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Mar 25, 2009 | 11 minute read
written by Linda Bustos
This post is a recap of today’s webinar: The New Ecommerce Dilemma: Buy, Build, or Leverage? presented by Michael Vax, CTO, Elastic Path Software. Agenda
Choose the Model:
Image Copyright ©2009 B2C Partners. All Rights Reserved. Selecting the Right eCommerce Software in Six Weeks or Less
Every new market starts from “Build”
At first choices were limited to Build vs. Buy decision. With the introduction of SaaS (software as a service) solutions, the decision became more complicated. SaaS (Software as a Service)
“Software-as-a-Service (SaaS) is a software deployment and subscription pricing model in which an enterprise application is delivered and managed as a service by software vendor to meet the needs of multiple customers simultaneously” - THINKStrategies, Inc.
SaaS examples:
Vendors like Amazon or Demandware offer a complete set of ecommerce services in a hosted solution. SaaS solutions are priced on a subscription basis, often based on the number of users or transactions. Leveraging existing enterprise systems The model you select will have a degree of each of build, buy and leverage. If you're doing SaaS, you'll still need some integration with your existing systems like order management, CRM and others. You most likely will use other 3rd party applications as well - web analytics, customer reviews etc. These may also use the SaaS delivery model. SaaS pros and consPros
Cons
Buy pros and cons The buy model still requires you to do some custom development and integrate with internal and external systems. Pros
Build pros and consPros
What is an ecommerce framework? An ecommerce frameworkis a system providing feature rich ecommerce functionality that can be extended by your internal IT team, system integrators, or vendor.
Pros
What is a hosted managed model?Your ecommerce services are hosted and managed by a vendor but with the option to take it in-house at any point. Brings element of SaaS into operational model.
Assessing your requirements and resources
ComplexityConsider how your ecommerce needs may change over time (at least 3-5 years ahead).
Uniqueness
Integration
Urgency
Strategic importance
IT budget
IT skills
Your ecommerce expertise
When to use a hosting solution (SaaS)When your competitive advantage is not your unique ecommerce features but your unique brand, merchandising, and marketing.
Example: Snowboard retailer + Power ReviewsCustomer leveraged PowerReviews’ AnswerBox solution to supplement its existing content and successfully answer a wide array of customer questions that hadn’t been adequately addressed by their standard descriptions. They selected a SaaS model because:
When to buy
Example: Apparel retail chain + ecommerce platform The apparel retailer had multiple brands and had never sold anything online. Ecommerce was another way to serve customers and capture any lost revenue from out of stock items in bricks-and-mortar stores. The buy model worked for them because there was low complexity and the ability to be unique. When to build
Example: Travel booking site + ecommerce solution The client was a travel agent with 20,000 users daily. They needed a web interface for their clients to search, book trips easily while advertising trips based on particular trip requirements. And back-end systems to manage deals and other business-related data. They also needed an interface for suppliers’ to fill in their offers. The solution was a custom build using J2EE, Oracle 10g, and Solaris technologies. The build solution allowed them to fulfill many complex and unique requirements. Build was the best choice because:
When to use an ecommerce framework
Example: Aeroplan + Elastic PathOne of the most successful airline loyalty rewards program in the world, Aeroplan wanted to expand their loyalty program and promote non-air rewards. Aeroplan selected an ecommerce framework because it had complex and unique requirements:
When to use a hosted managed solution
Example: Vancouver 2010 Olympic Store + Elastic PathElastic Path won exclusive rights to the Vancouver 2010 Olympic and Paralympics Winter Games online retail program. We are running the Vancouver 2010 online store under a hosted managed model:
Talking to IT budgets/pricing, are there some estimate budget ranges between models? You can only compare relatively - can't talk in absolute numbers because it depends on your requirements. SaaS is typically for lower budgets, then buy, then build the most expensive. Can you elaborate on the hosted managed model? Hosted / managed is where you buy the system or license the software, operated by vendor with dedicated hardware and also can be modified for you. For example, Elastic Path does the Vancouver 2010 Olympic store. The Olympic Committee decided to go with the hosted/managed model because they didn't have the IT or marketing/merchandising/operations staff to carry the project. In your opinion, what business model will be most prevalent in 2009? There are many different customers looking for ecommerce solutions - so it really depends whether you are enterprise or middle market - there are 2 different trends. Smaller retailers / mid-market in this economy are going toward SaaS and enterprise with complex needs they'll use a build from scratch or framework to build on top of to meet the needs that SaaS can't address out-of-the-box. Can you think of any risks going with a SaaS offering? Do you see SaaS offering sufficient flexibility for ecommerce projects in the future? SaaS vendors are working hard to increase flexibility of their offering but the limitation of the model is the majority of their customers may not need/want the innovation. You don't want to disrupt the happy situation of customers by building things they will never use but their service fees pay for the development of. Another risk is that your SaaS vendor may face financial trouble and if they go out of business, you have no option to quickly take in house. You're dependent on your vendor. Does Elastic Path have a European presence? Yes, we have a UK office to serve the EU. How do you determine ROI for ecommerce projects? How strategically important is this decision for you? Are you looking for a solution that will help you grow your business? Ecommerce is still in early stages of growth so many companies look to new markets/new offerings and ecommerce allows them to do it. Your ROI depends on many factors. The time to recoup the money you invested and see ROI also depends on how complex your solution was. What are the technical aspects of open source and Elastic Path? EP is built with best of breed open source components (Java based). Your developers don't need rare skills to work with it. In general, Bill Mirabito in Selecting the Right eCommerce Software in Six Weeks or Lessclassified open source as "Catalyst" - you can use open source if you really need to have a simple solution and faster time to market.
Deliver Successful Enterprise Ecommerce Projects A successful ecommerce project is a beautiful thing. It can raise revenue, reduce cost, and strengthen a brand. Unfortunately, the visibility of ecommerce and the breadth of stakeholders can amplify the usual project risks—availability of IT skills, understanding of business needs, scope control, accurate estimating, and so on. So whether you are replacing your platform or just adding a new recommendations engine, how do you make sure your ecommerce project succeeds? We sifted through the results (and in some cases, debris) of ecommerce projects over the last 10 years to bring you this “on the ground” view of what to do to turn the odds in your favor. In this one hour webinar, Elastic Path COO, Gordon Janzen, and Atul Jain, HCL Technologies Associate General Manager, will help you answer the critical questions for delivering a successful ecommerce project: • How are ecommerce projects different from other IT and marketing projects? • What business and project management elements are especially important in ecommerce projects? • What technical elements predispose an ecommerce project for success? • What are the Top 10 things to do before project kickoff? Presenters: Gordon Janzen, Chief Operating Officer, Elastic Path Software Atul Jain, Associate General Manager, HCL Technologies Thu, Apr 30, 2009 9:00 AM - 10:00 AM PDT Sign up today for Deliver Successful Enterprise Ecommerce Projects