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90% of Ecommerce Sites Will Use SaaS by 2013

11. August 2008
According to Gartner, Inc.by 2013, 40 percent of ecommerce deployments will use a complete SaaS solution and 90 percent of e-commerce sites will subscribe to at least one SaaS-based service, such as product reviews, product recommendations or social sales capabilities.

"The trend toward SaaS applications has affected customer relationship management (CRM) and other applications, and e-commerce isn't exempt from this trend," said Gene Alvarez, research vice president for Gartner. "E-commerce SaaS solutions enable companies that couldn't afford e-commerce to have these capabilities and compete online. It provides organizations with live Web sites, and enables e-commerce SaaS service providers to provide individual services, such as product reviews or click to call, that can be incorporated into e-commerce SaaS platforms, as well as on sites that are using licensed software."

 

Even with the benefits from e-commerce SaaS solutions, commitment to upgrading e-commerce Web sites appears to outpace commitment to the SaaS model for e-commerce during the next couple of years. Gartner analysts believe several factors are contributing to this trend:

  • SaaS e-commerce may not be appropriate for some Web sites, and may not provide a differentiated experience - Because the SaaS model has a low barrier to entry, some organizations feel that competitors can sign up quickly and easily with the same SaaS e-commerce provider, and deliver an equal online customer experience. However, organizations that are challenged in their e-commerce IT capabilities (such as lack of budget for people, hardware and software), and organizations that can have e-commerce capabilities without having to obtain hardware and software, find SaaS e-commerce appealing.
  • Current SaaS e-commerce offerings can't support business-to-business (B2B) - All SaaS e-commerce vendors support B2C online selling; however, for vendors with B2B requirements (such as quoting, proposal generation, lead management and purchase order payment processes), or for organizations that sell into a multilevel network of partners, SaaS e-commerce offerings won't be able to meet the necessary requirements.
  • Concern about the impact of SaaS e-commerce on the total IT portfolio -Organizations are often concerned about the management of a mixed-application environment (SaaS and non-SaaS applications). Many IT people fear that they'll be held responsible for site outages or performance issues when they actually have no control over the SaaS e-commerce application or its operating environment, and can control only part of the systems that contribute to the overall customer experience.
  • Uncertainty of SaaS e-commerce integration with other applications - Organizations that aren't familiar with SaaS offerings are uncertain how to integrate SaaS e-commerce with their existing applications and the stability of the integration over time. Although SaaS vendors don't operate in a stand-alone vacuum, some are able to loosely couple with an organization's applications via application programming interfaces, Web services or XML interfaces, while others have specific and tightly coupled integration requirements.
  • Concern about data collection and data ownership issues in a SaaS e-commerce environment - Many vendors claim that all data associated with a client site is owned by the subscriber, but that aggregated data isn't. This belief may vary by vendor, so organizations should ensure that they cover this issue before entering into a contract.
  • Some vendors have technical limitations, such a shortcomings in Web 2.0 capabilities.
  •  In some cases, vendors focus on providing commodity e-commerce functions (enabling organizations to have basic online stores) to a large audience, while other vendors focus on providing enterpriselike e-commerce solutions for large organizations, which are more aligned with Web 2.0 capabilities.
  • Organizations may need IT and non-IT resources to support the Web site - This varies by the vendor selected, because some vendors require the organization to have some IT resources for integration support with back-end systems, and to have business users to manage the products and the site's user interface. Other vendors may provide both of these supportive services; thus, clients must understand their commitments before entering into a contract for the service.
  • Various SaaS e-commerce payment models are creating confusion - Payment for SaaS e-commerce can vary by provider, so organizations must run test models to determine what they'll be paying for SaaS e-commerce in the short term (less than three years) and the long term (greater than five years).

"SaaS e-commerce is a viable solution for some organizations, however, they must make that determination based on the SaaS vendor's capability to meet their technical and functional requirements, and on the type of subscription payment model that's offered," said Mr. Alvarez.

"Before pursuing SaaS for e-commerce, organizations should develop a SaaS strategy that accounts for the scoping, evaluation, selection, operation and different architectures or SaaS solutions, as well as determines the organizations comfort level in leveraging externally provided IT applications."

Extract from "Saas impact on e-commerce" Gartner Report.

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