own perspective. Someexperts also strongly recommend, in additionto creating access policies, designatinga “data steward” who has responsibility/authorityfor defining specific productsand their key attributes, and setting upprocedures to ensure the accuracy of thedata that populates those definitions. (Thismight be taken on as an additional area ofresponsibility by an existing manager.)Karlene Lukovitz (klukovitz@klmedialink.com)is an independent business writerand media consultant specializing in themedia, marketing and retail industries.5Part of:

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