Retailers take note - IBM's 'Smarter Commerce'

IDC Retail Insights Community –

On March 14, IBM announced "Smarter Commerce," a strategic initiative that addresses the surging market for ecommerce solutions that take advantage of the convergence of a number of disruptive software and hardware technologies -- disruptive because of their combined effect in altering the way end users enable commerce and consumers to interact, both B2C and B2B. IBM is looking to help clients harness the power of these technologies through the creation of new dedicated service resources in IBM Global Business Services (GBS) together with integrated organic and acquired software assets now in IBM's Software Solutions Group. The Smarter Commerce offering spans the buy-market-sell-service aspects of the commerce life cycle and, as Craig Hayman, General Manager of Industry Solutions within IBM's Software Solutions Group describes it, places "the customer at the center of decisions and actions leading to greater customer loyalty, revenue and margin growth, and agility."

The specifics include a new services practice with 1,000+ dedicated members and access to $2.5 billion in commerce-related acquisitions and new software investments since 2010, including the acquisitions of Coremetrics, Sterling Commerce in August, and Unica in October 2010. The combined offering includes:

  • New cloud analytics including an IBM-Coremetrics offering to measure and optimize social presence in such social media properties as Facebook and Twitter.
  • Software solutions that allow companies to deliver relevant and consistent messages across all sales and marketing channels -- from the Web to email to stores to call centers.
  • A newly launched Smarter Commerce University to help build the skills needed for both sellers and partners.

Retailers Take Note

This is the largest integration of acquired and organic assets IBM has undertaken in quite some time, and more complex in many ways than the integration of Cognos and PwC. IBM's goal is to redefine the value chain, helping clients become more connected with their customers. Indeed, IBM sees this convergence of software and hardware technologies as heralding in "the age of the customer." Every retailer I have ever talked with would certainly agree that this is the case.

Frankly, as an ex-retailer, I see this as the most significant move IBM has made since their launch of retail segment specific POS software in the 1980's, hardware and software platforms that have had a long healthy lifespan. More importantly, as relevant as those applications were in meeting the needs of retailers for the last 30 years, the cohesive collection of assets that IBM is positioned to deliver will enable retailers to transform their companies to reflect current market demands.

To be successful, global and very competitive markets demand that retailers are streamlined, efficient, agile, and customer focused. Today, that means serving diverse customers the way that they shop, understanding their needs and meeting omnichannel demand wherever it may be. IBM Smarter Commerce does this by capitalizing on what we call Commerce 2.0, which describes the new ways in which commerce is being conducted and is characterized by a blurring of the lines between traditional commerce and ecommerce -- tying mobile, social, analytics and cloud computing with brick and mortar.

From a consumer perspective, the most critical capability is an efficient shopping experience -- Web, mobile, store and call center -- which includes access to inventory information and the ability to fulfill the order any way customers desire -- ship to home, ship to store or pick up in store. Nordstrom recognized this several years ago and launched a series of initiatives to enable a continuation of superior customer service, 21st century style. Nordstrom's continuing efforts encompass implementing multichannel execution, merchandising and collaborative supply chain applications targeting improving the customer experience.

The work Nordstrom did with Sterling Commerce and IBM predates the acquisition of Sterling, but according to the press release, Nordstrom implemented several solutions within Sterling Selling and Fulfillment Suite, including Sterling Catalog and Offer Management and Sterling Order Management, to enhance its order capture and fulfillment capabilities. A critical element of the Sterling Commerce implementation is the centralized order hub that synchronizes and orchestrates customer orders, without having to replace warehouse or distribution systems. Instead, the software extends Nordstrom's existing systems to help improve service, make more efficient use of inventory and reduce costs. For example, Nordstrom is able to open-up website inventory to the stores, operating a single distribution center to fulfill deliveries for every channel. More recently Nordstrom's announced that it will be adding in store mobile capabilities to further assist customers. The end result is a better shopping experience for the consumer and better control over the entire fulfillment lifecycle for the retailer.

Commerce 2.0 is changing the way products are purchased and sourced, manufactured and distributed. The rising expectations of the consumer, created by the application of mobile, of social, and enabled by cloud computing, offers the ability to research through trusted networks and resources, evaluate and compare, and then purchase both products and services from anywhere and at anytime. This capability is applicable across vertical industries, as the list of early customers suggests -- Staples, ING and Crocs.

A bit more about Staples - since Staples' online channel is a critical part of its growth strategy, Staples needed a commerce platform that would support and fuel its online business growth--not constrain it. Staples needed more flexibility to pursue creative, customer-centric business strategies. Teaming with IBM to deploy a powerful and flexible online commerce platform, Staples leveraged it to create a series of ground-breaking services on Staples.com that have set a new standard for delivering customer value.

Market Implications

By combining IBM commerce applications and advanced business intelligence tools with consulting and services, and its leading systems infrastructure, IBM Smarter Commerce offers in essence an end-to-end multichannel commerce solution spanning buying, marketing, selling and related services along with order fulfillment and distribution capabilities. With this comprehensive, integrated offering, IDC believes IBM to be well positioned to differentiate itself from competitors and potential market entrants.

We have published more detail about IBM's "Smarter Commerce" initiative in a link, and will publish even more discussion in the next few weeks in our research programs, but these reports are only available to subscribers. If you are interested in further discussion, subscriber or not, please do not hesitate to contact us. I can be reached at lhand@idc.com.

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