Monday, August 4, 2008

90 Percent of E-Commerce Sites Will Use At Least One SaaS-Based Service by 2013

Although uptake of software-as-a-service (SaaS) e-commerce solutions is slow, more organizations will begin to utilize these services during the next few years, according to Gartner, Inc. By 2013, 40 percent of e-commerce deployments will use a complete SaaS e-commerce solution and 90 percent of e-commerce sites will subscribe to at least one SaaS-based service, such as product reviews, product recommendations or social sales capabilities.

Even with the benefits from e-commerce SaaS solutions, commitment to upgrading e-commerce Web sites appears to outpace commitment to the SaaS model for e-commerce during the next couple of years. Gartner analysts believe several factors are contributing to this trend:

- SaaS e-commerce may not be appropriate for some Web sites, and may not provide a differentiated experience — Because the SaaS model has a low barrier to entry, some organizations feel that competitors can sign up quickly and easily with the same SaaS e-commerce provider, and deliver an equal online customer experience. However, organizations that are challenged in their e-commerce IT capabilities (such as lack of budget for people, hardware and software), and organizations that can have e-commerce capabilities without having to obtain hardware and software, find SaaS e-commerce appealing.

- Current SaaS e-commerce offerings can’t support business-to-business (B2B) — All SaaS e-commerce vendors support B2C online selling; however, for vendors with B2B requirements (such as quoting, proposal generation, lead management and purchase order payment processes), or for organizations that sell into a multilevel network of partners, SaaS e-commerce offerings won't be able to meet the necessary requirements.

- Concern about the impact of SaaS e-commerce on the total IT portfolio —Organizations are often concerned about the management of a mixed-application environment (SaaS and non-SaaS applications). Many IT people fear that they'll be held responsible for site outages or performance issues when they actually have no control over the SaaS e-commerce application or its operating environment, and can control only part of the systems that contribute to the overall customer experience.

- Uncertainty of SaaS e-commerce integration with other applications — Organizations that aren't familiar with SaaS offerings are uncertain how to integrate SaaS e-commerce with their existing applications and the stability of the integration over time. Although SaaS vendors don't operate in a stand-alone vacuum, some are able to loosely couple with an organization's applications via application programming interfaces, Web services or XML interfaces, while others have specific and tightly coupled integration requirements.

- Concern about data collection and data ownership issues in a SaaS e-commerce environment — Many vendors claim that all data associated with a client site is owned by the subscriber, but that aggregated data isn't. This belief may vary by vendor, so organizations should ensure that they cover this issue before entering into a contract.

- Some vendors have technical limitations, such a shortcomings in Web 2.0 capabilities — In some cases, vendors focus on providing commodity e-commerce functions (enabling organizations to have basic online stores) to a large audience, while other vendors focus on providing enterpriselike e-commerce solutions for large organizations, which are more aligned with Web 2.0 capabilities.

- Organizations may need IT and non-IT resources to support the Web site — This varies by the vendor selected, because some vendors require the organization to have some IT resources for integration support with back-end systems, and to have business users to manage the products and the site's user interface. Other vendors may provide both of these supportive services; thus, clients must understand their commitments before entering into a contract for the service.

- Various SaaS e-commerce payment models are creating confusion — Payment for SaaS e-commerce can vary by provider, so organizations must run test models to determine what they'll be paying for SaaS e-commerce in the short term (less than three years) and the long term (greater than five years).

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