A few years ago, as we were conceiving Creatim’s e-commerce managed service infrastructure, we were confronted with a technology dilemma: should we build it on an open source or commercial (proprietary) framework? Given that the first option was license-free while the other required a substantial investment, the decision shouldn’t had been too difficult to reach.
However, all that glitters is not gold.
According to Wikipedia, open source software copyright provides “the rights to study, change and distribute the software for free to anyone and for any purpose.” This means anyone can download it and modify the code as they please. It all sounds nice and especially the “free” part has always been a magnet for prospective online retailers.
Unlike open-source, commercial source code is a secret recipe usually owned by a reputable system developer. Its business model relies on prospective clients being willing to pay a license fee to use the software. Hence the provider must take into account not only technological perfection, but also the business efficiency of their applications in order to compete against its license-free Open Source counterparts.
Open Source e-Commerce Platforms
Implementing and maintaining an open source e-store usually requires certain programming skills. When you compile different modules of community-grown solution no one will give you the assurance that everything will work as it should. Unpleasant surprises cannot be excluded. Dealing with bugs and errors can be quite time consuming or even unmanageable if the e-shop outgrows the initial objectives it was built upon.
Ok, so technically skilled retailers are thus taken care of. What about everyone else? There are a myriad of retailers out there who are not technically savvy or are even averse to e-commerce ventures, yet they feel they need to move online if they want to stay in the game. Not surprisingly, the market has been flooded with low-end “universal” e-commerce applications, promising heaven and earth in their out-of-the-box solutions. They target the widest possible circle of retailers. They come with large code bundled with a long list of (mostly useless) features to impress a potential buyer. But the dazzling surface hides a lot of inconsistency, undoubtedly requiring programming knowledge as well as patience to deal with
1. Limited ability to tailor the site structure to the client’s needs
2. Poor usability and user experience options
3. Difficulties in implementing new features and integrations
4. Lack of planning and the consequent difficulty in updates and maintenance
5. Problems with operation at higher loads
6. Security pitfalls and frauds – there is a nice article on the topic
7. Inadequate maintenance and user support
8. No warranty and version release features
9. Risk that the developer discontinues development.
Out-of-the-box means limitations. As your business grows you will quickly hit the ceiling of such a “solution”. Then you’ll have to start all over again, which is not free anymore.
Advanced Open Source Solutions
On the other end of the Open Source spectrum there are advanced e-commerce platforms such as Magento Enterprise, PrestaShop and osCommerce. These e-Commerce platforms are capable of much more, but they cost money. The basic platform for Magento Enterprise Edition costs for example USD 12,900 per year. Then there are implementation and various integration costs which add to the bill.
There are a myriad of online agencies specialising in specific Open Source e-commerce platforms. However, when choosing a partner, choose wisely. Because of the non-standardised solutions and the lack of documentation (which is partly replaced by community forums) eventually only the agency will have a full overview of your e-commerce system. If you split up, you will most likely have to rebuild everything from scratch.
The demands of modern online customers increase constantly. They may shop via mobile phones, tablets or laptops, anywhere, anytime. According to Forrester Wave report there are currently four e-commerce platforms that meet their expectations: Hybris (recently acquired by SAP), IBM WebSphere Commerce, Demandware and Oracle’s ATG. Recent Benchmark study of e-Commerce Platforms by NBS System added InterShop to the club. All these platforms are built on proprietary code.
Their main emphasis is based on
1. Multi-channel architecture – the ability to blend various customer touch points into a seamless experience (mobile, web, print, office)
2. Scalability and capability of processing large throughput of data
3. Systematic version release and development based on proven successful business models
4. Advanced tools for online marketing, promotion and social media tools
5. Simple procedures for integration with a variety of internal and external systems
6. robustness and stability even under extreme loads (Christmas shopping)
7. Intuitive content and process management
8. Safety of operations
However, development of commercial solution comes at a price. The license fee for such platform may easily exceed a (few) hundred thousand dollars. Yet the initial investment can be significantly reduced by leveraging a managed service, a form of SaaS model (Software as a Service). SaaS means more online stores share a common platform and consequently also the license fees, which in the on-premise model sometimes account for more than half of the total investment. In addition to favourable financing, you also get rid of most of the technical operative, hence no additional technical staff is needed. Because of its economic benefits managed service model has gained a lot of popularity among e-retailers. Not surprisingly, all major developers now offer their software as a managed service and some (e.g. Demandware) build their entire strategy on it.
Through excessive use of open-source, non-standard software in the core business processes you risk to becoming totally dependent on a handful of developers, external or in-house, who alone master your IT infrastructure. If for one reason or another you separate from them, you may risk some serious trouble.
The implementation of commercial solutions usually happens via the manufacturer’s partner network. Because all partners build their projects on the same standardised e-commerce engine, the client doesn’t have to marry the solution provider for good. While replacing the solution provider of a critical application is never easy, at least it is possible without risking serious revenue loss or having to build everything from scratch.
Only a few e-commerce platforms meet all the criteria for sustained e-business development. In terms of today’s customer expectations, this means rapid integration of multiple channels, tailoring the user experience to different types of customers and swift implementation of new promotion tactics. These e-commerce platforms can do a lot, but they usually require a substantial investment.
Managed service may be a cost-effective alternative to that problem. In the managed service model, you can rent as much capacity as you need and fund the e-commerce operations from the on-going revenue they create, saving on up-front capital expenses, thus preserving cash flow and minimising risks to the company.
Open source systems are led by democratic principles of software owned by a community. However noble this idea might sound it has its limitations. In particular, businesses with complex structures and comprehensive international operations require a validated solution, planned development and extensive support. Just don’t fall pray to the mentality that “open source = free” so that you avoid unpleasant surprises later in the project.
Obviously there is no universal e-commerce platform that would fit into any business model. Eventually every retailer has to figure out on their own which system is most suitable for the job. And above all, it is important to find a competent solution provider that will bring the project to a desired outcome within a reasonable time frame.
Andrej Perc Andrej Perc is a co-founder and managing partner of Creatim. Follow @andr114