B2B ecommerce Produces Results Get On Board Now

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1 A Forrester Consulting Thought Leadership Paper Commissioned By EPiServer May 2014 B2B ecommerce Produces Results Get On Board Now

2 Table Of Contents Executive Summary... 1 The Verdict Is In: ecommerce Drives Both The Top And The Bottom Line2 SaaS/PaaS Provide A Path To Faster And More Cost-Effective Implementation... 4 Best Practices For Implementing B2B ecommerce... 5 Key Recommendations... 7 Appendix A: Methodology... 8 Appendix B: Demographics/Data... 8 ABOUT FORRESTER CONSULTING Forrester Consulting provides independent and objective research-based consulting to help leaders succeed in their organizations. Ranging in scope from a short strategy session to custom projects, Forrester s Consulting services connect you directly with research analysts who apply expert insight to your specific business challenges. For more information, visit forrester.com/consulting. 2014, Forrester Research, Inc. All rights reserved. Unauthorized reproduction is strictly prohibited. Information is based on best available resources. Opinions reflect judgment at the time and are subject to change. Forrester, Technographics, Forrester Wave, RoleView, TechRadar, and Total Economic Impact are trademarks of Forrester Research, Inc. All other trademarks are the property of their respective companies. For additional information, go to [1-NXJUHP]

3 1 Executive Summary The age of the customer is changing the way B2B companies must address their sales channels. B2B customers are more empowered by technology than they were in the past, choosing to research and purchase over channels that are most convenient to them. As empowered, connected customers in their personal lives, business buyers are increasingly expecting the same personalized, multichannel customer experience for their business transactions. Until recently, there were many arguments B2B companies could use to avoid selling through online channels. The technology was mostly homegrown and ill-equipped to deal with the channel complexity of selling online. The results of ecommerce systems were largely unproven for B2B, and the process of implementing them was considered complex and costly. However, in recent years, B2B ecommerce solutions have evolved to offer a customer experience rivaling that offered by B2C standard-bearers. The results are coming in and they all point to moving forward aggressively with ecommerce. the revenue their ecommerce system books is incremental revenue. SaaS/PaaS B2B ecommerce solutions have the potential to save time and money in implementation. According to our survey, 39% of SaaS implementations cost less than $1 million, compared to only 10% of onpremises implementations. And more respondents said that a SaaS/PaaS solution took less time than expected compared to those who implemented on-premises. Best practices can ensure you stay on time and on budget during implementation. In order to implement ecommerce efficiently and in a customer-centric fashion, B2B companies should carefully define project goals and objectives upfront. In addition, B2B companies are wise to involve users throughout the implementation process and engage with knowledgeable experts, both internally and externally. In January 2014, EPiServer commissioned Forrester Consulting to evaluate best practices in implementing B2B ecommerce systems and metrics around those systems. Forrester wanted to determine the perceptions and realities around the timing and costs associated with implementing ecommerce for businesses, and the results the solutions are delivering today. Between March and April 2014, Forrester Consulting fielded an online survey to 100 US firms that have implemented B2B ecommerce solutions in the last seven years and conducted interviews with a select set of the same respondents. Forrester found that these companies achieved impressive financial success attributable to their ecommerce implementations and used best practices to contain and manage the price of implementing the solution. KEY FINDINGS Forrester s study yielded three key findings: B2B ecommerce solutions contribute significantly to key selling metrics and incremental revenue. Our survey found that B2B ecommerce solutions lead to increases in company revenue, profitability per order, average order value, and decreases in cost per order. In addition, respondents estimated that, on average, 31% of

4 2 The Verdict Is In: ecommerce Drives Both The Top And The Bottom Line In surveying 100 firms that have implemented B2B ecommerce in the past seven years, we found that nearly all of them agreed that implementing their ecommerce solution was a key component in reaching their top online selling goals. Another consensus was that ecommerce is responsible for quantifiable improvements in sales metrics across the board, from revenue to cost savings. Sell to businesses online to grow revenue and attract new customers. Implementing ecommerce is now essential to meeting your company s goals. According to our survey, the top goals for selling to businesses online are to grow revenue (79%) and attract new customers (70%) (see Figure 1). Nearly all of our respondents said that their ecommerce solution was important in meeting their goals to grow revenue (98%) and attract new customers (90%) (see Figure 2). The rise of online retail pure plays have shifted buyer expectations across the board, and in today s age of the customer, your partners expect to be able to interact with you (increasingly in real time) across channels that are most convenient to them. FIGURE 1 B2B Firms Top Goals Associated With Selling To Businesses Online THE QUANTIFIABLE BENEFITS OF ECOMMERCE Firms are now starting to track metrics attributable to their ecommerce solutions, and the results are impressive. Our survey shows that: ecommerce delivers real financial success. Implementing B2B ecommerce solutions delivers clear and quantifiable benefits. Eighty-nine percent of respondents agreed that implementing ecommerce increased annual company revenue and by an average of 55% (see Figure 3). Eighty-eight percent agreed that implementing ecommerce drove higher profitability per order and by an average of 30%. Eighty-four percent of respondents agreed that implementing ecommerce drove lower costs per order and by an average of 28%. Lastly, 81% of respondents agreed that ecommerce increased average order value and by an average of 31%. The evidence is overwhelming that ecommerce contributes to both the top line and the bottom line. Implementing ecommerce drives incremental revenue. Respondents indicated that an average of 31% of the revenue that their ecommerce system books is incremental revenue (see Figure 4). This is good news for companies that are concerned about revenue cannibalization and channel conflict. In addition to being a necessary channel for customer engagement online, on FIGURE 2 ecommerce Drives The Process Of Selling To Businesses Online What are the top goals of selling your products to businesses through the online channel? (Select all that apply) How important is your ecommerce solution in meeting the following goals? Very important or important Grow revenue 79% Grow revenue 98% Attract new customers 70% Attract new customers 90% Improve customer retention/satisfaction Lower costs Gain a competitive market advantage 37% 61% 53% Improve customer retention/satisfaction Lower costs Gain a competitive market advantage 90% 92% 89% Base: 100 US firms that have implemented B2B ecommerce solutions in the last seven years Source: A commissioned study conducted by Forrester Consulting on behalf of EPiServer, April 2014 Base: 100 US firms that have implemented B2B ecommerce solutions in the last seven years Source: A commissioned study conducted by Forrester Consulting on behalf of EPiServer, April 2014

5 3 FIGURE 3 ecommerce Solutions Provide A Myriad Of Financial Benefits How much do you agree or disagree with the following statements? Implementing ecommerce increased our annual company revenue. Implementing ecommerce drove higher profitability per order. Implementing ecommerce drove lower cost per order. Implementing ecommerce increased our average order value. Agree 89% 88% 84% 81% Average improvement +55% +30% -28% +31% Base: 100 US firms that have implemented B2B ecommerce solutions in the last seven years Source: A commissioned study conducted by Forrester Consulting on behalf of EPiServer, April 2014 mobile devices, and even offline, ecommerce is clearly a net contributor to revenue growth across all channels. FIGURE 4 ecommerce Solutions Provide Substantial Incremental Revenue For B2B Firms What percent of the revenue that your ecommerce system books do you believe is incremental revenue for the company? More than 50% 40% to 49% 30% to 39% 20% to 29% 10% to 9% 12% 16% 24% 27% 19% Average: 31% 0% to 9% 2% Base: 100 US firms that have implemented B2B ecommerce solutions in the last seven years Source: A commissioned study conducted by Forrester Consulting on behalf of EPiServer, April 2014

6 4 SaaS/PaaS Provide A Path To Faster And More Cost-Effective Implementation While the value of ecommerce solutions for selling to businesses online is undeniable, many B2B companies balk at the thought of a complex and costly implementation process. We wanted to know how ecommerce is being deployed today how long it will take and how much companies should expect to spend to implement their ecommerce solutions. We found that ecommerce is most often deployed as a hosted solution, and the average costs and timelines varied based on company goals and company size. SaaS/hosted deployments are becoming more popular relative to on-premises solutions. Forty-two percent of survey respondents chose to deploy their current ecommerce solution through the SaaS/PaaS model, while 17% chose to host the solution on-premises (see Figure 5). Companies are increasingly looking at SaaS/PaaS as an option to get up and running quickly and cost-effectively. For example, 39% of SaaS implementations cost less than $1 million, compared to only 10% of on-premises implementations (see Figure 6). In addition, 41% of respondents deployed ecommerce using a hybrid methodology. Hybrid models are becoming more popular, as well, as they retain some of the flexibility of a SaaS/PaaS solution (speed and cost) while at the same time benefiting from the controls an on-premises solution can offer. FIGURE 5 B2B ecommerce Deployment Types How have you deployed your current core ecommerce solution? Software-as-a-service (SaaS)/platformas-a-service (PaaS) (hosted offsite) Hybrid (started SaaS, plan to transition to on-premises) On-premises Hybrid (started SaaS, transitioned to on-premises) Hybrid (started on-premises, transitioning to SaaS) Hybrid (started on-premises, transitioned to SaaS) 6% 3% 8% 17% 24% Base: 100 US firms that have implemented B2B ecommerce solutions in the last seven years Source: A commissioned study conducted by Forrester Consulting on behalf of EPiServer, April % Larger companies tend to deploy/transition to onpremises, but at a cost. We found that companies with annual revenues higher than $1 billion were less likely to deploy in a SaaS environment and more likely to transition from a SaaS deployment to an on-premises one (35% versus 24% overall). Transitioning off of SaaS/PaaS to on premise can make economic sense at certain higher scale points, but larger companies are still gravitating toward on-premises models from the start in order to FIGURE 6 ecommerce Solutions Provide A Myriad Of Financial Benefits How much did it cost to initially implement your current core ecommerce solution? More than $7,000,000 8% $3,000,000 to $6,999,999 33% $1,000,000 to $2,999,999 $500,000 to $999,999 19% 34% 39% of SaaS implementations cost less than $1,000,000 (versus 10% for on-premises) Less than $500,000 6% Base: 100 US firms that have implemented B2B ecommerce solutions in the last seven years Source: A commissioned study conducted by Forrester Consulting on behalf of EPiServer, April 2014

7 5 maintain control over their technology environment. Some also harbor a largely unfounded fear that SaaS/PaaS systems are less secure. At any rate, when large companies choose on-premises solutions as a get-started strategy, they often do so at the expense of time-tomarket considerations and initial cost savings. Best Practices For Implementing B2B ecommerce It s not always easy to stay on time and on budget on the journey to a successful ecommerce implementation. In speaking with decision-makers at B2B companies that have successfully implemented ecommerce, several key themes emerged as best practices. In order to successfully implement ecommerce. B2B companies must (see Figure 7): Carefully define project goals and objectives. According to our survey, the most critical factor to a successful ecommerce implementation is to accurately define the project goals and objectives (56%, 29% ranked as most important). Getting the key project requirements right the first time is essential to a successful project. It s also equally important to map these goals and objectives into a phased road map. Invariably, features will be scoped into and out of the process, and a solid road map with key milestones built in will ensure that the project stays on a proper course to completion. [You] need to decide key business requirements early. It can greatly reduce rework by making sure processes are correctly diagramed at the beginning. Director of ecommerce, MRO supplier Spend more time up front with mockups and requirements. Do not underestimate the work you need to do up front. It can make development sprints shorter and make the solution behave the way you want it to the first time. IT solutions analyst, internal supplier for global home goods retailer Involve internal and external users throughout the implementation process. Forty-six percent of respondents said that involving users throughout the FIGURE 7 Factors For A Successful B2B ecommerce Implementation Which of the following factors was most critical to the successful implementation of your core ecommerce solution? (Rank your top 3) Rank 1 Rank 2 Rank 3 Total Successfully defining goals and objectives 29% 16% 11% 56% Involving users throughout the process to ensure the solution would meet end user needs Engaging a knowledgeable system integrator/ecommerce consultant 12% 11% 20% 14% 14% 21% 46% 46% Building a business case to justify the solution 23% 11% 8% 42% Taking a phased approach to project rollout 11% 14% 14% 39% Obtaining executive buy-in/sponsorship from key stakeholders 6% 12% 13% 31% Dedicating enough time to training 5% 8% 16% 29% Making a critical hire for background 3% 5% 3% and experience 11% Base: 100 US firms that have implemented B2B ecommerce solutions in the last seven years Source: A commissioned study conducted by Forrester Consulting on behalf of EPiServer, April 2014

8 6 process to ensure that the solution will meet end user needs is critical to successfully implementing B2B ecommerce. It is also important to remember that these systems should be designed with end user involvement from the start, building end user alpha and beta testing into key development plans. Communication is key visibility into the project across the company is important because ecommerce touches all aspects of the organization. Director ecommerce, large global manufacturer We added a lot of people to the discussion, which took additional time. But if we didn t have people at the table from each department, it would have resulted in more time-consuming development cycles later on. Director of ecommerce, MRO supplier Engage with both insourced and outsourced experts. Having a partner who is an expert in B2B environments, as well as a veteran of large-scale implementations, is essential to ensuring a successful project. Forty-six percent of respondents said that engaging a knowledgeable system integrator/ecommerce consultant is critical to implementing B2B ecommerce. Furthermore, 54% of companies that were able to implement ecommerce in less than one year ranked it as critical. B2C experts have much wisdom to offer here, having spent the better part of 10 years grappling with similar implementation challenges. Where possible, leverage these experts to reduce project risk factors and shorten completion timelines. Having a partner that understands B2B and ecommerce is needed. Experience working in B2B projects is a must. When we send them business requirements, we weren t reinventing the wheel, they had done projects like these in the past. They are able to come back with suggestions and improvements. VP of ecommerce, global business supplies distributor We were able to stay on time and on budget by having an expert involved who has done this before that was empowered to define scope. With lots of experience with big projects they knew where the pitfalls were and were able to navigate through them. Head of ebusiness, global biotech supplier

9 7 Key Recommendations Time is the enemy. Inertia takes hold quickly in organizations and it s easy to say not now to the idea that ecommerce s time has come. But the evidence is now clear. ecommerce is a positive contributor to the customer engagement process and is inextricably linked to the future of the age of the customer. To be a leader in the space and successful at standing up a world-class ecommerce platform, B2B companies must: Make a long-term, strategic commitment to the space. For B2B companies, ecommerce is not just an extension of the website; it often drives a business transformation. ecommerce will fundamentally change how B2B companies acquire and retain their customers. As such, B2B executives must prepare to run a marathon and not a sprint. They must expect to endure many short-run challenges in exchange for quantifiable long-run benefits. Developing an ecommerce platform and hiring domain experts to run the ecommerce business requires making a significant investment of time and energy in the space. Fortunately, technological advances have made it possible to pay for such resources increasingly, at least initially, on an opex basis as opposed to exclusively on a capex basis. Get going now and produce results quickly. B2B customers are clamoring for ecommerce and the evidence is clear that ecommerce produces incremental revenue, enhances profitability, and reduces costs. Companies that wait risk falling exponentially farther behind and ceding ground to both pure-play B2B websites and encroaching B2C players. According to our survey, 62% of B2B companies were able to implement ecommerce in less than 12 months. With mature SaaS and PaaS solutions available now, B2B companies can and should get up and running quickly and at a relatively low cost. It s not necessary to build the perfect solution from day one. Results drive investment, so get to getting results as expeditiously as possible and backfill with the less critical pieces later. Rethink traditional channel ecosystems and recalibrate for new opportunities. ecommerce is a relatively new, but extremely important channel for B2B companies. After carefully reviewing existing channel relationships, B2B companies may realize that old competitors are now new partners and old partners have quietly become new competitors. Completing such an analysis can lead B2B companies to simplify channel complexity, which is a good thing and will speed along ecommerce. Forrester s research has shown that reducing channel complexity often leads to faster implementation timelines. In addition, as we have seen in the consumer market, a unified, multichannel experience drives higher customer satisfaction and loyalty. Follow proven best practices and learn from those who have already made key mistakes. Take the time up front to study how others in both B2C and B2B have approached the ecommerce challenge, keeping in mind that ecommerce is a process and is never done. Enough time has passed in both realms for good and bad examples to emerge and for B2B companies to borrow lessons learned. Chief among the mistakes to avoid is to build an experience that works for the company first and the customer second. B2B companies that have successfully implemented ecommerce reverse the proposition and build for empowered customers first keeping in mind that increasingly B2B customers want and expect a B2C-like unified and mobile-friendly multichannel experience. Leverage consultants, customers, employees, and any/all experienced ecosystem partners to avoid making costly and time-consuming errors.

10 8 Appendix A: Methodology In this study, Forrester conducted an online survey of 100 B2B companies in the US to evaluate best practices in implementing B2B ecommerce systems and metrics around those systems. Survey participants included decision-makers at companies that have been selling direct to business partners online for more than three years that were personally responsible for, or had knowledge of, the core ecommerce implementation process. A series of follow-up interviews was conducted with a subset of these survey respondents, as well as with candidates provided by EPiServer. Respondents were offered an incentive for participating in the interviews. The study began in March and was completed in April Appendix B: Demographics/Data FIGURE 8 Survey Demographics Using your best estimate, how many employees work for your firm/organization worldwide? Which title best describes your position at your organization? Which of the following most closely describes the department you work in? 20,000 or more employees 5,000 to 19,999 employees 1,000 to 4,999 employees 12% 16% 31% Manager 22% Associate 2% EVP, SVP, VP 34% IT/development/ infrastructure Business analysis/ analytics ecommerce 15% 12% 59% 500 to 999 employees 30% Project management 4% 200 to 499 employees 2 to 199 employees 7% 4% Director 42% Customer experience/ customer service Marketing Other (please specify) 4% 3% 1% Sales 1% Product management 1% Base: 100 US firms that have implemented B2B ecommerce solutions in the last seven years Source: A commissioned study conducted by Forrester Consulting on behalf of EPiServer, April 2014

11 9 FIGURE 9 Survey Demographics (Cont.) Which of the following most closely describes your company s total annual revenue? How long has your company been selling your products and services online? More than $5B 9% More than 10 years 15% $1B to $5B 40% 6 to 10 years 52% $500M to $999M 27% 3 to 5 years 33% $250M to $499M $50M to $249M 10% 14% Less than $50M Base: 100 US firms that have implemented B2B ecommerce solutions in the last seven years Source: A commissioned study conducted by Forrester Consulting on behalf of EPiServer, April 2014

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