What's the difference between internal and external catalogs?

As Senior Director of Product Evangelism at Vroozi, Mike Jud brings more than 15 years industry experience in sourcing and procure-to-pay solutions to our Complete Guide to Catalog Management:

Catalogs will drive compliance to your company’s contracted and approved suppliers, but what type of catalog is best, internal or external catalogs? Although the question seems basic on the outset, the decision has many implications and the answer is not the same for everyone. Your company may in fact adopt a hybrid approach, a mix of internal and external catalogs. So, how does one decide the best catalog strategy?

Internal and External Catalog

Internal catalogs are catalogs where the data is obtained from suppliers, mapped to the buying companies’ category schema, approved, and indexed for search. Companies go through this catalog content management process because they want to provide their users with a one-stop search for all products and services. That is, if a user searches for a product, the search results will present the approved supplier(s) and pricing for that search. A user does not need to know, for instance, which catalog or supplier to search for a given product. Cross-catalog search has always been a top requirement from customers for an “Amazon-like” user experience.

However, note that the catalog content management process requires some work to maintain the catalog data for internal catalogs. Therefore, external catalogs have been used where companies do not want to manage the catalog. For external catalogs, the user at the buying company will “punch out” to a site that hosts the supplier’s catalog, perform the search in the external catalog, select items, and return the cart to the buying system in a round trip. The disadvantage of course is that the user will need to know what catalog to access depending on the product or category. The ability to do a cross-catalog search is limited. In addition, the user will have a different user experience when they go to the external site where they often get confused by different color schemes, terminology, and process flows. We really haven’t seen a good technology that delivers cross catalog search and a unified user experience for external catalog content.

Internal Content for a Better User Experience and Compliance

Where user experience has been the important requirement for users to make purchase requests without any training, the internal catalog content has been the best practice. The model for so many is Amazon. By taking the familiar, companies reduce dependency on training, increase adoption, and improve compliance. The objective of the internal content then is to help users make the right product and service decisions, guide users to the right sources of supply (eg: contracted and approved suppliers), guide users to follow company policies when purchasing, and determine the right price.

With internal catalog content companies have tremendous control to help their users. Not only does catalog content provide users with all the product and service definitions they need to make their purchasing decisions, including pictures, contracts, pricing, and availability – the typical catalog fare, but also the catalog content has been used quite effectively to guide users. For example, catalogs can display rate cards that allow the user to determine the correct price based on the consultant level that matches the requirements. Also, the catalog data will show the contracted price scales so users know the thresholds to achieve pricing discounts. When a user enters the quantity, the right price will display based on that input. Lastly, many customers have used catalog content to publish “How Tos”. For more complex items that require multiple steps or an explanation on procedure, the “how to” will guide the user through the steps. The catalog is an underutilized tool for empowering users to make the appropriate choices and enter the correct data.

Don’t forget External Catalogs

As I mentioned in the opening, many companies may adopt a hybrid of both internal and external catalogs. So, where do external catalogs fit? External catalogs are largely used where prices change frequently (eg: commodities) and the company can’t keep up with the updates, or the company simply doesn’t want to manage the catalog content. With external catalogs, the supplier is responsible for managing their site. The user will then punch out to consume the data when needed to obtain the right specs and price (the assumption is that the punch out data is up-to-date, but we’ll save that for another blog).

Let the Internal Catalog Be your Guide

If our objective again is to provide all users with a familiar experience where they can always find what they are looking for, then the internal catalog will need to guide the users to the right place. In the internal catalog content, the company can define “pointers” to the right external catalog or even the right place in the external catalog, a one-time setup. If a user searches on “laptop” then the search results can take the user to the right external catalog (ie: the search results will point to the right external catalog). This is called Level 2 data and we will have more on that in the subsequent blog. But, for the focus of this blog, note that the internal content can guide the user through the company’s marketplace of internal and external catalog content that represent the companies approved and contracted suppliers, as well as potentially new suppliers to discover (more on eMarketplaces later).

If you are making a decision on internal versus external catalog content, then look to internal content as much as possible. Where you need external content because prices change frequently or you prefer that the supplier manages the content, then consider creating the internal pointers to the external data for a best in class user experience.