PetSmart acquired Pet360 for $130 million in cash and up to $30 million more in future performance-based payments.
Within five years, 90% of e-commerce sites will operate at least partly with on-demand software-as-a-service technology, but retailers should be careful to choose the right SaaS for their needs, Gartner says in a new study.
Within five years, 90% of e-commerce sites will operate at least partly with on-demand software-as-a-service technology-which is available under a monthly subscription rather than licensed and installed on a company’s dedicated infrastructure-but retailers should be careful to choose the right SaaS for their needs, Gartner Inc. vice president and retail analyst Gene Alvarez says in a new study, “SaaS Impact on E-Commerce.” The study also notes that by 2013 40% of e-commerce sites will run completely on SaaS technology.
“The trend toward SaaS applications has affected customer relationship management and other applications, and e-commerce isn’t exempt from this trend,” Alvarez says, noting that SaaS offers a relatively low cost of entry. “E-commerce SaaS solutions enable companies that couldn’t afford e-commerce to have these capabilities and compete online. It provides organizations with live web sites, and enables e-commerce SaaS service providers to provide individual services, such as product reviews or click to call, that can be incorporated into e-commerce SaaS platforms, as well as on sites that are using licensed software.”
Even with all the advantages SaaS offers, however, commitments among companies to upgrade their e-commerce platforms still appear to favor licensed technology over the couple of years, Alvarez says.
Indeed, SaaS technology presents several concerns to I.T. directors. One of the most common concerns among retailers is their lack of direct control over SaaS performance issues and operating environment; another is that it can be more difficult to differentiate from other retailers who subscribe to the same SaaS technology, Alvarez says. Other concerns are inconsistency in the way SaaS applications can integrate with other technology, such as enterprise software for accounting and other functions.
Alvarez advises retailers considering SaaS technology deployments to confirm with a prospective SaaS vendor how its platform is designed to integrate with other technology and what, if any, I.T. resources a retailer needs to have in-house to support that integration. Retailers should also check whether a SaaS vendor provides only basic e-commerce functions or more sophisticated platforms that support interactive Web 2.0 technology.
In addition, retailers should clarify whether the retailer or the SaaS vendor owns all of the data related to site usage, and whether the retailer has access to aggregate data from all sites subscribing to the same SaaS technology platform. Payment methods can vary among SaaS vendors, so retailers should also confirm what they’ll be expected to pay over the first couple of years and over a longer term.
“SaaS e-commerce is a viable solution for some organizations, however, they must make that determination based on the SaaS vendor’s capability to meet their technical and functional requirements, and on the type of subscription payment model that’s offered,” Alvarez says. “Before pursuing SaaS for e-commerce, organizations should develop a SaaS strategy that accounts for the scoping, evaluation, selection, operation and different architectures or SaaS solutions, as well as determines the organizations comfort level in leveraging externally provided IT applications.”