The Hostway Blog

Build or Buy – In-House or Cloud for eCommerce?

As retailers evaluate their eCommerce goals and priorities, a decision must be made: Do you build or buy—or more specifically, do you employ internal help to manage an eCommerce store or contract outside resources as well as ask, licensed applications or cloud-based? These decisions apply to everything from the infrastructure, to the eCommerce platform and applications, to the talent who will create and manage the website. Retailers today are lucky: 2016 brings more options for eCommerce than ever before.

There are more eCommerce platform options than ever before.

There are an abundance of eCommerce platforms and tools available today, ideal for serving every size and type of online retailer. But, choosing the best technology for your business is just the beginning. You need the proper infrastructure – the servers, network and security – to support your online store, and all of this great technology must be implemented, work well together, and be properly maintained. At this point, a retailer must make decisions regarding whether to license, develop and launch internally, or to turn to SaaS and cloud providers.

The upfront capital investment associated with a robust eCommerce environment can be overwhelming. A turnkey, SaaS eCommerce solution can provide basic eCommerce functionality, but these solutions come with limitations, and generally, customization and flexibility is minimal at best.

For those who need to scale, want the flexibility to use the tools of their choosing, to have control over their site, but don’t want to invest in the personnel or infrastructure to do this in-house, a hosted and managed eCommerce service provides an attractive option. There’s a relatively new term being used to describe this type of hybrid solution—Business Process-as-a-Service (BPaaS). In this scenario, the merchant controls every aspect of the solution, but the infrastructure and professional expertise is provided by a third party. The CIO and IT team serve a strategic role, controlling the decision-making, working with the provider to integrate legacy or new technology, and to obtain the desired business results.

CIOs are focused on using the cloud to establish a modern, innovative IT environment with operational agility and business advantage as key outcomes. Today, the projects are mission-critical and production grade. This is an affirmation that more businesses are comfortable with cloud deployments beyond the front office.
Joanne Correia, research vice president at Gartner
http://www.gartner.com/newsroom/id/2923217

From an infrastructure standpoint, merchants are able to take advantage of the latest hardware, easily scale as required, and pay for only what they use, avoiding a substantial upfront capital expenditure. At the application level, they can be exposed to the latest technology, including eCommerce platforms like Magento—options that may be difficult to deploy on their own.

"In a 2013 survey, Forrester Consulting found that 81 percent of organizations are either using or planning to use mission-critical apps in the cloud, and 77 percent of respondents identified improved agility as the key motive for moving core apps to the cloud."-PR Newswire

With a managed service or BPaaS, merchants are now able to turn to companies that have invested heavily in infrastructure and resources so that they are able to bear full operational responsibility. This includes all back-end functions, including software patching and updates, hardware scaling, system modeling, security, and assistance with third-party software installation. As a result, time to deployment is faster and less expensive than in-house options, and ongoing maintenance is quite painless. The merchant focuses on the brand, product catalog, merchandising and promotions, while the managed service provider looks after everything else. Above all, as opposed to a traditional SaaS eCommerce solution, this option is 100 percent the merchant’s, with all of the flexibility and scalability a merchant will require.

At the crux of this in-house vs cloud decision lie the business goals, budget, available resources (system and personnel), the technology desired, and timeframe to deploy. For those with a very small eCommerce presence, or specific eCommerce objectives – like launching a store for a singular brand or in an experimental market – a SaaS solution may be a good option. But for most others, a managed eCommerce solution (or eCommerce BPaaS) provides many attractive benefits.