1994 Feb 01

Datamann Mail Order Software Plus
Sigma Micro Controller+
Smith, Gardner & Associates Mail Order and Cataloging System
David M. Raab
DM News
February, 1994

Computer software has its own fashion trends. Today, the most stylish systems use client/server environments with fourth generation languages and relational database engines. But traditional technology has its own advantages: flat file systems are faster than relational databases on the same hardware, the COBOL programming language is easily transported across operating environments, and terminal/server architecture uses cheap, “dumb” terminals and is easy to work with. On a purely practical level, systems using these older technologies have been around long enough to become stable and develop rich sets of features in response to real-world needs.

These benefits are particularly important in operational systems such as catalog software, where response time, reliability and cost-effectiveness are key goals. Here are three catalog systems that use traditional technologies to deliver state-of-the-art performance.

Mail Order Software Plus (Datamann, 800-451-4263) is the oldest of these packages, originally introduced in 1978 for the Prime mini-computer. The package has since migrated to IBM mainframes, back to Prime, and then to the IBM RS/6000 on AIX, IBM’s version of UNIX. These moves have been possible because the system’s COBOL programming language and flat-file data structure (C-ISAM on the RS/6000, VSAM on the mainframe) can be used in many different environments.

MOSP provides the order entry features common to systems of this class: the ability to search for customer records by name, Zip or phone, automatic checking for duplicates after a new record is entered, system and user-defined help messages, the ability to change a line item without rekeying an order, and the use of outstanding purchase orders and existing back orders to calculate the expected shipment date for out of stock items.

But it also provides uncommon flexibility. Individual operators can choose whether or not to see the available inventory count for an item when it is added to an order. A separate option controls whether the system makes a product substitutions automatically for an out of stock item, or offers a matrix of similar items to choose from. Still another option controls whether upsell or cross sell items always appear on the screen or must be requested by the operator.

The system does an especially good job with special information such as monograms, personalized messages or alteration instructions. It lets the user set up item-specific templates that specify a fixed amount of text or force a choice from a predefined list of options. It can apply different charges depending on which option is chosen.

Pricing for each item is set by promotion, but can further vary based on a date range and quantity breaks. In addition, the system can apply group discounts based on total order size, customer type, or sets of related products–such as “pick any 10 items on these two pages” or “buy five items and get a sixth for free”. The system stores the last promotion sent to each customer and automatically applies the pricing associated with this promotion. The user can also change to a different promotion or see a list of all the prices currently available for a given item.

Alone among these systems, MOSP allows for three levels of sales tax (such as state, county and city) within each range of Zip codes. It can also interface with Vertex software, a third-party system that provides precise sales tax information based on the specific shipping address.

The inventory system allows multiple vendors for each item. It stores the lead time and price charged by each vendor, and also reads purchase order files to track the last cost and average cost for an item. There are target and minimum stock levels for each item. The system can use these to generate purchase recommendations, though not actual purchase orders.

Most users, however, would base their purchases on forecasts of demand derived from current and planned promotions. MOSP can do projections based on historical response curves by catalog, with different curves for individual items, groups or types (since certain sizes or colors may be known to sell faster than others). In addition, it can look at trends compared to budget or a revised forecast, and develop a projection based on a weighted combination of planned and actual results to date. The projection can be combined with information about existing inventory levels and outstanding purchase orders to provide detailed reports on the amount of additional merchandise needed by week to meet anticipated demand. These reports are sophisticated enough to take into account the time lag before anticipated returns are put back into stock.

MOSP also allows very detailed control of warehouse operations. It supports multiple warehouses, multiple storage locations–including multiple picking sites–for the same item in each warehouse, automatic transfers from reserve to forward locations, batching of pick instructions by warehouse zones, support for RF scanning and sortation devices, and interfaces with barcode readers, electronic scales and manifesting systems. The system cannot track serial numbers on items as they are put into inventory, although it can store the serial number of an item shipped in an order. Back order release is automatically done by the oldest order first, but the system can also change the priority of a specific order, delete back orders by date range, and specify that certain inventory not be used to fill back orders.

Customer service features include free-form text notes on each conversation. Reason codes and status codes can be attached at the item, order or customer levels. The system can assign callback dates to an order, along with the initials of the responsible operator. Codes can also generate form letters, either from within customer service or order entry. Operators can write custom letters as well.

The system is tightly integrated with accounting software from American Business Systems for accounts receivable, accounts payable, general ledger and payroll.

MOSP provides detailed marketing reports on the performance of each promotion, down to a full profitability calculation per square inch including promotion expense and product costs. Mailing list selection is designed primarily for list rental fulfillment, however, making it somewhat limited for house file segmentation. One drawback is that there are separate selection screens for customer summary information (recency, cumulative purchases, customer type, etc.), for product class or type, and for Zip ranges. More important, each file segment must be selected independently, with duplicates removed outside of the system. In addition, item-specific detail and promotion history are not available through any of those screens. In practice, house file segmentation is usually done outside the system, which is then updated from a file with the source code used for each customer ID.

If item detail is essential, it can be extracted from the transaction files by the IQ report writing package that comes with the MOSP system. This meets most client needs for special reporting, although Datamann also custom programs reports for clients on request.

Prices for MOSP on the RS/6000 start at $5,000 for a two-user system, reaching $10,000 for eight users, $15,000 for 15 users, $20,000 to $25,000 for 32 users (based on the computer hardware), and up to $50,000 for 128 users. Installation and customization typically add $10,000 to $15,000. Maintenance is 12% per year, and includes toll free technical support from 8 a.m. to 7 p.m. Eastern time, with on-call coverage at other times.

The system has 21 total installations: nine on the RS/6000, six on IBM mainframes and four on other hardware. The largest installation, on a mainframe, has about 500 users. A typical RS/6000 client has 40 to 50 users with 500,000 to one million customer records on-line. The company feels that existing RS/6000 hardware could easily handle twice those volumes, and multi-processor systems could support much more.

Controller+ (Sigma Micro, 800-227-4462) has been around since 1984, also using COBOL and C-ISAM files. The system can run on any standard UNIX system, although about two-thirds of its 65 installations use the RS/6000. Typical installations are in the 40 to 50 user range with 300,000 to 400,000 customers on line. The largest has 250 users with 3.5 million customers and 15,000 orders per day.

Controller+ has evolved its own set of powerful features. But it does have some rigidities: for example, the user cannot make it display the available quantity when an item is added to an order. This information is available via a “hot key” to an inventory query, however, and the system does automatically show both substitutions and the expected availability date of the requested item.

A more important limit is that Controller+ reserves inventory only after an order is completely entered, rather than as soon as each line item is added. Many direct marketers feel inventory should be reserved immediately, to prevent several customers from being promised the last piece in stock; this is how many other systems work.

Controller+ takes a particularly nice–though also unusual–approach to product substitutions. Instead of defining a single substitute in each item’s inventory record, Controller+ stores substitutes, upsell and cross sell items in a separate set of tables. Each table can apply to numerous items–say, a half dozen different blouses that might all be offered as substitutes for each other depending on size, style and color requirements. This saves the work of defining substitutes separately for each item and also allows for multiple substitutes. The table appears automatically when an item is not available; otherwise, the operator must request it.

The system does offer some flexibility in the sequence of order entry events: it can be set up so that either the customer name and address or the line items are entered first. Starting with the line items allows operators to immediately answer questions about availability and price, so the customer can decide whether to buy before providing name and address information.

Business-to-business marketers are well served by the system, which can send a single invoice to a master billing address for multiple customer accounts. It can also assign a separate shipping address for each line item in an order.

But other special needs are not always met. Personalization notes or other types of instructions can be entered only as text, either in one 15-character line or seven 30-character lines; there is no way to force a specific length or user-defined options. Reason codes can be attached to returns, but not for other customer contacts. The system cannot attach a callback date to an order, although this could be done at the customer level by using one of the 15 user-defined ‘demographic’ fields. And there is no ability to send form letters automatically, or even to generate custom letters within the system. Instead, data must be selected using the custom report writer and then exported as a mail merge file to external word processing software.

Pricing is reasonably flexible. It is set by catalog, and accommodates variations by customer type, quantity discounts, and special pricing for groups of items. However, it cannot support kits that mix mandatory and optional items or that allow the user to select several items from a group. Although the system is aware of the last promotion mailed to each customer, the operator must manually enter the source code that will be used to price each order. The system does have the ability to show all the prices currently available for a particular product, though.

Sales tax is controlled at the state rather than Zip code level. One rate can be applied to all orders from a state, or the rate can be entered manually for each order from a state, within a range established by the system. Users who are not satisfied with this can link to Vertex instead. The system has recently been modified to handle Canadian sales taxes.

In several ways, Controller+ has the most powerful inventory management of these systems. It allows up to 15 vendors per item, and it the only system to store details such as the minimum order and prices by quantity for each vendor. The system also stores the actual average cost for an item, the last price paid, and a user-entered “control cost” that can be used in calculations that anticipate future price changes.

Controller+ is the only one of these systems that can generate actual purchase orders based on forecasted demand and existing stock levels. These orders can choose vendors according to several alternate rules, such as lowest price, last vendor used, or buying from a particular vendor whenever possible.

The warehouse management portion of Controller+ is limited to a single warehouse per company, although it allows multiple companies. Within a warehouse, inventory can be stored in one picking location and several reserve locations. Backorder release is strictly based on the oldest order first, with no way to change priorities short of deleting orders before the pick list is generated. The system can produce standard manifests and interface with electronic scales and bar code readers. Serial numbers can be associated with an order, but not stored for items in inventory.

Controller+’s forecasting has recently been expanded to allow multiple response curves within a catalog. The system prepares a separate forecast for each product, which it then allocates among colors and sizes according to user-defined percentages. Although convenient, this does not allow for differences in response curves for certain sizes or colors. Forecasts can also be based on previous sales or budgeted amounts.

The system has a good mailing list selection capability. One screen can make selections on last order date, lifetime order value, source code, Zip range, product codes purchased and other customer-level information. A separate screen is needed to make selections at the SKU level. Up to 190 screens can be used in combination–joined by either ‘and’ or ‘or’ logic–to create multiple segments. The system stores the last mail date and last piece mailed, but not the full promotion history of an individual.

Controller+ has a full set of marketing reports, including catalog profitability per square inch net of promotion expenses and product costs. Users are provided with the IQ report writer for ad hoc reporting. The system has its own accounts receivable and purchase order modules, and can be interfaced with American Business Systems for accounts payable, general ledger and payroll.

Pricing of Controller+ is based on the number of users. An eight-user system costs $25,000 if the client also buys the hardware from Sigma Micro, or $29,000 if they buy the hardware separately. Installation, set-up and 40 hours of training are included in either case. Additional users cost $500 each. Customization is not usually required, but is available and can be done so the system remains compatible with future upgrades. Maintenance begins at $400 per month and includes toll-free technical support from 8:30 a.m. to 5:30 p.m. Eastern Time, with additional hours also available.

Mail Order and Cataloging System (Smith, Gardner & Associates, 407-241-9505) is a relatively new product, introduced in 1990, but already has 72 installations. A typical site has 50 to 70 users, while the largest supports 650 users with 3 million active customers and 70,000 orders per day. The system is written in COBOL but runs only on HP 3000 hardware, using HP’s UNIX-like MPEiX operating system, TurboImage network database and Omnidex relational indexing product. This combination gives exceptional performance for the hardware cost.

MACS has unusually attractive screens, built with special software that gives a graphical look to character-based hardware. All order entry is handled in a single screen, divided into three fixed areas: one for name, address and other customer-level information; one for line items in the order; and a third for all other types of system messages, pick lists, customer notes, and so on. At any point in a screen, the user has four types of on-line help available: general and company-entered information about the current field, and general and company information about the screen as a whole. The system also makes extensive use of function keys.

The order entry screen shows the available quantity for an item as soon as it is entered, and will automatically show the next possible shipment date for items that are out of stock. One substitute can be directly linked to each item, but cross sell and upsell information are stored only as text in one of the seven user-controlled comment fields allowed per item. These fields cannot be shared across items, so information that applies to multiple items must be entered separately. A copy function speeds this process.

Inventory is reserved immediately when a line item is entered.

MACS supports user-defined lists and templates to capture special instructions or personalization information about each item. It can also store text notes, comment codes, operator IDs and callback dates at both the customer and order levels. Codes can trigger standard messages that will print on the packing slip, label and/or invoice; custom messages can also appear on any of these. The system has a separate letter writing facility that can draw on existing form letters or create custom letters that automatically retrieve such information as name, address, account or order number.

Pricing is set typically set by catalog. Each price can have start, end and final dates, and discounts by customer type, quantity, groups of products, and manually-applied codes. The system can handle kits that mix mandatory and optional items.

Sales tax is calculated by Zip code range, although MACS allows only one rate per range. It can also interface with Vertex.

MACS allows up to five levels of relationships to be attached to each order. These can handle gifts, separate billing and shipping addresses, and business-to-business needs such as company, site and individual-level records. These relationships can determine how information is stored and records are selected–for example, the system could select businesses based on their company-wide purchase volume, and then mail to decision makers but not shipping addresses of the selected firms.

The inventory management system allows nine vendors per item; it will store the last actual price for each vendor, but not price lists with volume discounts. MACS can handle multiple warehouses with multiple picking locations within each warehouse and can track serial numbers at receipt as well as with individual orders. Backorders are automatically released based on the oldest order first, but users can change priorities of specific orders. They can also implement other policies such as holding shipments until at least half the order is available.

MACS can use forecasts and inventory information to calculate future purchase requirements, but does not actually generate purchase orders. Projections can use separate response curves for different products within a promotion. Different curves can be applied to different sizes or colors only by treating them as separate products. The system can create forecasts that combine budgeted response with projections from actuals to date.

Like the other systems, MACS relies primarily on outside software for duplicate identification and merge/purge. For each customer, it stores summarized transaction information such as number of orders, first and latest source code, state, customer type, etc. Selections based on these items are made from a single screen and are extremely fast because the information is stored in on-line indexes. Selections based on specific transaction detail must be made through the system’s reporting capabilities. MACS does not store each customer’s promotion history, although this will be added in April with the release of MACS II.

Ad hoc reporting needs are currently met by a report “customizer” that can be used to modify existing standard reports. A full-blown report writer will also be part of MACS II.

MACS II will also include enhanced outbound telemarketing features, including contact management routines and a one-screen customer summary showing buying habits, recent purchases, RFM categories, promotions received and other information.

Accounting is handled by the system’s own accounts receivable module. It can be tightly integrated to accounts payable and general ledger from third-party software supplier GTS.

Charges for MACS are related to the computer it runs on. A minimum system costs at $50,000 and could handle up to 32 users. This includes installation, five days of executive training and ten days of on-site training. Additional modules for continuity, standing orders, installment billing and other functions cost upwards of $15,000, depending on the module and system size. Annual maintenance costs about 20% of the software price; it includes toll-free technical support available seven days a week, 24 hours per day.

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David M. Raab is a Principal at Raab Associates Inc., a consultancy specializing in marketing technology and analytics. He can be reached at draab@raabassociates.com.

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