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As the business community becomes more competitive, how companies allocate resources takes on greater importance. Shifting from client-installed software applications to a hosted or SaaS model is more efficient. Merchants can achieve lower cost of owner-ship by embracing SaaS because they need few technical resources to implement and support an application.
It’s difficult to make a comparison between a proprietary, unbundled approach to an eCommerce system and a bundled SaaS approach because so many of the costs are elusive. An eCommerce solution is composed of many components, which either have to be contracted out or handled in-house when going with a proprietary, unbundled solution. Either way, there is an associated cost.
Components include the data center, installation and maintenance of the software, as well as design and implementation. Some-body also has to maintain the hardware, keep abreast of shipping rates, industry standards and tax regulations, oversee security and manage the merchandizing and marketing aspects of the eCommerce system, including the site’s market performance. Not only must merchants deal with the cost of all of these separate elements, but it’s crucial that the elements all work together seamlessly.
The SaaS model allows one vendor to oversee all of the solution’s elements. The vendor maintains that breadth of industry knowledge and maintains the operations of the merchant’s website on a continual basis. This is feasible through economies of scale—the vendor has multiple customers using its platform.
There are two dimensions involved in delivering eCommerce solutions. The vertical dimension consists of the solution stack—the hardware setup in the data center, as well as professional services, such as design, online marketing, site optimization and implementation. The horizontal dimension is the ongoing delivery of the service. eCommerce solutions support virtual showrooms. They need to be dynamic so they can handle new inventory, specials and promotions as well as seasonal items.
SaaS vendors wrap up all of those elements in an appropriate package of professional services to ensure the site is launched in an optimized fashion with a high-quality design. Successful vendors will have personalization capacities on their platforms and will have a rich and rapidly evolving ecosystem with best-of-breed partners integrated into the system.
One element that makes a critical difference between success and failure for a SaaS company is its ability to meet service expectations. It’s important that the system is operating in a network of high availability and the data center has robust capacity. The SaaS vendor must have servers in a world-class data center that has redundant power, generator backup, fully meshed Tier 1 connectivity to multiple backbone providers and in-depth 24-hour monitoring.
Successful SaaS vendors recognize the complexity and the dynamic nature of both the technology and the environment in which it operates. eCommerce is deployed as an integral and critical part of an overall e-business technology system. Merchants expect that the platform will be integrated with point-of-sale and other back office systems.
Rapidly evolving technology puts intensive demands on the delivery systems. Successful vendors continually update their systems so they are in compliance with the rapidly changing industry and regulatory requirements. SaaS vendors that offer extreme devel-opment by doing shorter and more frequent development cycles continually offer new functionality to their customers.
One of the biggest concerns with eCommerce solutions is security. A big part of transitioning to SaaS is based on the need to provide a secure operating structure and the delivery of eCommerce technology. Some of the things to look for are Payment Card Industry Data Security Standard (PCI DSS)-compliant hosting, credit encryption capability and credit card purging capabilities. It’s difficult to achieve and maintain data security around a client-installed proprietary application. Delivery as part of a package solution is critical.
Because the cost and potential penalties and liabilities associated with data breach have become more onerous, vendors have invested substantial time, money and effort in being ahead of the curve. Vendor staff must regularly analyze firewall logs to keep on top of traffic patterns and identify any unusual activity. They must ensure appropriate security patches are applied to server software, and they must respond immediately to any hardware, software or database administration issues.
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