August 16, 2007, 12:00 AM

New hosted e-commerce systems options are on the rise

After the application service provider delivery model hit, many e-retailers turned on it. But new hosted systems are a viable option for e-retailers looking to refresh their e-commerce platforms, says Rob Garf of AMR Research.

 

After the application service provider systems delivery model hit, many e-retailers turned against it because of availability, security, control, maintenance, payment integration, flexibility and service concerns. Today, however, new hosted systems are a viable option for retailers looking to refresh their e-commerce platforms, says Rob Garf, vice president of retail strategies at research and advisory firm AMR Research Inc.

12% of retailers are giving outsourced e-commerce vendors a second chance while managing business processes internally, according to a new survey from AMR Research. “While this number is growing dramatically, it still is relatively small compared with the traditional licensed application model. 84% of respondents went with this option,” Garf says. “A third approach, where technology and business processes are outsourced to a third party, comprises only 4% of activity.”

The survey received 213 responses; 50% from bricks-and-mortar retailers, 35.3% from catalogers and 14.7% from web-only merchants.

“While outsourcing is a viable option for retailers in the early lifecycle of online operations or for smaller retailers with limited budgets and technology staff, we anticipate those who outsource today are likely to bring their I.T. and business processes in house in three to six years as business grows and operations mature,” Garf predicts. “Because of this, deployment models that vendors offer are beginning to expand, especially as vendors target the growing outsourcing market-one that was basically extinct two years ago.”

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