Blog will soon be updated with latest OPP innovations – stay tuned / Ingo Woesner, Sep 27, 2017
Dear SAP Retail Community,
The new SAP Omnichannel Promotion Pricing (OPP) is a true “omnichannel” innovation.
Based on SAP CAR’s Retail Applications Bundle it ensures correct and consistent effective sales prices and cart values across all sales channels along with the ability to introduce new pricing rule types with low implementation effort, which then become effective across all sales channels almost immediately.
But let us start from the beginning.
Typical Situation in Retail Sales Applications
A typical retailer has plenty of systems in place to calculate sales prices, e.g. SAP ERP systems, POS systems, web shops, mobile apps, CRM, etc.
Each solution has its own price basis (let’s call it “repository”) and its own price calculation logic (let’s call it “pricing service”):
Fig.1: Typical Situation in Retail Sales Applications as of today.
This multitude of pricing tools often leads to price inconsistencies in the various sales channels. Even worse, promotional offer types and rules are not fully and consistently supported across all sales channels.
This leads to massive development and test efforts, to get things “quasi-consistent”:
- When introducing new promotional offer types and rules, retailers have to change the coding in each of their sales applications. This can take weeks and months.
- Even when retailers have implemented these changes, they can still not be 100% sure that the various pricing engines are applying promotion rules in a consistent way.
A whole family of mobile apps emerged because of this unfortunate situation, pointing consumers to such unintended “bargains”.When customers become aware of “better” prices, or find their fortunate bargain order rejected, a poor customer experience is the result. This has a profound effect on customers’ satisfaction and loyalty.
What is SAP’s solution for Omnichannel Retailers?
The new SAP Omnichannel Promotion Pricing (OPP) ensures correct and consistent effective sales prices across all sales channels, along with the ability to introduce new promotional offer types and rules quickly and with low implementation effort.
Fig.2: Omnichannel Promotion Pricing for SAP Retailers
The value for omnichannel retailers is obvious:
- Consistent price and promotion information available at all touch points
- Faster time to market of new creative promotional offer types and rules
designed by marketers
- Increase revenue by higher customer satisfaction and loyalty
- Save costs with low implementation and test efforts when introducing new promotional offer types and rules
Omnichannel Price and Promotion Repository in SAP CAR
A new Omnichannel Price and Promotion Repository in SAP CAR stores all relevant information needed to calculate the effective sales prices and cart value in all sales and communication channels.
This comprises regular sales prices as well as offers.
- Typically, regular sales prices like sales list prices and sales net prices are calculated by the SAP ERP based SD pricing plus condition technique. These prices act as a “start” value for the new Omnichannel Promotion Pricing calculation.
- Many offer types are supported, from simple discounts via Mix’n Match offers to offers which are combined with an incentive. Find details here.
So simply all price and promotional offer types and rule information that is needed to calculate the effective sales prices and cart value are centrally held in the Omnichannel Price and Promotion repository in SAP CAR and stored in the Demand Data Foundation (DDF).
Transformation of Offers into OPP Promotions
Promotional offer types and rules, simply called “offers”, are typically created in
- SAP Promotion Management for Retail (SAP PMR)
- New SAP Fiori transactional app “Manage Promotional Offers”
- SAP ERP Retail Promotion Management (excl. Bonus Buy)
- Import from 3rd party systems
After an offer has been created, it is transformed into a format that complies with the Promotion format of the Association for Retail Technology Standards (ARTS). The ARTS Promotion is a widely accepted standard for defining promotional rules.
An offer with this format is called “OPP Promotion”. An OPP Promotion is the runtime model for offers within the Omnichannel Promotion Pricing. The OPP Promotion was introduced to allow easier mapping of promotional rules for external consumers.
There is no application that allows the direct maintenance of “OPP Promotions”.
Omnichannel Promotion Pricing Service
In addition to the central repository, a new Omnichannel Promotion Pricing Service is introduced, which calculates the effective sales prices and cart value by using the price data stored in the Omnichannel Price and Promotion Repository.
The Omnichannel Promotion Pricing Service is a JAVA based SAP HANA XS Advanced application (XSA). Therefore the configuration of database service and back-end connection information is done during deploy time. Find more information here.
Excerpt: Offer Recommendation
Offers can not only serve for mere effective sales price calculations. Retailers can use offers to propose them as “incentives”, to encourage consumers to do something in order to collect the benefit.
Here some examples:
- “If you buy product A and B today, you get 2$ off on product B”
- “If your purchase total is above 100$, you don’t pay any shipping costs”
- “If you buy one item of category A and 2 arbitrary items of category B, you’ll get 500 loyalty points”
- “If you buy a product of category A and show coupon code ABC, you’ll get 2% off on your purchase”
- “If you’re member of target group “young urbans” and buy a pair of trousers, then you’ll get 15% off on trousers”
- “If you buy this cell phone together with mobile contract, you will get a 10$ coupon for your next purchase”
The Offer Recommendation in SAP Hybris Marketing picks for every consumer, in every sales channel and in every moment the best of all thousands of available offers, based on the real-time context and matched with historical information.
However, Offer Recommendation does not include the creation and maintenance of an offer. In a SAP Retail Omnichannel Commerce scenario, offers are typically created in SAP Promotion Management for Retail (PMR) or in the Fiori app “Manage Promotional Offers”. After the creation these offers are replicated from SAP CAR into SAP Hybris Marketing, where they are used for Offer Recommendation.
The Recommendation application of SAP Hybris Marketing is well integrated with the SAP Hybris Commerce Suite’s web content management system (WCMS), allowing the recommended offers and products to be proposed in a web shop, mobile app, kiosk, etc.
More information about Offer Recommendation is available in this blog.
After this divagation with Offer Recommendation let’s come back to the Omnichannel Promotion Pricing and learn, how it can be deployed to the various sales channels and applications.
A SAP Retail Omnichannel Commerce system landscape comprises various applications to address the individual sales channels. Some high volume sales channels typically run “standalone” and are only asynchronously connected to SAP backends, e.g. POS systems and commerce platforms. This independency allows them to meet mandatory performance and reliability requirements.
To meet the requirements of the various sales applications various deployment options are available:
A central Price and Promotion Repository in SAP CAR is mandatory for an Omnichannel Promotion Pricing scenario.
Optionally an extract of the central Price and Promotion Repository can be deployed locally to the respective sales application. To ensure consistency local extracts are periodically updated from the central repository (via the Data Replication Framework (DRF) with new iDoc types ROP_PRICE and ROP_PROMO).
This is depicted as the “Outbound” layer in SAP CAR (see also chapter “Focused Business Solution” below):
The Promotion Pricing Service can be deployed centrally in SAP CAR, and/or locally in the sales applications. In contrast to the price repository, it is not necessary to have a central Promotion Pricing Service, but to totally rely on local pricing service(s).
Here some examples of typical deployment options. Each can be implemented independently per sales channel:
- The web shop calls a local pricing service using a local price extract
- A POS system calls a local pricing service using a local price extract
- A mobile app calls the central pricing service using the central price repository
A local extract of the repository combined with the local deployment of the pricing service ensures correct and consistent effective sales prices even in asynchronously connected “standalone” sales applications, along with the ability to introduce new offer types with low implementation effort.
This allows high volume sales applications like POS servers in the stores and commerce platforms like SAP Hybris Commerce to avoid high data traffic (load, latency) in the network communication, and performance issues (speed) for the many concurrent users for a (remote) price calculation.
A hybrid scenario is also possible, where e.g. a web shop uses a central pricing service, while a POS solution uses a local deployment.
Make Pricing Fast!
The price condition technique in SAP ERP covers even the most complex B2B industry pricing requirements. In contrast, B2C consumer businesses typically need just regular sales prices, combined with a handful of promotional rules and offer types to calculate the effective sales price and cart value.
Omnichannel Promotion Pricing is consequently designed for B2C consumer businesses, which means high volume businesses with low pricing complexity.
Therefore the Omnichannel Promotion Pricing service starts the calculation with pre-calculated regular sales prices, and applies the relevant offers. That’s it – fast and simple.
So Omnichannel Promotion Pricing is not designed to be used in B2B businesses. However, in B2B sales channels with low pricing complexity (e.g. when price lists are applied to defined customer groups) OPP can be evaluated as a viable pricing solution.
What happens with all the other pricing engines?
The Retail Pricing (“Handelskalkulation”) in SAP ERP and the price condition technique remain relevant, as they typically provide the regular sales prices to the central Omnichannel Promotion repository in SAP CAR. However, SAP ERP pricing does not affect the actual calculation by the new Omnichannel Promotion Pricing.
In SAP Hybris Commerce based sales channels, the genuine Hybris pricing engine will no longer be used in an Omnichannel Promotion Pricing based scenario. In that case the Hybris pricing engine is replaced by the Omnichannel Promotion Pricing service. The integration of Omnichannel Promotion Pricing with SAP Hybris Commerce is provided by the integration package for SAP for Retail from version 2.1.
Regarding POS solutions, GK Software intends to integrate the new Omnichannel Promotion Pricing service in an upcoming release of the SAP Omnichannel POS by GK Software, and to provide standard import capabilities of the extract from the central price repository in SAP CAR. Other POS vendors need to be implemented on project basis.
Accelerated Project Implementation
The new Omnichannel Promotion Pricing is part of the RDS Package for SAP CAR, as well as the Omnichannel Model Company.
The new Omnichannel Promotion Pricing ensures correct and consistent effective sales prices and cart values across all sales channels along with the ability to introduce new pricing rule types with low implementation effort, which then become effective across all sales channels almost immediately:
- One central offer maintenance
- One central price and promotion repository
- Identical price calculation logic in all sales channels
- Different deployment options (central, local, hybrid)
- Extensibility concept – easily extensible by SAP customers and partners
- Faster time to market of new creative promotional rules designed by marketers
- Save costs due to low implementation and test effort when introducing new offer types and bonus buy rules
- Increase customer satisfaction and customer loyalty
by having consistent price and promotion information at all touch points
- SAP CAR 2.0 Retail Applications Bundle 1.0 Feature Package 3 (CAR RETAIL APPL BUNDLE)
- Price and Promotion Repository in SAP CAR
- Export of prices and promotions via iDocs
- SAP CAR 3.0 Retail Applications Bundle 2.0 (CAR RETAIL APPL BUNDLE 2.0)
- Central Promotion Pricing service in SAP CAR
- Online access via web service to central Promotion Pricing Engine in SAP CAR
- Focused Business Solution (FBS) “SAP CAR, omnichannel price and promotion service”
- The new Omnichannel Promotion Pricing comes as a Focused Business Solution and need to be licensed in addition to the SAP CAR license.SAP’s Focused Business Solutions are developed as SAP standard solutions that address business needs of customers in targeted markets. They are available for sale from the SAP Global Price List and are treated as SAP Standard in every way, including SAP Global Standard Maintenance and Support.
- SAP Hybris Commerce (6.1), integration package for SAP for Retail 2.1 or higher
- Local Pricing Repository in SAP Hybris Commerce
- Local Promotion Pricing Engine in SAP Hybris Commerce
- Offer Maintenance applications
- How to use offers as recommended “incentives” in personalized marketing
- CA-DDF-RT-PPR: ABAP based Omnichannel Pricing Repository and outbound capabilities
- CA-DDF-RT-PPS: JAVA based Omnichannel Pricing and Promotion Service
Dr. Ingo Woesner
Global Director, Product Management
P&I Retail Omnichannel
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