Master the. COSTS AND COMPLEXITIES of ecommerce Platforms

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1 Master the COSTS AND COMPLEXITIES of ecommerce Platforms

2 Forrester Consulting Uncovers Key Issues Facing ecommerce Leaders In a recent survey of 156 ecommerce decision makers at retailers across North America and Europe, Forrester Consulting uncovered several key factors that are reshaping the ecommerce landscape, including: The most common challenges organizations experience with their ecommerce platforms The capital expenses required to maintain ecommerce technology The best practices retailers should follow when creating a total cost of ownership (TCO) analysis LoB and CIO critical conclusions: TCO evaluations typically underestimate the true cost of maintaining ecommerce technology Retailers lack confidence in the ability of their current solutions to meet future needs and drive business growth Supporting in-house and licensed ecommerce solutions is a complex, resource-intensive effort How do you compare? 7.6% of online revenues are spent supporting the technology that underpins organizations ecommerce operations 37% of retailers regard international expansion as a critical factor in their overall business strategies 43% of TCO models underestimate the true cost of owning an ecommerce platform 25% of online retailers are planning to re-platform their ecommerce solutions in the next two years, and an additional 29% will do so within four years Download the full report at MASTER THE COSTS AND COMPLEXITIES OF ECOMMERCE PLATFORMS 2

3 TCO is Rarely Accurate The Forrester Consulting study notes that while most organizations understand the importance of a TCO model, many approaches lack rigor and do not consider all of the factors required to gain a clear picture of what it truly costs to maintain an ecommerce platform. The result? 43% of retailers underestimate what their ecommerce platforms actually cost. However, 88% of survey respondents said that aligning TCO with online revenue was an important factor in their ecommerce technology decisions. So this imbalance must be rectified if organizations are to choose platforms that truly fit their needs and satisfy their expectations. What does it actually cost online retailers to maintain ecommerce technology? The survey data revealed some interesting differences between organizations that operate traditional ecommerce platforms and those that employ cloud-based solutions. Organizations using on-premise or licensed ecommerce platforms report costs of 7.6% of online revenues Cloud-based ecommerce platform users report costs of 3.5% of online revenues TCO matters, but agility, innovation, and time-to-market are equally important. Source: Understanding TCO when Evaluating ecommerce Solutions, Forrester Consulting, November MASTER THE COSTS AND COMPLEXITIES OF ECOMMERCE PLATFORMS 3

4 Retailers are Uncertain their Platforms can Grow Growth remains a goal for nearly every business surveyed. However, the vast majority of retailers lack confidence in the ability of their existing platforms to support growth especially on a global scale. So while global expansion is a key strategy of numerous organizations, 78% express major concerns that the technology they currently have in place will impede them from operating in new markets. How confident are you that your current platform can support global expansion requirements? Moderate Concern: 13% Least Concern: 5% No Concern: 4% Major Concern: 78% What do retailers need in an ecommerce solution to grow on a global scale? 1 Global Delivery: An ecommerce solution must be supported by a global network of data centers that provides a secure and scalable infrastructure capable of delivering services to all customers, regardless of location. Content Syndication Management: A web interface and process flow controls and synchronizes data across multiple digital channels, enabling retailers to improve the accuracy and speed of managing product information. 4 2 Multi-Site Management: A multi-site framework allows organizations to create distinct sites and easily syndicate content for use either as is or translated for international audiences. 5 3 Multi-Currency Support: An ecommerce platform must comply with international pricing requirements, such as region-specific currencies and tax systems. Multi-Language Support: Leveraging a platform that delivers a customized, localized experience using local currency, language, and cultural expectations means better customer experiences and stronger brand affinity. MASTER THE COSTS AND COMPLEXITIES OF ECOMMERCE PLATFORMS 4

5 Licensed Platforms Impede Innovation Managing ecommerce platforms has become an increasingly complex process that drains both human and material capital providing yet another reason why 43% of TCO estimates are inaccurate. Top three obstacles to growth: TECHNICAL RESOURCES The scarcity of skilled staffers makes locating and paying the right people quite difficult. In fact, the survey found that on average, retailers have 34 technical resources supporting their ecommerce platforms at an annual cost of $212k per person. Are onsite technical resource costs sabotaging your TCO? PLATFORM UPGRADES Updating traditional ecommerce platforms is difficult and resource intensive which is why only 13% report upgrading more than once a year. And, 76% said the upgrade process takes more than a month to complete. A year may as well be a decade in the ecommerce market can you afford to fall behind the competition because of lengthy upgrade cycles? LICENSING 78% of retailers said they must purchase extra licenses before they can execute their growth strategies. This can significantly increase the upfront costs associated with launching into additional markets. Do upfront license fees inhibit your ability to explore new markets? 34 technical people at $212k per person not in your annual budget? Then think about a cloud-based platform. Not only do cloud-based solutions require no on-premise technology, heating, cooling, or floor space, they also require you to have very few support personnel on staff. MASTER THE COSTS AND COMPLEXITIES OF ECOMMERCE PLATFORMS 5

6 What it all Means to You Are you in the 54% of retailers that plan to replace their ecommerce platform in the next four years? Maybe you re looking for ways to cut costs while boosting your ecommerce reach and capabilities? Do you want to truly align ecommerce revenue and costs? If so, then it s time to take a hard look at what cloud-based ecommerce solutions have to offer. 7.6% Demandware Commerce: 3.5% The cost of cloud-based ecommerce platforms is 3.5% of online revenues vs. 7.6% for Helps you better align ecommerce revenue and cost by paying only for what you use Delivers a feature set and cost model that promotes a quick response to changing consumer behavior and new market Takes cost and complexity out of your IT organization, provide frequent, seamless capability updates, and support growth without a traditional deployments. The difference is a predictable, transparent, no-surprises figure. opportunities penalty MASTER THE COSTS AND COMPLEXITIES OF ECOMMERCE PLATFORMS 6

7 Move Faster, Grow Faster with Demandware The ubiquity of Internet access, across a myriad of devices, is forever changing how consumers interact with retailers. Demandware Commerce is the only digital commerce platform that delivers the speed, agility, innovation, and superior economics you need to master the new retail reality. Our enterprise-class, cloud-based platform is scalable, secure, and current. It eliminates the barriers and complexities of traditional licensed software, giving you the freedom to focus on serving customers and executing strategic initiatives that drive growth. MOVE FASTER Speed and Agility With intuitive applications for both business and technical users, your merchants, developers, and operations teams can respond to new market opportunities and changing consumer expectations with speed and agility. This way, you can quickly execute omni-channel merchandising and marketing, manage global operations, and develop unique experiences that differentiate your brand. Continuous Innovation Seamless upgrades deliver continuous innovation without disruption. Pre-built integrations with third-party technologies allow you to quickly and cost-effectively deploy complementary capabilities, helping you create tailored, relevant digital shopping experiences that set you apart from the competition and grow market share. GROW FASTER Launch New Sites and Brands in New Geographies Our business model is predictable, transparent, and aligned with your business goals. As such, Demandware enables you to launch new sites faster, across channels, geographies, and brands without purchasing additional licenses and investing in extra infrastructure. Scalability, Security, Reliability Whatever your expansion strategy, a secure technology backbone allows you to grow with confidence. State-of-theart data centers across the globe are readily available to support growth. We ensure optimal performance, security, and uptime during seasonal peaks, so you can keep your resources focused on strategic initiatives. To get started, us at request a live demo, schedule a meeting, or call (888) For additional information, please visit our resource center. MASTER THE COSTS AND COMPLEXITIES OF ECOMMERCE PLATFORMS 7

8 Appendix: Survey Demographics For its November 2012 research report, Understanding TCO when Evaluating ecommerce Solutions, Forrester Consulting surveyed manager-level personnel in ecommerce, IT, and marketing departments across 156 North American and European retail, branded manufacturer, and consumer products companies with online revenues exceeding $50 million. In which country do you work? Germany: 21% Canada: 1% To which industry would you say that your company belongs? Branded Manufacturer Selling Direct: 5% Consumer Products: 9% Brand Manufacturing: 3% Using your best estimate, what was the total and online revenues (in millions) of your company worldwide in 2011? UK: 23% More than $1B 25% U.S.: 55% Retail: 83% $600M to less than $1B $250M to less than $600M 13% 46% 46% Which of the following best describes your position at your company? Manager: 6% Which of the following most closely describes the department you work in? Marketing: 6% $100M to less than $250M $50M to less than $100M 9% 8% 25% 26% Director: 15% ebusiness/ ecommerce: 20% less than $50M 3% Vice President: 14% Online Revenues Total Revenues 5 Wall Street, Burlington, MA C-level Executive: 65% Information Technology: 74% 2013 Demandware, Inc. All rights reserved. Demandware is a registered trademark of Demandware, Inc. MASTER THE COSTS AND COMPLEXITIES OF ECOMMERCE PLATFORMS 8

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