Current State of PRM Vendors
What
are the advantages of partner relationship management (PRM) applications
and can they be sustained stand-alone? Designed to help manufacturers reach
end users served by an intermediary, PRM software lets original equipment
manufacturers (OEMs) grasp feedback from end customers, while also supporting
commerce and interactions with distributors. Then the natural question is why
only a few software vendors specializing in PRM, which is also known as channel
management, demand chain management (DCM) or channel relationship
management (ChRM), have thrived? Part of the answer is that expectations
for PRM were overblown during the business-to-business (B2B) e-commerce
software frenzy of a few years ago, leading to an overabundance of specialty
vendors. But another factor is that PRM functions increasingly overlap with,
and are being subsumed by the market for customer relationship management
(CRM) and supply chain management (SCM) software, as the goal is to
make manufacturers more responsive to customers' demands for their products
so that manufactures can deliver products in a more timely manner.
While many debates will still rage about PRM's relation to CRM or SCM (i.e., whether the first is only a cousin or a child of the latter's) and about its stand-alone viability, it is certain that there has been a need and demand for PRM, albeit the area has been a moving target ever since its relatively recent advent. While even during the dot-com euphoria many were dreaming about disintermediation?that is reaching their customers directly (often hoping at the expense of their partners)?the more realistic ones have always known the importance of the indirect channel (resellers, dealers, distributors, wholesalers, etc.). Now that the back-to-basic reality has indisputably triumphed, almost every company has been more closely scrutinizing their relationships with partners and figuring out how best to reach and nurture them.
Some pundits are predicting as much as 80 percent of business will go through indirect sales channels in the next five years. Given ever-shorter product life cycles and companies' ever-increasing reliance on third party channel partners to drive sales and increase customer satisfaction, the need for some form of PRM should not be questioned. Indirect business partners are usually better at serving local markets and specific customers than companies that focus on developing and marketing product lines across a broad spectrum of markets.
That
PRM is still morphing also stems from the fact that different folks need different
strokes. The mix of traditional brick-and-mortar and on-line channels (so called
click-and-mortar) is adding to the confusion. As the systems become more sophisticated,
they are moving from single-channel capability to delivering multi-channel capability
and enabling users to reach their customers through a variety of channels, including
distributors, dealers, on-line marketplaces, and direct sales. Capabilities
range from traditional paper-based mail, phones, fax, computer-telephony
integration (CTI), valued added networks (VANs), secure virtual
private network (VPN) communication between manufacturers, and indirect
channels about specific deals to detailed Internet-based portals that enable
everything from downloads of vendor product information to e-mail campaigns
about important events. The ever-growing number of companies sell and serve
clients through multiple, distinct channels, rendering applications that handle
only one channel increasingly irrelevant.
Thus,
the relatively recent demise of PartnerWare, a PRM pioneer
whose TCX Insight product included components for channel marketing,
closed-loop lead management, and extended team selling, and a number of recent
mergers and acquisitions like Click Commerce and Allegis
(see Click
Commerce Acquires Allegis), ChannelWave and Aqueduct,
or Comergent and Profile Systems, indicates
rapidly more difficult competitive position of pure PRM players (that is an
insufficient client base traction and recurring revenue, narrow functional footprint
[such as one without order management functionality], while almost impossible
to find a new investment funds infusion). For more discussion on what constitutes
PRM and DCM functionality, its importance and its standalone sustainability,
see Who
Alleges The PRM Market Consolidation?
PRM Vendor HAHT Acquired by GXS
The claim that ongoing consolidation in the enterprise application space of late has mostly been about pilfering install base, increasing market share, and saving the "economy of scale"-based product costs can be refuted by the recent merger of two players in the B2B e-commerce arena. They claim that the rationale for their merger is to provide a more comprehensive solution for accommodating increasingly global business relationships.
Namely,
on January 15, Global eXchange Services, Inc.
(GXS, www.gxs.com),
the large, privately-held B2B e-commerce software, services, and solutions pioneer,
which operates one of the largest B2B e-commerce networks in the world and manages
one billion annual transactions for more than 100,000 trading partners, announced
that it signed a definitive agreement to acquire HAHT Commerce
(www.haht.com). HAHT Commerce is based in
Raleigh, North Carolina (US) and is a privately-held provider of demand
chain management applications (DCM) that strategically automate, integrate,
and optimize order management, product information management (PIM),
channel management, business intelligence (BI), and customer services
functions between manufacturers, their channel partners, and end customers.
The acquisition was hailed as the joining of two providers of complementary B2B e-commerce solutions that should help retailers, manufacturers, and suppliers of all sizes expand collaboration and expedite time-to-market for new products. GXS believes the addition of HAHT Commerce will enable it to provide businesses of all sizes with the industry's most comprehensive solution for PIM and data synchronization, which should enable retailers, manufacturers, and suppliers to manage product information from concept to consumer. With more than thirty-five years experience, GXS provides supply chain services and software to 60 percent of Fortune 500 companies. With this acquisition, the company hopes to be able to deliver a complete solution suite that would include software to integrate data into and out of back-end systems; management tools to publish and syndicate product information accurately; transaction delivery services to move the information; and community enablement to electronically connect all trading partners in the global retail supply chain.
GXS touts this combination is all about improving the quality and consistency of product information data flowing throughout the retail community, since nowadays the lack of accurate product item information between buyers and sellers in the community remains a significant and costly problem. By combining its products, services, and staff resources, GXS hopes to establish itself as a "one stop shop" to address this emerging multi-billion dollar opportunity. On the other hand, HAHT Commerce hopes to immediately benefit from GXS' worldwide customer reach and broad transaction management capabilities to rapidly accelerate the adoption of its DCM software solutions.
Thus, HAHT must breathe a sigh of relief for finding its white knight in GXS. However, given the company's traditional focus on order management aspects including catalogues, configuration, order capture, order tracking, returns management, etc., one should watch GXS' commitment to maintain continuity with HAHT's order management products, given it will likely focus on data synchronization and PIM in the immediate future. HAHT has a substantial customer base with these legacy products, which might be neglected or even divested, causing these customers to be concerned and even possibly consider alternatives.
PRM Still A Moving Target
Further, PRM is still a moving target in part because different industries have very different needs in their PRM solution. A chemicals company, for instance, will start with order management, while a more consumer-focused company will be more interested in looking at brand management. Telecommunications will pay attention to order management and commissioning, which is a complex process based on partner agreements and rate structures, and will be interested in giving their agents a single point of interface to many back-office systems, such as billing, order management, and pricing, which would require a flexible integration framework. In the energy sector, the emphasis will be on the service side.