Gaining Market Share

Integration as a Service at Office Depot

Office Depot Inc. is looking for ways to increase revenue and boost market share in this slowly recovering economy. For the Boca Raton, Fla., retailer of office supplies and services, keys to achieving those goals include retaining its most valued customers and creating an edge over its competitors.

To that end, the retailer is using a software-as-a-service (SaaS) integration platform from Hubspan Inc., Seattle, to handle transactions with its business customers.

Prior to using the application, Office Depot's sales department was hampered by the fact that it couldn't support all of the transaction preferences desired by many of the thousands of business customers the retailer works with on a daily basis, says Glenn Trommer, director of e-commerce and implementation services at the company. "In some instances we were not able to satisfy portions of the orders from our customers," Trommer says.

The reason for this was a lack of integration between systems used by Office Depot and those used by many of its customers. This proved to be a competitive disadvantage, because other online office suppliers were able to support these types of transaction preferences, and therefore fulfill orders.

Officials at the company considered building an integration application in-house, but that would have been too costly and complex, Trommer says. They evaluated software-as-a-service integration offerings from multiple vendors, focusing only on SaaS solutions because they made the most economic sense.
   
The Hubspan Integration-as-a-Service offering came closest to meeting Office Depot's needs, from a cost, performance and customer service and support standpoint. Furthermore, the vendor was knowledgeable about the online retail business. In addition, Office Depot was impressed with Hubspan's list of clients, which includes Boeing, Barnes & Noble and Dell.

The service is centered around a secure, multi-tenant technology platform that supports business transactions regardless of differences in applications, technologies or protocols.

In addition to conventional batch or file-based business-to-business integration, the service provides what the vendor calls "Straight-Through Integration" for better and more sophisticated connections with customers. Different documents and tasks can be unified into a single set of request-response transactions across firewalls and multiple IT systems, according to Hubspan.

"Hubspan helped us take specific customized transaction sets and format them into something Office Depot can accept from a purchase order standpoint to fulfill orders," Trommer says. "That gave us a competitive advantage we didn't have before."

Gaining Market Share

The implementation team provided Hubspan with the information it needed to ensure that transactions would be formatted correctly, Trommer says. Part of this involved training Hubspan people in how Office Depot does business. "We wanted to make sure they understood our selling approach" and sales cycle, he says.

Other than that preparatory work there were no big challenges to the implementation, Trommer says. The companies tested the service prior to launching it live in April 2008. Since that time, Office Depot has seen a "significant" increase in incremental revenue through high-end, business-to-business transactions, as well as an increase in market share.

Trommer would not quantify the revenue or market share gains, but says the technology has given the company a huge boost at a time when business has been slow for many retailers. "In these tough economic times [it's] really helped us gain market share with very little investment," he says.

One of the biggest advantages of the service is its easy scalability, Trommer says. Partly for that reason, Office Depot might expand its use of the service to include transactions with some of its vendors.

Trommer's team, which works with the sales department to figure out ways that technology can enable salespeople at Office Depot to sell products to customers and prospective customers online, collaborated with managers in sales to select the Hubspan offering. Having input from people on the business side, and in particular the sales department, was important because they would be the ones using the technology, Trommer says.

"We needed a consensus and buy-in from them," Trommer says. "We wanted to make sure we were providing them with something that would give them a competitive edge."

Ken Vollmer, principal analyst at Forrester Research Inc. in Cambridge, Mass., says the SaaS integration approach offers several key advantages. These include rapid implementation, low technical requirements and shared expenses across multiple clients.

"We believe the SaaS-based integration market will continue to grow due to the flexibility this option provides," Vollmer says.