Turn Off Costly Variant Management in ERP

Many companies still operate with older ERP solutions where product variants are managed in expensive and rigid applications developed by ERP consultants. These variant applications are often the most costly part of the IT landscape. Additionally, they are also difficult to customize.

A more profitable and user-friendly solution to this issue is to move variant management to a new cloud-based Product Information Management (PIM) system.

In this article, we explain why this is a great idea for many companies in manufacturing, distribution, and retail.

What is Variant Management?

Variant management refers to functionality that allows companies to handle different versions of a product without having to create separate product records for each variant in their business systems. Variant management is typically used by companies in manufacturing, distribution, and retail, where products often have different attributes such as color, size, material, etc.

However, variant management has not always been a standard feature in older ERP systems, including SAP. As a result, many businesses have been forced to purchase "extensions" for their ERP systems—so-called variant management applications. ERP consultants have provided these variant management applications, and over time, several consulting firms have tailored their own standard applications, which have been sold with licenses to companies needing variant management.

The advantage was that companies could purchase a ready-made variant management application for their existing ERP system through an annual license fee, without making a significant investment in further development.

For manufacturing companies, variant management in ERP enables the registration of orders for products the company has never produced before, as they can configure a product from different variants.

EXAMPLE

Imagine a furniture company that produces chairs. Each chair can be customized with different options—such as type of wood, color, dimensions, seat upholstery, and patterns. When combining all these options, a single chair can have several hundred different variants.

To efficiently manage this complexity, the company uses a variant management application in their ERP system. When a customer orders a chair, the company’s employees can configure the product in the ERP system based on the attributes chosen by the customer, and the variant management application automatically generates a unique product ID. This ID ensures that the product can be tracked in production, inventory, and throughout the entire digital value chain. It is a legal requirement that all products have unique IDs for proper registration and distribution, which the variant management application guarantees.

Without variant management, the company would have to manually create every possible combination of the chair as separate products in the ERP system—a time-consuming and resource-intensive task. It would be significantly more challenging to manage inventory, orders, and product data. Therefore, variant management is essential for running an efficient, scalable, and digitally mature business.

The Challenge of Variant Management Today

Some companies operate with older ERP solutions where product variants are managed in rigid applications developed by ERP consultants.

We often see that variant applications are the most costly parts of ERP solutions.

Beyond high licensing and consulting costs, these variant applications also make it difficult for companies to upgrade their ERP system to a new Cloud ERP, switch ERP providers, or further develop their ERP system. The cost of redeveloping variant functionality in a new ERP system can be overwhelming or, most importantly, extremely expensive.

Another consequence arises when a company wants to digitize its order intake with a new customer portal, B2B webshop, or B2C webshop. In this instance, the integration between the ERP system and the customer portal becomes costly and complex, solely due to the variant application.

How Does It Affect a Company's Desire to Digitize Sales Through Customer Portals?

In short, variant management in ERP often creates challenges that are impractical for modern e-commerce.

More specifically, it can lead to the following issues:

🛑 Complex Integration with E-Commerce Platforms: Many e-commerce platforms require a simplified structure for product variants. If the ERP system handles variants and product relationships differently than how the company wants them to be presented to customers, integration becomes complex and often expensive.

Examples:

An attribute for the color black is labeled as “BLK_001” in the ERP system because it must be part of a final product ID and is based on data from BOMs (Bill of Materials). However, in the customer portal, it should simply be called “Black” so customers understand the attribute. Does this small detail have to be manually corrected on all black products/variants in the customer portal?
To purchase item X, items B, C, and D are also required. If a chair is created in the ERP’s variant management application using attributes but is not predefined as an independent product (i.e., it consists of a frame, a seat, and optional armrests), which product (item X) should the customer portal display as the default? Should the company manually create product examples in the customer portal in advance as inspiration?

🚫 Issues with Custom Orders: B2B customers often expect to configure their products online. If the ERP system does not support a flexible product configurator, it can limit opportunities for digital sales.

🐌 Slow Order Processing: We frequently see that variant management applications significantly slow down the entire purchasing experience in a customer portal. This is because the customer portal constantly needs to query the ERP system’s variant application for new product combinations/variants whenever a customer attempts to configure a product in the portal.

Product Information Management – The Solution for Modern E-Commerce

A solution to these challenges is to move all variant management and product relations out of the ERP system and into a cloud-based Product Information Management (PIM) system.

A PIM system significantly reduces a company's Total Cost of Ownership (TCO). It is scalable, has a flexible, user-friendly interface that makes product management far more intuitive, and the licensing costs for most PIM systems are significantly lower than those for older variant management applications in ERP.

With PIM, companies can easily configure product models and create a structure that can be modeled. Since PIM is separate from ERP, businesses can achieve a much simpler ERP setup, making them more agile and increasing their ability to switch ERP systems if needed.

We have benchmarked ‘PIM’ against ‘Variant Management in ERP’ across five key categories, each with three of the most important parameters:

1. Structure and Flexibility

	PIM	ERP
Centralized Product Data Management	Functions as a 'single source of truth' for product data across channels.	Primarily designed for order and inventory management, not for complex product data models.
Handling of Variants and Attributes	Can manage thousands of variants with detailed attributes.	Often have limitations in handling complex product variants.
Advanced data management	Enables classification of products, tagging, relationship management, and multilingual support.	Often locked into a static product structure.

2. Data Management and Data Quality

	PIM	ERP
Automated Enrichment of Product Data	Can retrieve data from multiple sources and validate it automatically.	Often requires manual enrichment of product data.
Data Standardization and Error Handling	Advanced rules and validations ensure correct and consistent product data.	Often has limited validation, increasing the risk of errors.
Support of Multiple Languages and Channels	Handles translations and adapts data to different markets.	Often lacks built-in support for multilingual product descriptions.
Versioning and History	Allows versioning of product data.	Typically has limited or no versioning functionality.

3. Integration with Customer Portals and Webshops (E-Commerce)

	PIM	ERP
Integration with webhops	Often has APIs and plugins for e-commerce.	Older ERP systems require custom-developed integrations for webshops.
Support of Different Pricing Strategies	Enables price and discount management across different markets and customers.	Often has limited pricing management functions.
Multi-channel Product Enrichment	Seamlessly adapts product information for different sales channels.	Often limited to internal processes.

4. Digital B2B og B2C strategy

	PIM	ERP
Product Launches	Enables faster product launches across multiple channels.	Often requires manual setup for each variant.
B2B Sales Portal	PIM ensures updated product data and variants for B2B platforms and supports configuration in an e-commerce context.	ERP data is often complex, and configuration must be built (variant management application).
Customer Experience	Allows product enrichment including images, videos, and technical specifications.	Typically handles basic product data only.

5. Scalability and Cloud

	PIM	ERP
Cloud Integration	Most modern PIM systems are cloud-based and scalable.	Many older ERP systems are on-premise and have limited cloud integration.
Large Product Catalogs	Can manage millions of products with variants without performance issues.	May experience performance issues with many variants.
Customization and Automation	PIM can automate product enrichment and improve data flow.	Often requires manual customizations or complex scripts.

It is important to emphasize that ERP plays a crucial role when a company wants to implement a customer portal. We believe the best solution is to let PIM and ERP complement each other, where:

ERP should manage finance, inventory, logistics, and potentially production.
PIM should manage product data, variants, enrichment, and integration with sales channels.

This will ensure a more agile setup and result in a lower TCO (Total Cost of Ownership).

How We Can Support This Transition

Through strategic consulting, implementation, and extensive experience, we at Alpha Solutions ensure a digital transformation that provides you with a scalable and future-proof solution.

Strategic Consulting and Analysis
We advise you on the benefits of moving product data to a PIM system, ensuring a more streamlined variant management process.

We analyze your existing ERP setup to identify the biggest bottlenecks in variant management. Based on this analysis, we develop a new product model and demonstrate how PIM can be integrated into your architecture and technical ecosystem. As part of the process, we facilitate workshops and create a roadmap for your PIM implementation.

READ: Make B2B E-Commerce Easy with Struct PIM

Integration Between PIM, ERP, and E-commerce
A successful digital strategy depends on an efficient integration between the company's systems.

Alpha Solutions develops API integrations between PIM and ERP to ensure a seamless data flow. We synchronize product data from PIM to e-commerce platforms, optimizing variant management and ensuring that product data is always up to date across all channels.

Additionally, we integrate PIM with B2B sales portals and marketplaces. We implement middleware solutions that connect PIM, ERP, and e-commerce platforms, as well as real-time synchronization between product data and the webshop.

How Alpha Solutions Stands Out

Alpha Solutions holds a unique position in the market with an in-depth understanding of ERP integration, e-commerce, and digital transformation. Our expertise ensures a holistic approach to PIM projects, where we not only focus on data management but also optimize the digital customer experience.

Our API-driven approach provides scalable solutions that prepare you for modern e-commerce. We also have deep expertise in complex product catalogs within B2B, industrial, fashion, and retail sectors, implementing best practices for product data management.

As a certified partner with leading PIM providers such as inriver and Struct, we can offer the best solutions on the market and build long-term partnerships with our customers.