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WEBINAR REVIEW SaaS: Risks and rewards in retail

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A recent Internet Retailing webinar considered approaches to buying and using ecommerce technology, including cloud-based solutions. Taking part in the webinar were Fraser Davidson, director, technology services at Javelin Group, David Kohn, head of multichannel at Snow + Rock and Jennifer Hale, product manager at SLI Systems.

The hour-long webinar, SaaS: Risks and rewards in retail, took as its theme the different ways of buying ecommerce technology and the pros and cons of each. Speakers focused in particular on the emergence of software as a service (SaaS) solutions.

Fraser Davidson, director, technology services at Javelin Group, opened the webinar with an account of how technology has developed since online selling first started in the mid-1990s. Where once solutions were largely developed in house, the market moved towards ecommerce platforms and then towards different delivery models, including software as a service (SaaS). In the current, third wave, he said, retailers are orienting their solutions towards a better customer offer and experience, delivered more efficiently. “The drive to differentiate yourself is pushing other technologies to the forefront. Now the traditional platform often isn’t enough. You’re looking for personalisation so you can target your clients more effectively. Quite a lot of that will be driven by search and navigation, which has evolved, and there’s also a big discussion of whether people should be looking at platform as the only solution or the emergence of web content management.”

Today the choice is between cost and functionality, he said, illustrating through a chart where the different major platform providers fit within that range. He went on to discuss the different delivery approaches for ecommerce platforms, from the fully outsourced to the licensed solution, by way of options including software as a service, and the financial and operational decisions that underlie those technology choices. “The important thing about SaaS is it can be considered for all or part of the solution,” he said. “You may end up with a mixture of an outsourced model, a Saas, licensed and SaaS model for different parts of your solution. When we’re advising clients we’ll often look at the technology that does the job and at the delivery that’s best for the technology.”

As the growth in online sales continues, the shopping experience and the differentiation between those experiences will be ever more critical. “There is no one size fits all,” said Davidson. “You may decide that the platform plus one or two specialist offerings gives you your best of breed and you may do that through one or more different ways of procuring the service or technology. But what’s clear is those that get it right with the best experience will be the winners going forwards.”

David Kohn, head of multichannel at ski and snowboarding equipment retailer Snow + Rock, and the second speaker in the webinar, opened by explaining what technology underlay the Snow + Rock business and how it was bought. While much of the technology is SaaS, he said he had just bought a licensed PIM system.

Why use third-party solutions?

“It’s an incredibly fast-moving market where technology is becoming increasingly specialized and unless you are really a significant player, and we are very much a medium-sized retailer, it’s impossible to keep on top of it all,” said Kohn. There are certain areas where you have to use third parties. The experience is also becoming increasingly componentised and there are these point solutions, such as search, merchandise where your core solution may not be adequate.”

SaaS also reduces the need for in-house resources, said Kohn. He heads a team of two running three websites, and SaaS allows them to focus on their core strengths and needs without needing a larger team to develop and maintain systems. “Because it’s not a one-off license sale and they want to retain the business there’s an ongoing focus, which means they always care. Sometimes once you’ve got a licence they lose interest.” Upgrades are also easier, he said.

Why not SaaS?

Recurring costs mean ongoing payments which are not capitalisable and hit the profit and loss account, said Kohn. It’s also less straightforward to move on from a SaaS provider while future development may be inhibited if a retailer is going in different direction to the platform provider. “You can become very dependent on a provider,” said Kohn, making it difficult to leave. It’s also important, he said, not to have a ‘kit of parts’. “We’re trying not to make our structure so complex that we’re managing four or five different plug-ins, none of which talk to each other,” he said.

Kohn then talked through the reasons why Snow + Rock had chosen SLI Systems to deliver its search system on a SaaS basis, and about how the service worked practically, and the results that it had seen.

Concluding, he said that key factors to consider in SaaS providers included their service level agreements and responsiveness, their customer success ethos and their relationship with other providers. It was also important to ensure there were no hidden costs.

The final speaker, Jennifer Hale, product manager at SLI Systems, outlined reasons to use SaaS for search solutions. Retailers had historically been wary of handing over business-critical parts of the ecommerce site to a third party, and with good reason, said Hale.

“We typically see people who use search converting at rates about three times higher than those who don’t use the search, and it is a really critical component to an ecommerce site,” she said. It’s essential to be critical of any provider who can have such a potentially large impact on your success.”

But, she said, SaaS can benefit retailers, said Hale, through its reliability, scalability and flexibility. She went on to illustrate the back-up and monitoring systems used by SLI Systems, as well as the way its solutions can scale as retailers expand.

She also outlined some criteria that retailers could use to make a decision. They included being sure what their SaaS provider is charging for, as well as the tools retailers are given to measure the return on their investment. “Overall I’d say there are a lot of advantages to the SaaS model but as with anything it’s a matter of choosing the right partner,” said Hale. “You have to make sure they have the right features, that they are willing to have the type of relationship you want with them and they’re a good fit with your business. Not all SaaS companies and solution are the same.”

The final Q&A session touched on subjects including the role that licensed software still had to play in a market where SaaS is growing fast.

To hear the webinar for yourself, to view the accompanying slides and hear the question and answer session in full, visit the SLI Systems webinar page.

For details of our other webinars visit our webinars page.

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