Order Management Trends
Over the past few months, I have been working with many of my colleagues to understand the key drivers and trends impacting order management. I mentioned this study in an earlier blog What is new at SAP in the area of Order Management? and would like to thank all those who took the time to provide their feedback. We interviewed dozens of customers and reviewed reams of technology analyst and management consulting reports to understand what companies expect from an order management application and how these expectations are evolving. In this blog, I would like to share some of our findings.
Benefits of Order Management
In order to appreciate the trends and the impact they have on the order process, it is essential to understand the benefits companies expect to derive from their order processes. There are three primary benefits:
- Achieve operational excellence
- Enhance customer experience
- Drive revenue growth
Operational excellence can be achieved through process improvement and process reengineering. Examples include reducing cost and order cycle time through process automation and integration, and scalability to support corporate growth.
The order experience is a big part of the overall customer experience. The customer experience can be enriched through a variety of ways, such as making the customer interaction simpler, providing relevant information about the order, insuring order accuracy and quality, and making the complexity of the order process transparent to the customer.
Revenue growth can be realized through optimized product offering and expanded market reach. Examples include up and cross selling of products, using the internet to reach new customers, and building customer loyalty.
All order management applications are expected to deliver a combination of the above three benefits. However, a company may choose to focus on maximizing one or more benefits depending on its unique business drivers and adopted corporate strategy.
Order Management Trends
The big theme is that companies are increasingly using order management to enhance the customer experience and to drive revenue growth. The decreasing ability of companies to differentiate based on products, services and prices is fueling the trend to use customer experience as a competitive differentiator. The trend to apply technology to increase revenue and not just to cut cost is driving the focus in using order management to increase revenues. Below is the list of key trends we observed in our study:
- Multichannel Experience – The last few years have seen an increase in the number of channels available for communication. Today, customers expect to not only transact with a company using any channel but also to seamlessly switch channels during the course of a transaction. This implies that an order management application should support customer interaction using multiple channels and insure a simple and consistent experience across channels.
- Web 2.0 – The opinion of a user or user group matters. The advent of social networks has made it possible to instantly garner support for an opinion. This presents an opportunity to leverage the user or user community to evangelize the product and to optimize the product offering.
- Business Transformation – Companies are transforming themselves in response to the globalization and other competitive forces. Recent years have seen a record number of Mergers and Acquisitions (M&A) and agreements for Business Process Outsourcing (BPO). This requires scalability as well as flexibility from order management applications. In addition, companies are leveraging partners – or developing their own core capabilities – to offer a complete set of products and services to their customers. Some companies are going as far as transforming themselves from sellers of products and services into sellers of a solution to customer’s problem.
- Inbound Marketing – Inbound marketing (any interaction initiated by a customer) is gaining in importance for two reasons: One, the desire to enrich the customer experience at each interaction. Two, outbound marketing is losing relevance because of customer frustration with the large volume of outbound communication, fragmenting customer value drivers, and regulations such as the ‘Do Not Call List’. What this means is that customer initiated requests, such as a call to place an order may be the best opportunity to communicate the marketing message and to offer up and cross sells.
- Internet – The internet has allowed companies to expand their market reach and to use it as a low cost-to-serve channel. E-commerce in the US alone has exceeded $ 100 Billion. Internet based ‘self-service’ applications not only empower the user by offering control and convenience but also help to lower the cost to serve. It is thus imperative for an order management application to support e-commerce and to offer a wide range of ‘self-service’ features.
- Insight – The recent automation of business processes has led to the creation of large amounts of data. This data can be transformed into information and insights to improve the order process and to grow revenues. McKinsey, a leading management consulting firm, identified the ability to leverage information in new ways as one the top eight trends to watch in the year 2008. [Eight business technology trends to watch, McKinsey Quarterly, December 2007].
Order management offers three main benefits: achieve operational excellence, enhance customer experience and drive revenue growth. Traditionally companies have focused on achieving operational excellence but the need to create a strategic differentiator and to grow the top-line is driving companies to also focus on improving customer experience and revenue through their order processes.