June 1, 2012, 12:00 AM

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Successful e-retailers minimize growing pains by letting SaaS vendors handle the heavy lifting.

Scalability is critical in the fast-moving world of e-commerce. Many e-retailers have had the experience of growing rapidly and then struggling to manage higher traffic while still delivering the feature-rich shopping experiences online shoppers have come to expect from top e-retailer sites.

Without a scalable platform that is regularly updated to stay abreast of advances in e-commerce, e-retailers are bound to lose sales. That alone is reason enough for e-retailers to embrace software-as-a-service, or SaaS, in which the vendor hosts e-commerce software and the retailer connects to it via the web.

SaaS is rapidly emerging as an alternative to a retailer maintaining its own servers, licensing e-commerce software and arranging for sufficient bandwidth to handle its web traffic. That's a lot of work, especially for small retailers without strong I.T. teams.

"Non-SaaS platforms, also referred to as licensed or hosted solutions, are typically not built for scalability, reliability, security and performance," says Michael Turcsanyi, president and cofounder of OrderDynamics Corp. "For retailers entering the second year of business, which is a key growth stage, they need the scalability, redundancy and seamless, regular deployment of new features SaaS platforms provide."

Solves common problems

Turcsanyi became an evangelist for SaaS after years of working with retailer-hosted software. Client companies often would customize software to their needs, then encounter two big drawbacks: First, it took them a long time to write their own code; second, once they did, they would have to keep updating it whenever the vendor revises its software.

SaaS platforms solve both problems. The SaaS vendor develops the new code, which it builds to meet the needs of all retailers on the platform, based on their feedback. When the vendor rolls out upgrades, as OrderDynamics does every six to eight weeks, they are immediately available to all retailers on its platform. The retailer doesn't have to do the initial development, and it doesn't have to change a thing when OrderDynamics releases an upgrade.

"A lot of retailers have had to learn the hard way that the most challenging aspect of customized platforms is the lack of native upgradability. They don't necessarily intend to end up in that position, but that's the road where customization ultimately takes them," Turcsanyi says. "SaaS platforms enable rapid deployment of new features, allow for greater design flexibility and support a broad set of sophisticated merchandising tools that can help e-retailers grow their business, such as support for multiple web stores and metrics to help drive qualified traffic, conversions and average order values."

High performance

One of the principles Turcsanyi has laid down for OrderDynamics is to provide e-retailers high-quality service and support agreements that guarantee excellent performance in such areas as uptime, page download speeds and data security.

"These are performance issues retailers don't always think about right away, but that make a big difference in effectively managing their growth down the road," Turcsanyi says. "Because SaaS providers earn their money through monthly fees, they're motivated to achieve high levels of customer satisfaction."

At a time when retailers are striving to deliver great service to customers across several sales channels, Turcsanyi says SaaS platforms serve as a key link.

"A store manager can call up a customer's online wish list or account profile to get a better idea of her preferences, or a customer can check the status of an in-store back order online," Turcsanyi says. "The idea is to join the e-commerce platform to front- and back-end retail systems so customer data can be seamlessly shared. Retailers can then access that data in any channel to market more intelligently to their customers. It's what we call connected commerce."

As many retailers struggle to keep pace with the rapid advances in e-commerce technology, the scalability of SaaS platforms and steady stream of upgrades from vendors make SaaS increasingly attractive. "SaaS is about providing retailers with quality technology and service," Turcsanyi says, "so they can focus less on I.T. issues and more on growing their business."

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