Platform vs Out-of-the-Box: Which Retail OMS is Best?
Tuesday, February 20, 2018

Platform vs Out-of-the-Box: Which Retail OMS is Best

A confusing part of choosing the directions for starting your omni-channel retailing strategy is finding the right technology. For example, order management technology is the core of any unified commerce system that makes omni-channel a reality. But you have to choose between an out-of-the-box solution vs a platform solution. The key difference is that a platform solution provides a base on which to build (code) an order management system (OMS). On the other hand, an Out-of-the-Box DOM provides a pre-built system that is ready to use as soon as it is brought live. So, why would you want one versus the other?

Order Management Evolution OMS tech has evolved - there is no longer a need for high levels of customization

Most order management systems in use today are either home-grown systems or platform based solutions. On an evolutionary scale, the home-grown systems came first before companies started creating standardized OMS and DOM (distributed order management) solutions. However, as the technology evolved and became better understood, full programming languages and platforms came about onto which coding an OMS became easier. This coincided with the migration away from on-premise systems to cloud-based software as a service (SaaS) models, which are the defacto standard today. Today’s final stage of evolution is the Out-of-the-Box DOM solutions.

Order management has evolved to a point where today, there is no longer a need for highly customized solutions. An Out-of-the-Box DOM can be highly configured to support all your needs, yet still give you the industry standard best-practices used in retail. For the most part, needed features, processes and workflows are well known – and most retailers want to be on the cutting edge of these standard, rather than being left behind with a stagnant coded solution.

Who Should Use a Platform?

Platform OMS vs Out-of-the-Box DOM - Tug of war man 1Platform systems have one particular strength. That being complete code control. The earliest systems were completely custom coded by an in-house development team. Platform solutions were the next step up. These systems are programmed using a coding language designed for OMS creation and supply chain system coding.

Platform solutions are fully customized to the retailer’s exact needs. They cater to the exact workflows created and used internally. Here, coders and consultants develop the solution to the exact specifications and details desired. However, this does not mean the retailer is getting industry tested best practices, or the most current process thinking.

Although all significant OMS platforms are cloud-based offerings, some platform systems can be hosted on-premise, if so desired. This depends on the vendors’ licensing and configuration capabilities.

Platform technology upgrades provide a continual stream of new functionality and possibilities for the OMS. To leverage new capabilities requires an adjustments or updates to the OMS code. For completely new capabilities, it may need fresh coding.

Time to deploy platform systems vary. It is dependent on implementing the platform solution, then on coding the OMS to the exact requested specifications. Retailers need to be prepared to have internal business analysts and consultants review existing practices, and processes – to develop the full requirements specification for the system. Variability comes up in how simple or feature-rich a solution is requested.

Pricing for platforms includes annual software licensing fees, support fees, integration charges and a monthly SaaS charge. Furthermore, it may also include a GMV (Gross Margin Value) fee, a recurring charge by number of physical locations (stores, DCs), and per order fees. Then the consulting and coding fees are additional. These are to define, map out, architect, develop, upgrade and adjust the OMS. Given that system requirements vary on the size and complexity of the project, a range is difficult to estimate. Although large projects, built with one of the industries largest platform providers can easily exceed $1-2 Million. Such large systems have been known to take 22-24 month implementation cycles, as part of a full unified commerce deployment.

 

Will the Real OMS Please Stand Up Whitepaper

 

Who Should Use an Out-of-the-Box DOM?

Out-of-the-Box DOM solutions have a common theme being a reduced need for in-house or technical consulting resources. Although not fully customized to each retailer, it is designed as a deploy, configure and immediate-use model. Given that DOM (distributed order management) technology is cloud-based, all upgrades, enhancements and bug fixes take place behind the scenes on a continual basis. Unlike platform systems, upgrades, new features and system enhancements are immediately ready to use by systems administrators – upon rollout. These solutions do not require technical resources for upgrades, annual maintenance cycles, or code upgrades. As a result the Total Cost of Ownership (TCO) of an out-of-the-box DOM is typically lower than that of platform solutions.

No Coding Systems Out-of-the-box DOM solutions result in a reduced need for in-house technical resources

Out-of-the-box DOM is a NO CODING required solution. Although not customized to the exact specifications of each retailer, they are highly configurable. They do not require consulting or coder services to adjust business rules or to start using a new feature. All retailers on this system gain the benefit of industry best practices that spurred the creation of the new capability.

Although a platform system can be just as functionally deep as an out-of-the-box solution, the latter will generally have greater depth across a greater variety of ready to use features. This becomes more relevant as the retailer’s administrators learns the full breadth and capabilities of such a system.

Associated with functional depth is mass flexible scalability. Order volume rates can vary wildly in retail. Spikes in demand can raise average order volumes by 20x – 50x or more in a matter of hours (think Black Friday at 11:00pm – peak hour). The core design of an out-of-the-box DOM is to meet typical order volumes and yet immediately scale to meet order demands – at a moment’s notice.

Given the “no coding” nature of these systems, out-of-the-box DOM solutions are designed for ease of integration with other applications and systems. As such, integration with third party applications like specialized tax systems or payment gateways can connect seamlessly. No need for cycles of integration testing, waiting for new code testing or changes to the hard-coded OMS architecture.

DOM – Extended Benefits

Platform OMS vs Out-of-the-Box DOM - Tug of war man 2

With a system designed to industry standards, 24|7|365 support teams are readily available to help adjust, tweak or, fix challenges. Industry standards also generally built into out-of-the-box DOM solutions – like PCI, SOC2, GDPR, and NF525 compliance.

Quality assurance is another significant advantage of these solutions. Standardized solutions mean deeper, more consistent, and thorough quality assurance scenario testing. Bug fixes are detected and resolved continually, by a quality assurance team – testing scenarios with a robust data set spanning a variety of retailers. Related to quality, a sandbox is always available to retailers as well. This provides a test system to trial new business rules, prioritizations, and changes before bringing running them on the live system.

Typical integration and deployment times for out-of-the-box DOMs ranges from 3 to 6 months (90 – 180 business days).  Pricing includes a integration/implementation costs, monthly SaaS fees, and per order fees over a certain volume.

Side-by-Side Comparison

Platform vs Out-of-the-Box DOM - Side by Side Comparison

Final Verdict

Custom coded software and platform OMS systems might make sense for retailers with extremely unique business requirements or workflow processes that just cannot change. However, shortcomings include higher long term total cost of ownership (TCO), lack of flexibility, an additional work burden on your existing IT resources, scalability risk, and a dependence on consultants.

The vast majority of retail businesses, can easily find a well-suited out-of-the-box DOM solution – to meet their needs and more. It will keep them on a continual improvement path, offer depth of functionality, offers industry best practices, and lets ‘the business’ focus on retailing. All this done while easing the technical burdens of offering omni-channel retailing to your customers.

 

Author:

Charles Dimov - Director Marketing OrderDynamicsCharles Dimov is Director of Marketing at OrderDynamics. Charles has 21+ years experience in Marketing, Sales and Management across various IT and Technology businesses. Previous roles include Chief of Staff, Director Product Marketing, and Director Sales. Charles has held roles in brand name firms like IBM, Ericsson, HP, ADP, and OrderDynamics.

 

 

 

Related: 

What Exactly is an Out-of-the-Box Retail DOM

Want to Know More About Distributed Order Management?

Reflections on Retail Hackathons