Cloud v. SaaS: Innovation or Conformity in eCommerce?
Clouds that carry rain and clouds that carry your data have one thing in common: when you look up at them, you can see whatever shape you want. Your imagination is the limit.
If your eCommerce sales channel has become too costly, or best case, too busy to host efficiently on your own premises behind your firewall, then you have 2 choices: Cloud or SaaS.
SaaS eCommerce solutions will tell you they’re the Cloud, but they’re not. They are a solution platform built on a multi-tenant Cloud. SaaS is off-the-shelf software that you can rent and configure to a certain extent, but you will never have the license to build your own innovations. It is a high-rise in the Cloud, with many tenants, and like all high-rises, you can only build out so much, and you often have noisy neighbors.
Cloud is the infrastructure that makes it happen, and for less than you think. You can choose to house your eCommerce sales channel in one of the high-rises of the Cloud, or you can build your own estate, you can lift and shift your unique ecommerce system you’ve spent years building and perfecting, on your own Cloud.
This is not an “agree-to-disagree,” or a “well-it-just-depends” type of conversation. This is a “define-the-best-version-of-your-business-and-learn-how-Cloud-can-make-it-happen” type of conversation.
4 Most Important Factors in the “Cloud vs. SaaS” Debate for Commerce
There are 4 reasons why companies are outsourcing eCommerce infrastructure and moving fast to either Cloud or SaaS:
1) The Innovation Factor
eCommerce SaaS solutions come with ready-made clouds all packaged up for you. You can pick from a few different shapes and colors, but essentially your “cloud” is going to look a lot like your neighbor’s, who may happen to be your competitor.
You can take comfort in being an “#YeahUsToo” business, that you’ve conformed to the norm. However, once you’ve adopted a SaaS package for your commerce website, down the line, when you’re looking for incremental and strategic growth, implementing changes that will differentiate you from the competitors you chose to conform to will prove to be difficult and self-limiting.
A unique eCommerce system in the Cloud is your system built in the shape of your imagination. With the Cloud, you offload the cost and security issues of housing your commerce system to an expert 3rd party cloud provider. This allows you to focus on becoming an “#I-Am” / “#We-Are” company of innovators with a prize-winning customer experience of your own design, built specifically with your customers in mind.
2) The Scalability Factor
Can you scale your digital operations up and down to fit your business needs?
Hosting your unique customer-facing systems in the Cloud brings a lot of efficiencies. If you’re in sales and marketing, this means you no longer need to be a self-trained technologist just to understand if your digital infrastructure can handle a marketing promotion.
Cloud-based commerce solutions free companies from deliberating how increased promotional traffic will impact their network bandwidth or the server CPUs and cores. On the other hand, if your system is on premises, the cost for a planned promotion can become cost-prohibitive and time-consuming, especially if expected promotional traffic requires new servers to be requisitioned and put online.
In the Cloud, spinning up a virtual server in minutes to handle additional traffic, and then spinning it down just as fast when you’re done, is not just cost-saving, it’s a game changer. Not only is it liberating for your teams’ stress levels, Cloud allows your technology to revolve around your business needs, and not vice-versa.
Be wary of how well SaaS will support your planned promotions, and how high your costs will be for the planned support. They are software experts, not infrastructure experts. Almost all noisy neighbor complaints in the Cloud come from SaaS platforms, the high-rises of the Cloud world. Just like in the real world, the real Cloud is quiet. These factors are almost always overlooked when selecting a SaaS eCommerce system.
3) The Cost Transparency Factor
In his recent post, Chris MacLean explains why and how Cloud is the most cost-effective option:
“If we could only pick one, perhaps the single most important reason eCommerce is moving to cloud is the ability to scale the infrastructure up or down with relative ease. Online eCommerce is subject to changes in shopping volumes (sometimes severely). Seasonality, holiday season shopping, and promotions are examples of events that demand significantly more IT infrastructure on a temporary basis.
In the past, eCommerce businesses were forced to over-provision expensive hardware and software licenses to handle the high workloads during peaks. Once things returned to normal, they were stuck paying for unused capacity.”
Technically, SaaS ‘high-rise’ solutions are also housed in the Cloud, so some of the benefits will apply, right? Well, here’s the caveat: You have no control over the infrastructure. The software company owns it. And they own any cost savings that come with it. But if your traffic continues to spike beyond expectations, you can bet the landlord will start asking for more money.
Your SaaS contract gives you a subscription to the software and its functionality, and nothing more. This means you get none of the optimized auto-scale savings when traffic goes down. The software company hosting it for you gets those savings. You just get the same monthly fee to rent their software.
With your unique eCommerce system in your own Cloud environment, you have the power to optimize, and reap all the cost benefits that come with auto-scaling to traffic demands.
4) The Reliability Factor
As stated above, the chance for noisy neighbors from a SaaS “high-rise in the cloud” solution is far greater. When software companies, who again, are not experts in infrastructure, continually try to cut corners on costs by keeping as many tenants as possible on a server, things can get pretty noisy. It’s important to keep in mind that a more comprehensive descriptor of SaaS is “multi-tenant Software as a Service.”
Let’s say your promotion “kills it,” and you suddenly get tens of thousands, or even hundreds of thousands, more requests an hour. In the midst of celebrating your successes, your promotion might literally ‘kill it” meaning the SaaS “cloud” server goes down, possibly taking a few tenants with you.
Whereas with Cloud, and hosting your unique eCommerce system on it, hyper-scalability is an innate part of the service design. Due to redundancy and large networks of backup servers, the chances of downtime on the real Cloud are significantly smaller. And remember, even if the SaaS provider does work hard to absorb the extra volumes from your promotional traffic, their extra efforts won’t be cheap.
Giving Honest Answers to Hard Questions About the Cloud
What does your business model and its level of complexity mean for this decision?
B2B ecommerce is the fastest growing segment of the eCommerce industry. It’s also the fastest growing segment of the Cloud.
By 2021, the B2B Commerce market will grow to 6.7 Billion by most analyst predictions, more than double the projected growth for the B2C retail market. This is why large online players like Amazon and Alibaba have been making the shift to B2B for years.
B2B businesses traditionally don’t do business in a traditional way. That is to say, they will not be satisfied to conform to the same one-size-fits-all solutions adopted by their B2C colleagues. As one analyst put it in Forbes, “The ‘black box’ effect, where a customer buys a device without a real interest in learning how it works, barely exists in B2B, while it is dominant in B2C. For this reason, a B2B eCommerce implementation is fundamentally more complex than in a B2C environment. While this makes the successful design and implementation of a B2B eCommerce platform more difficult, it also dramatically increases the value of that system, as the problems solved are costly to address using conventional means.”
So, as more and more B2B companies look to enter into eCommerce or to replatform to a more robust solution, they won’t be looking to mold the shape of their business to someone else’s design. B2B will stick to the more unique and flexible platforms these vendors offer.
B2B will look to build eCommerce systems in their image. Only with Cloud, the true Cloud, will businesses have the flexibility to hold that shape. And as B2B rapidly outgrows B2C eCommerce, Cloud will outgrow SaaS.
Do all “Cloud” solutions reap the full benefits of the Cloud?
As we’ve parsed out above, not all clouds are created equal. SaaS in the Cloud, and hosting your unique system in the Cloud, are 2 completely different things, despite SaaS marketing attempts to muddy up the Clouds.
There are many eCommerce systems to choose from. At the enterprise level, this starts to become an easier decision as far as Cloud vs. SaaS, where eCommerce sales revenue hovers in the millions. At this scale, it makes sense to leave behind SaaS eCommerce “cloud” solutions and consider moving to the real Cloud, with a unique eCommerce system that has a competitively differentiating customer experience.
The major eCommerce platforms considered by most enterprises are Hybris, Oracle, Intershop, Demandware, Sitecore, and even Magento (the most-used platform on the internet that now has an Enterprise Edition). All of these software providers, with the exception of Salesforce’s Demandware and CloudCraze, have an eCommerce platform you can configure and build to your unique business needs and customer experience.
While SaaS solutions do offer a number of great benefits, your organization has no real control over the infrastructure, and limited control over the configuration of the software to fit unique business needs. Often those unique business needs are the very things that differentiate you from your competitors. Most of the software companies assume the mantle of Cloud because true Cloud means innovation and flexibility, and SaaS does not. They are high-rises with landlords that will raise your rent. This is an important distinction to make between solutions. Getting under the hood to see what is really offered, outside of marketing language, is critical to make sure you don’t start searching down the wrong path.
It’s up to you to decide.
While the power of having your unique eCommerce system hosted on the Cloud is hard to compete with, there are perfectly legitimate reasons to conform to a SaaS offering for eCommerce. If your business model is not that complex, and the online traffic you will get is steady, predictable, and relatively low, then SaaS makes perfect sense.
However, once your business reaches enterprise level, or your team starts to innovate with new processes and unique customer experiences, hosting unique eCommerce systems on the Cloud starts to make more and more sense. Its power and flexibility allow for the optimization of your business’ processes, scalability and beyond.
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