By: Donny Askin, Principal, TechTurn Consulting, Inc.
Published: April 19, 2016
A Recent History of Order Management Systems
As a student of the Direct-to-Consumer (D2C) Order Management System (OMS) space for nearly 40 years, I have seen it emerge, come of age, mature, and be reborn. Let me share some perspective…
Virtually all of the legacy OMS products have suffered
They have been acquired by larger solution providers seeking to make them the cornerstone of their omni-channel or cross channel solution. Examples include Ecometry’s acquisition by JDA (with a few stops along the way), CommercialWare’s acquisition by Micros Retail and ultimately Oracle, Ordermotion’s acquisition by CommercialWare and ultimately Netsuite, Main Street’s acquisition by Demandware, Stone Edge’s acquisition by Monsoon, etc.
More often than not, these products have atrophied due to lack of focus and investment under their new ownership leaving a vacuum in the end-to-end retail commerce solution set.
In many cases, these products have been ‘Decapitated,’ of the ERP-esq elements that were historically part of OMS such as warehouse management, purchase order management and financials, rendering OMS as little more than an order repository, order brokering and heuristics repository for the omni-channel experience.
There is a new generation of OMS providers emerging, with omni-channel capability but even stronger marketplace affinity and capability.
A high level historical perspective
The leading D2C OMS providers originally emerged out of the catalog mail-order space in the 70’s and 80’s
While companies like CommercialWare (one I founded), BSA, Smith-Gardner/Ecometry, and MOMS competed vigorously, the biggest competitor at the time were ‘home-grown’ solutions.
The vast majority of these OMS solutions were as much ERP as they were OMS. I would characterize them today as E/OMS’s. They typically incorporated demand-chain, order management, customer service and fulfillment functionality. They had strong call-center centric capabilities as well as warehouse management, purchase order management and even financials.
Higher end focused companies like Yantra entered the space, introducing a readily configurable, distributed order management concept.
With the emergence of the internet and ecommerce… everything has changed. As the ecommerce site and commerce engine providers emerged, their focus was the customer’s online experience. There was much talk of the end of traditional retail and the emergence of the new economy. Investment and valuations surged. Traditional catalogers and retailers were,surprisingly, the laggards and new companies emerged, pioneering the space.
OMS was considered ‘back-office,’ cost-control focused and something that many believed was not even needed as a component of the enterprise solution map. With the bubble burst in 2000, the ‘new economy’ collapsed almost overnight and the tragedy of 911 created a near fatal blow to the whole space. Almost all of the OMS providers ,as well as commerce providers who were solely focused the pure plays, collapsed overnight along with their retail customers. The ecommerce laggards, those with the catalog lineage, had placed their bets on the multi-channel branded retailer who survived the collapse and after a recovery period, ultimately thrived.
Just a few years later as the promise of multi-channel or cross-channel or what we now call omni-channel began to be realized, the industry ‘whales’ went into acquisition mode. All of the products suffered under their new ownership. Innovation and focus were lacking and more often than not, the acquiring company was more interested in ‘check-boxing’ OMS as part of their solution set, as a way to support their core offering such as ecommerce or POS, than investing in OMS innovation.
Fast-forward to OMS today
Retailers have a growing sophistication around multiple, co-mingled channels for selling. Customers are demanding that retailers seamlessly integrate online, offline, in-store and marketplace channels. This dynamic has underwritten the importance of the OMS hub in the emerging ‘hub and spoke architecture’ enabling a customer to search online, pick up in store or any other confluence of the channels to accommodate the customer shopping experience. OMS has evolved into the common repository for everything about the customer and the transaction. Retailers have a critical need for the information to be understood by all channels in their effort to provide a consistent customer experience across all channels. Order Management IS that conduit.
The need and criticality of OMS is now understood throughout the retail industry. Players such as IBM/Sterling (formerly Yantra) along with the distributed OMS offering from WMS giant, Manhattan Associates, dominate the high end of the retailer and brand owner market space. These offerings are coupled with strong ERP solutions such as those offered by SAP and Oracle along with literally dozens of other critical solutions to fulfill the solution set map. Multiple platforms and the required integrations are customary at this tier of customer.
In the middle market, JDA has let the Escalate retail solution completely atrophy and many of their traditional clients have left the platform. Since the acquisition of Micros by Oracle, the Oracle team has been working feverishly to adapt their newly acquired OMS offering to deploy via the cloud while sun-setting older versions. Many of their traditional clients have left the platform.
Today’s OMS offerings has been stripped down to their bare essentials. The remaining critical components are: order repository, order brokering and business rules repository. Middle market retailers have to replace their legacy OMS’s with not one but 3-5 additional solutions, along with all of the integration required to link the additional offerings. This adds significant burden, cost, complexity and discontent for the middle market customer. As a result, there is a solution void slowly being filled by emerging or re-emerging technologies introduced to the market. New offerings from Magento and a re-purposed subscription offering from Radial, along with UK based MNP Retail are beginning to fill the void in the middle market. Additionally, at the middle to lower end of the market, offerings like RetailOps and Skubana are emerging to service the smaller or marketplace centric retailer.
The good news is… OMS is in vogue and it is the solution that is making omni-channel a reality
OMS is the glue, the engine and the repository for a customer-centric, retail transaction irrespective of channel. It is now understood that OMS is not only a critical component of the enterprise solution but the key to success in providing a consistent customer experience when and how the customer chooses to shop.
I feel fortunate to have ridden this long wave. That being said, I believe a new innovative generation, OMS 3 or even better, OCOS, Omni-Channel Order Solutions are emerging. New players are entering the market. Existing players are retooling and I expect that this will soon be followed by another round of M&A as all of the larger solution providers chase the ‘holy grail’ of a unified, coherent, consistent, end-to-end customer shopping experience. Web commerce has evolved to mobile commerce, social commerce and wearable commerce. The front-ends will change rapidly but at its core is, OMS.