Product information is an essential factor for the success of any organization that offers products or services. It forms the basis for effective communication with your customers, suppliers, and partners. But how do you ensure that your product information is always up-to-date, consistent, and complete? How do you prevent customers from getting confused by different messages on various channels? The answer is simple: by using a good Product Information Management (PIM) system.
A PIM system is a software solution that helps you centrally manage and distribute your product data to various systems and channels. With a PIM system, you can enrich, validate, structure, and synchronize your product data. This enables you to provide your customers with an optimal customer journey and increase your revenue.
In our previous blog, we explained what PIM is and why it is crucial for any organization offering products or services. In this blog, we take it a step further and help you make the right choice for the type of PIM system that best suits your organization. There are many different types and sizes of PIM systems on the market, each with its own pros and cons. A rough estimate suggests that there are around 300-500 PIM systems worldwide. How do you know which system is most suitable for your situation, needs, and budget?
Three types of PIM systems
There are several types of PIM systems, ranging from systems that handle everything for you to systems you build and maintain yourself. At Squadra, we distinguish three types of PIM systems: lower-tier, mid-tier, and top-tier systems.
1. Low-tier systems: simple and budget-friendly
Low-tier systems are PIM systems that primarily offer basic functionality and data modeling structures, with limited configurability unless extensively customized. However, customization is not advisable; after all, you do not want a software package. Low-tier systems are suitable for organizations with a simple data model and minimal functional requirements. The advantage of these systems is that they are relatively inexpensive and easy to adapt to your needs. Implementation costs are also relatively low. The downside is that they are often limited in what they can do, and additional costs may be incurred for more extensive features or integration with other systems. If you are considering this option, be aware of potential limitations in the somewhat longer term in terms of business benefits (such as efficiency savings, additional revenue, etc.).
2. Mid-tier systems: comprehensive and affordable
Mid-tier systems are PIM systems that already have a lot of functionality. They are generally more expensive than low-tier systems and are suitable for organizations with a reasonably complex data model and more functional requirements. The advantage of these systems is that they offer many possibilities for managing, enriching, and distributing your product information in terms of functionality and flexibility in diverse data structures. For example, you can set up workflows, perform quality controls, and generate reports. Most mid-tier systems also provide the necessary flexibility in diverse data structures, an aspect often underestimated by organizations. Consider, for example, automatic classification between structures (e.g., between your own PIM product structure and GS1), attribute inheritance (a feature linked to a product family is also applicable to the underlying product groups, products, and articles), values, and languages (e.g., “Flemish inherits from Dutch”). The downside is that they often have some limitations in terms of functionality or data model flexibility. Every PIM system has functionality for data quality, but certainly not all systems allow you to configure your own DQ dashboards or perform outlier detection. Sometimes a so-called supplier portal is missing, or there are significant restrictions on unlocking data to various sales and marketing channels, including marketplaces, social media, etc.
3. Top-tier systems: advanced and flexible
Top-tier systems are PIM systems for demanding organizations with a large and/or complex assortment that prioritizes efficient data processes and high-quality, rich product data. They are suitable for organizations with a complex data model and extensive functional requirements. The advantage of these systems is that they offer a wealth of functionality that is fully configurable without requiring extensive programming or additional development. For example, you can take into account different languages, regions, and rights. The downside is that they come with a higher price, and you need more time and expertise to set them up and maintain them, usually with a steeper learning curve.
Functionalities of a good PIM system
What can a comprehensive PIM system actually do? In general, a good PIM system has the following functionalities:
1. Data collection
This is the process of extracting product data from various external and possibly internal sources, such as data provided by suppliers via a supplier portal or data pool, or data from your own ERP system(s). You determine which data you need and how to translate it into your internal PIM data model. This is important for creating a uniform and standardized way of storing data that you can easily adjust, expand, and unlock to various sales and marketing channels later. A good PIM system allows you to import different data formats, map attributes and attribute values, and convert them to your own data model. You can also set rules to monitor and improve data quality.
2. Data enrichment
This is the process of supplementing your product data with additional information, such as visual materials (digital assets), product references, or missing data. You also make the received product data unique and appealing to your target audience by diversifying, for example, the product name or marketing text. A good PIM system helps you enrich your product data using workflows, templates, bulk operations, and automatic translations. When dealing with large quantities of products, AI modules in a PIM system, but also specific AI tools like PowerSuite, offer excellent opportunities to automate this process almost entirely. You can also use external sources such as data pools (such as GDSN (GS1 standard), 2BA (ETIM standard), and IceCat) to enrich your data with rich content such as images, videos, specifications, or product data sheets.
3. Data distribution
This is the process of publishing your product data to different systems, such as your ERP system, e-commerce platform, or point of sale system, and also to external sales and marketing channels such as marketplaces, social media, or the aforementioned data pools, as well as to your potential B2B customers who request data in custom formats. You ensure that your product data meets the requirements and desires of the recipient. A good PIM system allows you to tailor and distribute your product data using exports, feeds, APIs, or integrations. You can also adapt your product data to the context, format, and language of the channel to which you are sending it. This way, you can provide your customers with a consistent and relevant product experience.
4. Data management
This is the process of overseeing and controlling your product data across the board. You monitor the quality, consistency, and timeliness of your product data. You determine who can modify which data and what tasks need to be performed. A good PIM system gives you the ability to manage your product data using roles, permissions, version control, audits, and reports. You can also monitor and analyze the quality of your product data to gain insight into performance, bottlenecks, and improvement points, and implement additional data controls if necessary.
The overview below provides a simplified representation of the functionality of a PIM system.
Key questions when choosing your PIM system
It is essential to think carefully about which type of system truly suits your organization. The big question when choosing a PIM system is how much risk you are willing to take because selecting a PIM system is not something you do every year. You make this choice for at least five to seven years. Unfortunately, we often encounter situations where a system is chosen based on user-friendliness (“looks good”), a good demo, and the price. Unfortunately, wrong choices are quickly made because you happen to have a demo from excellent pre-sales, which says nothing about the strength of the PIM system. It will also be claimed that the PIM system can provide the required functionality. As mentioned above, all PIM systems generally offer most of the basic functionality. In-depth questioning is, therefore, crucial! Ask yourself the following questions:
1. How much money do you invest in PIM?
One of the first questions you need to ask yourself is: how much money do you want to spend on a PIM system? This depends on your budget but also on your expectations and ambitions regarding the added value in business terms. It is crucial to identify and, where possible, quantify the business drivers: what efficiency benefits does a PIM system offer? Consider the impact in terms of time-to-market, the reduction of returns, and the expected additional online revenue based on better product pages and cross-selling. If you find this challenging, Squadra can, of course, help you. Based on the many PIM projects they have done, Squadra has insight into the costs of various PIM systems as well as the business benefits that can often be achieved.
2. What do you really need?
Another important aspect to consider is: what do you really need in terms of functionalities? It is tempting to choose a PIM system that can do everything, but the question is whether and when you will use that.
To determine what you really need, you must start with a PIM/Product Data strategy. Where do you want your organization to be in five to ten years? What goals do you want to achieve? What products do you want to offer? Which channels do you want to serve? Which customers do you want to target? These are all questions that affect your need for PIM functionality.
Based on your strategy, you can define a product data requirement. This is an overview of the data you need to describe, present, and sell your products. Consider things like product name, description, price, image, specifications, reviews, etc. Your product data requirement determines which functionalities and flexibility in your data model you need in your PIM system.
3. What flexibility in your data model is needed?
A third aspect to consider is: what complexity is needed for your product data? This depends on the type of products you offer and the variations you have. A simple product, such as copier paper, requires less complexity than a complex product, such as a customizable laptop.
The complexity of your product data influences the data model you need in your PIM system. The data model contains the structure in which you organize and classify your product data. It consists of structures, features (also called attributes), relationships, and rules. The more complex your product data, the more complex your data model.
The so-called PIM product structure typically has a different setup than the product structure for an ERP system or website. After all, they all have a different purpose! In addition, a PIM system must also be able to maintain classification structures, for example, if an organization wants to keep a GS1 classification alongside the PIM structure to provide GS1-based output to customers or the GS1 data pool. It is also often desirable to manage packaging hierarchies in a PIM system. For example, products may come in boxes of 20, and these boxes may be delivered per European pallet with 16 boxes.
The complexity of your product data plays a crucial role in selecting the right PIM system. In general, you can say that as data complexity and/or the number of variations increase, PIM systems quickly become more robust. You then need more advanced functionalities, such as inheritance, product variants, packaging hierarchy, data quality, automatic classifications, and workflows.
4. Is data exchange possible?
A final aspect to keep in mind is: is data exchange possible with other systems? A PIM system never stands alone. It is part of an application landscape in which different systems communicate and share data. Consider systems such as ERP, CRM, and CMS.
It is essential that your PIM system can integrate well with the other systems in your application landscape. This ensures an efficient and consistent data flow, preventing errors and double work. Therefore, pay attention to the data exchange possibilities your PIM system offers, such as APIs, connectors, and import/export functionality.
It is also important to determine where products are ‘born’: in the PIM system or in the ERP system. This depends on your company’s position in the value chain. For retailers and wholesalers, the advice is to let products be born in the PIM system. Still, for manufacturers, this often happens in the R&D phase. Products in the R&D phase exist as a concept or idea with various features and sometimes visual material from examples or test products but are usually not yet included in the PIM system. They often exist as spreadsheets or, in larger organizations, in the PLM system. Only when the product is marketable is it passed on to the PIM system and enriched with additional sales and marketing information.
A Product Information Management (PIM) system is a valuable investment for any organization looking to optimize its product information. It can help you efficiently acquire and manage your product data, enhance product presentations, provide better information to your customers, and ultimately boost your sales. However, choosing the best PIM system for your organization depends on your budget, data model needs, and functionality requirements.
In this blog, we discussed the three main types of PIM systems: low-tier systems, mid-tier systems, and top-tier systems. Each type has its own advantages and disadvantages. To make the right choice, you can ask yourself several questions about your product information, channels, people, and time and budget constraints. By answering these questions, you can gain a better understanding of your needs and expectations from a PIM system.
If you have any questions about PIM systems or would like more information on how a PIM system can benefit your business, feel free to reach out to us through the website or contact Jos Schreurs (tel: +31 6 53 35 29 45 or email: email@example.com).
We look forward to hearing from you and are eager to assist you in improving your Product Information Management solution.