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New software presents a single, up-to-date version of product information.
John Edwards, CFO Magazine
September 1, 2005
Kenneth T. Flynn, vice president and corporate controller at Proliance International Inc., an automotive heating-and-cooling products maker, fairly radiates confidence. That's because whenever a customer needs to check the price or specifications of something like a heater core or an air-conditioner condenser, Flynn is certain the information will be both accurate and current. What makes him so sure? Product information management (PIM) software.
Like a growing number of manufacturers, wholesalers, and retailers, New Haven–based Proliance has turned to PIM technology to ensure that the entire enterprise — employees, customers, and suppliers — is working with the same, updated product data. "We want everyone to see the exact same thing, with no confusion," says Flynn.
PIM software surfaced about three or four years ago, when vendors began merging print-catalog management programs with automated Web product-listing tools. The combination created a new software family that combines the structure and visual quality of print products with the Web's interactivity and immediacy.
Product information management aims to bring a single "truth" to online product listings. The technology eliminates the need to check for the most recent catalog versions, or to find editions tailored to a specific market or region. And with all relevant information about each product presented in a single place, users no longer need to switch between price lists and spec sheets.
A PIM product typically consolidates and organizes data stored in other applications, such as enterprise resource planning (ERP) and customer relationship management systems. Says Andrew White, a research director at Stamford, Connecticut-based technology advisory firm Gartner Inc.: "It becomes the central repository of product information, serving anyone who needs good, clean data about products."
Like Proliance. "Previously, a person in marketing would use an Excel data sheet that had certain data fields while a colleague would see other fields — or maybe the same fields but with different data," says Flynn. "PIM allows us to have all the information in one spot, so we can exchange information such as pricing, packaging specs, digital images, and so on." By linking the PIM software to its existing JD Edwards ERP system, Proliance can now share updated product information as soon as the data enters the system. "When we make the change internally, the customer instantly has access to those changes," says Flynn.
The PIM market really started to take off last year. Today, upwards of a dozen vendors offer PIM products or have added the technology to existing software suites. Several bigger vendors, including Oracle, SAP, IBM, and i2, offer PIM as one of their so-called master data management tools, according to Jim Murphy, research director at AMR Research Inc., a Boston-based technology advisory firm. Some of those vendors acquired small PIM specialists to enter the market; SAP, for one, bought A2i in 2004.
Meanwhile, several of the remaining independent PIM vendors have begun targeting their wares at businesses in specific industries. For example, Redwood City, California-based Comergent Technologies Inc. offers a solution tailored for automotive companies, while Wayne, Pennsylvania-based FullTilt Solutions Inc. has a product suited for the health-care industry.
Proliance chose Comergent's C3 Product Depot as its PIM solution, and Flynn says a key reason for selecting the software was Comergent's close links with automotive aftermarket companies. Specifically, Proliance wanted a product that supported the Product Information Exchange Standard, a data-interchange specification that is widely used within the automotive aftermarket industry. "Comergent was one of the industry leaders in bringing about this standard," says Flynn.
Nine Ways to Spell "Scissors"
Not surprisingly, retailers are among the biggest PIM boosters. "If you're a Wal-Mart or a Home Depot, you need to know what products you're getting in the door," says Kosin Huang, an analyst with the Yankee Group, a Boston-based technology-market research firm. "The problem is, the retailers have one version of the product data, and it's usually different from what the manufacturers have." Such a situation can lead to costly mix-ups in product ordering and pricing, especially if items need to be returned, reinvoiced, and reordered.
Corporate Express Inc., an office- and computer-supplies retailer based in Broomfield, Colorado, uses WebSphere Product Center (the PIM component in IBM's WebSphere E-business software line) to feed information to its E-commerce Website as well as to third-party marketplaces, corporate E-requisitioning systems, and an array of other online destinations. The system can serve more than 30,000 simultaneous users, says Daniel Druker, IBM's director of enterprise master data solutions.
Besides providing accurate and in-depth information, the technology also helps users find whatever they're looking for with minimal effort. "We realize that there are at least nine ways to spell 'scissors,' and we're able to accommodate them all,"says Chuck Coleman, Corporate Express's product support systems director. The software also alerts shoppers to additional products they might need. For instance, if a user requests information on a specific printer model, the PIM will serve up information on that printer as well as various accessories that can be used with the product.
PIM is also finding a home in the health-care industry. Premier Inc., a San Diego–based health-care group-purchasing organization, is using the technology to organize and present detailed information on an array of different medical products. "We buy about $21 billion a year in medical, surgical, and pharmaceutical products, as well as capital equipment," says Joe Pleasant, Premier's chief information officer. "We provide services to about 1,700 hospitals."
As a group purchaser, Premier negotiates prices with suppliers and provides product and pricing information to its customers. "We needed a way to store information on all of our products, and efficiently present that information to our customers," says Pleasant. The firm was using an in-house-developed data repository, which offered limited analytic intelligence; adding or changing product attributes required a lot of programming work. That's a big reason why Premier turned to Perfect Product Suite, a PIM system developed by FullTilt.
Perfect Product Suite is now the central repository for product data on 1.5 million medical products carried by Premier. The company plans to bring that number up to about 4 million SKUs in the next few years. "The system allows us to store information on 100-plus different attributes," says Pleasant.
The software has also enabled Pleasant's staff to improve the quality of product information. "We're able to serve it to other applications a lot more efficiently and to give our customers new views and insights into product information," he says.
The Road to ROI
Helping to propel PIM sales is the potential for significant and rapid ROI. A survey conducted earlier this year by the Yankee Group found that 63 percent of businesses that implemented PIM technology experienced increased sales resulting from an improved relationship with retailers. Meanwhile, 59 percent reported reduced logistical costs through better replenishment planning. Another 60 percent said that time spent by clerks or warehouse personnel correcting discrepancies or errors was significantly reduced.
To date, Proliance has invested $100,000 in the Comergent system it deployed at the start of 2005. Flynn expects that the software will eventually make a significant contribution to the company's bottom line. Corporate Express's Coleman, on the other hand, says he didn't need to formally calculate an ROI, simply because PIM technology has become indispensable to the company's daily operations. "We're dealing [now] with roughly twice the number of items we started with, and we're doing it with the same number of folks that we had when we began," says Coleman.
Since a PIM system is only as good as the data it contains, potential adopters must consider how the software will mesh with existing internal and external data repositories. "Data accuracy is really your top priority," says Flynn.
Reliable data can be fed into a PIM system in several ways. The prime information source is usually the company's own ERP system. Yet data can also come in from electronic data interchange and XML files sent by suppliers, financial markets, testing laboratories, and other business partners. Sometimes, information is even typed directly into the system. "You need to sit down with your software vendor and ensure that it understands what all your inputs and outputs and processes are about," advises Coleman.
Businesses adopting PIM technology must also make sure the people to whom they're sending the information have the capability to use it. While just about anyone can browse through a Web-based catalog, many customers aren't prepared to integrate product data into E-requisitioning systems and other advanced procurement technologies. "We had all these great things to send, but our customers didn't always have their own systems ready," says Flynn.
That's why business planning is important. The Yankee Group survey found that more than half of the companies that have implemented PIM software or plan to do so over the next 12 months — 52 percent — have also developed a business case for the technology. "Considering PIM's importance and complexity, it's not surprising that most companies aren't undertaking this investment blindly," says analyst Huang.
Flynn says careful planning has enabled Proliance to deploy a PIM system that is working well and generally living up to the company's initial expectations. "Anything that gives business data better coherency and visibility, and builds confidence, is good," says Flynn. "PIM wins on all of those counts."
John Edwards is a regular contributor to CFO.