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Etailers should minimise in-house development work, says analyst

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Online retailers’ IT departments would be better off buying in ‘commodity’ functions such as shopping cart management, search, product merchandising and management. Instead, they should focus on rich internet shopping capabilities or on SEO, according to US analysts Gartner.

By eliminating custom development efforts for commodity functions and replacing them with commercial, off-the shelf, or open-source ecommerce applications, Gartner estimates that large enterprises can save 35% of ongoing maintenance and license costs, while small enterprises (those with an IT budget of under $1m a year) can save 25% of these costs in 2009, and 20% in the future. The one-time cost to implement the strategy, though, would be $250,000 to $350,000 in software, on average, with a further one-time cost for implementation services.

“Except for market leaders, such as Amazon and eBay, custom development is likely to be a waste of effort and money because it supports functions that do not enable a differentiated online customer experience,” says Gene Alvarez, research vice president at Gartner. “For example, a developer who supports a commodity function, such as shopping cart management, would be better to develop rich internet shopping capabilities or improve site design for search engine optimization so that the site can rank higher in a Google-based search.”

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