2004 Aug 01
ProfitCenter Software Profitability Software Suite
David M. Raab
DM News
August, 2004

Have hosted systems finished their fifteen minutes of fame? They’ve now been in the limelight long enough for the novelty to wear off and be replaced by close scrutiny of their flaws. Yes, it’s our old friend the hype cycle: initial enthusiasm followed by disillusionment followed by slow but steady progress in the real world.

But knowing about the hype cycle doesn’t prevent it from happening, and no one likes to recommend a technology that is out of fashion. So this will not be yet another article about hosted marketing systems.

It will be about hosted order processing instead.

Profitability Software Suite (ProfitCenter Software, 888-446-6240, www.profitcentersoftware.com) actually does both marketing and order processing. In fact, like other systems built for catalog companies, it provides nearly all of the functions needed to run the business. These include product management, inventory, order processing, and fulfillment on the operations side, and sales management, customer service, outbound promotions and Web site presentation for marketing. Although accounting and human resources are missing, this is also typical of catalog software.

Since ProfitCenter shares the same basic functions as other catalog systems, what makes it special? Three elements: the depth of its functions, tight integration of the Web with other channels, and its hosted delivery method.

The system’s functionality reflects its origins as an in-house project for Systemax, Inc., a billion-plus dollar direct marketer whose main operating units are Global Computer Supplies, Global Industrial Equipment, and Tiger Direct. The system had to support sophisticated business-to-business sales and marketing, including separate levels to track contacts, accounts, opportunities, and sales quotes; import and distribution of sales leads; pipeline reporting; and, account-specific price lists. Similarly, product management had to allow detailed product documentation and serial number tracking; purchases from distributors and manufacturers; automated inventory tracking, reorders and substitutions; product receipt and warehousing; various types of electronic data exchange; and reconciliations among requisitions, purchases, stock receiving and payments. Order processing needed customer purchase orders, real time inventory updates, rule-based configuration, cross sell and upsell recommendations, and sales of services such as warranties. And these functions had to be delivered in a highly scalable environment: Global Industrial alone has over 350 users on the system.

The same functions had to be delivered for Web marketing, which accounts for nearly half of Systemax’s revenue. Even though many companies have now folded the Web into core operating units, Web systems themselves still often remain separate. ProfitCenter runs both Web and conventional order processing against the same underlying data files, automatically ensuring consistency in pricing, inventory reporting, product details and other information. It also gives marketers tools to control directly the offers and products shown on the Web, without intervention by technical support staff. This is critical because it means users will actually be able to manage their Web site with ProfitCenter. Otherwise, even if data sharing were possible, users would still need a separate Web management system and thus lack close integration of the Web with other channels.

The third distinctive element of ProfitCenter is hosting. This means that ProfitCenter sets up and runs software; clients need only send their data and connect through a Web browser. Hosting has intrinsic advantages of quick installation, easily distributed access and low demands on in-house technical staff. It is typically offered with per-user-per-month pricing that adds financial flexibility and lower initial cost, although long-term savings are a matter of debate. For smaller companies, hosting also gives access to more sophisticated systems than they could purchase and maintain independently. Perhaps the main criticism of hosting is the difficulty of integrating hosted systems with other software. This may be less important with catalog systems than some other categories, because catalog systems tend to provide so many functions by themselves. Indeed, several catalog software vendors offer hosted options.

Most of hosting’s general advantages and disadvantages apply to ProfitCenter. But while many hosted systems require little or no implementation expense, ProfitCenter charges a relatively substantial amount–typically equals three years of projected user fees. Since pricing starts at $125 per user per month for a minimum of ten users, implementation for a minimum system would be about $45,000. This is more than some conventional mid-market catalog software and too expensive for many small direct marketers.

ProfitCenter has some other interesting features, notably personalized “dashboards” that let each user choose the combination of data and reports to view at log-on. The system includes over 600 standard reports, which are further customized during implementation. Users can also create their own reports by using a report writer against the underlying data tables. The tables themselves contain large numbers of extra fields for users to assign as needed–a standard approach in packaged software, allowing customization without physically changing the data structure. The underlying technology includes the usual enterprise-class components: Oracle relational database, Linux servers, BEA WebLogic application server, HTML and J2EE for end-user screens. Actual hosting is outsourced by ProfitCenter to ATT.

Perhaps the least impressive feature of ProfitCenter is its outbound marketing. Users can define catalog, Web, email, and fax campaigns, each with an attached mailing list, source code and offers. But there is only one list per campaign and everyone gets the same offers. This means that targeted offers require a different campaign for each group. Because lists for each campaign are generated independently, it takes considerable care to ensure each customer is selected only once. The system does maintain a unified history of customer contacts, simplifying efforts to coordinate contacts over time. ProfitCenter also lacks any kind of integrated predictive modeling. Even cross sell and upsell recommendations must be based on manually-entered rules rather than any automated affinity analysis. Again, these limitations are shared by other catalog systems. ProfitCenter users do manage to run very large and successful direct marketing programs through the system.

ProfitCenter was developed in 2002 and signed its first external client in 2004. It currently has about a half-dozen implementations with more than 1,200 seats.

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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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