October 21, 2021
From the minute you wake up, step around your house to do your daily routines, and go about your day’s work you find yourself using a variety of products and consuming an array of services. Whether it is the toiletries, appliances, apparel, cooking implements, pieces of furniture, the vehicle you use, your communication devices or even your computers and all imaginable services: most, if not all, of these, were buying choices made by you based on what you saw in a particular business’s catalog from one or multiple suppliers. In certain cases, even the vegetables you buy from the local seller in your neighborhood are provided to you in the form of an on-shelf catalog or even a WhatsApp message highlighting the day’s available produce. Simply put, on a day-to-day basis, catalogs are a buyer’s most common tool.
Until recently, the common perception was that entirely catalog-driven business models were confined to mega-corporations. After all, Amazon boasts a mammoth catalog, listing over 12 million products (when counting Amazon Marketplace sellers) and services while at Walmart, the catalog-driven business leads to a total revenue of over USD 559 billion. Almost all industries such as transport, hospitality, OTT, finance, education, among others, businesses are entirely or predominantly catalog-based.
However, things have changed. The catalog-driven model has permeated even the micro-scale use cases, ones that are ever-present in our daily lives. Whether it is getting the food delivered to your home by Swiggy or Zomato or shopping groceries on Grofers, catalog-based services are making chores simpler, quicker, and more convenient for all alike. Even the local vegetable seller in a city neighborhood who posts available items to regular customers on WhatsApp is setting up a perfect example of leveraging the catalog model at scale. And regardless of size or demographic, the model brings marked benefits to the business that uses it; be it the local vegetable seller or Amazon.
The chart below pinpoints that the empirical business formula remains the same be it for a small localized retail vegetable vendor or large global corporations like Amazon.
Different retail segments – their offerings and consumption through catalog-driven business models:
|Variable||Local Vegetable Retailer||Amazon.Com Retailer|
|Business Geography||Localized in the neighborhood of the residential area||Global|
Less than 25 (depends on season and availability)
Only one product type (vegetables)
|More than 12 million products and services across a variety of categories|
|Customer Base||Less than 50||More than 250 million|
|Revenue||Less than hundred dollars/day||Few hundred million dollars/day|
|Catalog Maintenance||Daily updates||Continual update, multiple times a day|
|Catalog Publishing and Order-Taking Application||A phone call, WhatsApp messaging, in-person shelf-viewing, and buying||Own e-commerce platform with domains across multiple countries|
|Catalog Publishing Infrastructure||Physical viewing (shelf or flyers) and public cloud (WhatsApp, messaging, etc.)||Public/Private cloud|
|Order Submission||Physically and now slowly moving to online, and on the phone||Started online and going physical also|
|Payment Policy||Collection on delivery||Collection on shipment|
|Order Fulfillment Logistics||Customer pick up from seller or home delivery through delivery||Global delivery system with multiple carriers|
|SLA||In hours||Varying from same day to several days/weeks|
|Catalog Aggregation||None||Several thousand seller catalogs aggregated|
|Fulfillment Orchestration||None required||Is a feature included in the e-commerce application|
From Amazon to the vegetable vendor, the catalog model makes a business’ offerings easily viewable and purchasable. This capability of enabling customers to select their option of choice from the relative comfort of their home or while on the move has redefined the standards of customer experience and business in general.
With the catalog model delivering results on every conceivable level, it becomes important for industries that have previously been skittish about embracing this model, such as enterprise IT, to read the writing on the wall and reconsider their options more effectively. I’ve emphasized this earlier as well: if a product can be availed as a service, then why should there be stress over architecture and capital investment? If the neighbourhood vegetable vendors can leverage the right platforms to grow their businesses, then why should an enterprise CIO have apprehensions about the catalog-driven model, when a substantial part of their procurement of hardware, software, and cloud services are from catalogs themselves?
These are questions we hope to dive into with a deeper understanding of the new digital landscape and what consumers and providers can gain from such a relationship.
A Case for Catalog-driven Businesses
In an age of heavily digitized commercial ecosystems, the anything/everything-as-a-service (XaaS) approach is imperative in maintaining sustainable business value. Whether what’s being offered are products, services, or a combination of both, there are several key benefits that businesses gain from imbibing a catalog-driven model irrespectively. They are:
- Expanding reach: Whether it is a new generation of employees joining a company or new customers enriching a business’ clientele; a catalog-based approach creates several new avenues for job seekers and a prospective audience to become a part of the business.
- Greater customer satisfaction: Enabling customers to pick and choose exactly what they need and remediate issues at the push of a button is the cornerstone for greater customer satisfaction.
- Accessibility: Catalogs are system-agnostic; they can be accessed from a multitude of sources across locations and timespans with the same ease.
- Scalability: Being cloud-based, catalog-driven models provide quick turnarounds and flexibility to scale based on the requirement.
- Value for money: Standardized services across the board provide greater quality at reduced costs. Regardless of a business’s size, as long as services can be productized, they can be delivered to customers in a catalog format. This effectively eliminates the need for large-scale CAPEX, facilitating businesses to focus on expanding their ventures further.
Catalog-driven Business in Enterprise IT – A Rebuttal to Common Concerns
In a previous post, I stressed the importance of strategizing XaaS models from a more business-benefit perspective. This is particularly true for enterprise IT, where technology is by no means a restriction to adopting the catalog model. However, the most notable hurdle remains with changing mindsets.
CIOs in particular need to change their mindset, reimagine, and take their cues from other industries and leverage the benefits of implementing the catalog-based model into their enterprise IT ecosystems. The CIO should break away from the traditional framework of service offerings that were being hardwired by the industry and, which precludes passing on the benefits of the catalog-driven model to the customer.
Naturally, there are a variety of valid arguments that come up when introspecting these factors. However, these can be addressed sufficiently with the right mindset. For example, one common criticism that I have come across is that digital catalog-based models take too much time and money to build. But if that was the case, then how can mega-corporations like Amazon and micro-businesses like local vegetable vendors both make the catalog model work for them? Simple, they use the right tools for their specific job; be it large-scale enterprise software or something as simple as WhatsApp broadcasts. At the end of the day, a service catalog is a content; and using the right platform, this content can be shared with the masses for consumption. Similarly, while everything cannot be presented in a catalog, more than 90% can be, a number too large to be ignored in a world where time and ease are of the essence. The rest of the offerings can be being easily handled via specific exceptions.
The crux of the matter is that traditional views on catalogs must be rethought to make way for a digital-oriented perspective on the subject. Regardless of what technology your business possesses, the only thing that matters is the service you offer to your customers and how comfortably they get it. The catalog is the missing link in your business’s value chain, and the tools needed to fix this are already there. If every other industry, big or small, is benefiting from catalog-based models, then why should enterprise IT be any different? With the right service orchestration solutions and the right mindset, greater business value will not only be expected but will be an inevitable outcome.
Prafull has been working with HCL for over 12 years. During his tenure, he has co-created and co-led HCL Gold Standard, HCL Gold Blueprint Platform, and HCL SIAM Framework. He has extensive expertise in service management application for any service relationship management scenario – with a wide scope, beyond IT. He has authored several methodologies and frameworks for IT service management including multivendor ITIL® frameworks, ITSM for cloud computing, and service integration.