Article Published by Retail TouchPoints
The directive from the Executive Board is clear: pay as you go, or don’t go at all. No more capital investments into projects and systems for products and markets that aren’t tried and tested. And why shouldn’t such an edict be issued? They’ve been burned, time and again, by projects delayed or scrubbed for business systems that were supposed to streamline processes, generate revenue and make life easier. Instead, money goes into the pit of never-ending projects to try and fulfill the whispered promise of software.
Management doesn’t want to hear about a software project until it’s a proven success. Wouldn’t it be nice to walk into a board meeting with a report on the new e-Commerce site for a new product launch, up for six months generating big revenue for a low cost of entry, so low you didn’t need their approval to get it off the ground and take it to the cloud?
Does this sound like a great story? Yes.
Does it sound a little far-fetched? Sure.
Is it? Almost absolutely.
Does this mean Commerce Cloud solutions are not pay-as-you-go? Well, almost. The software licensing is pay-as-you-go, but set-up fees have to be considered unless you happen to be one of the lucky 7%whose customer buying journey fits any given Commerce Cloud solution 100% out-of-the-box. And for B2B digital commerce, this number is even lower.
Three things need to be considered when evaluating the right digital cloud commerce platform to minimize the upfront capital expense (there it is!) of setting up the software while still ensuring project success (which is more than just saying, “Hey! It works!”). Ensuring project success starts with asking, “How much of my typical customer’s journey can be supported with…”
• Out-of-the-box functionality
• Configured functionality
• Customized functionality
Companies realize varying success rates when attempting cloud-based customer interfaces with out-of-the-box solutions, versus custom-made solutions. Aside from the lucky 7% of companies who achieve their goals with a 100% out-of-the-box solution, as we’ve described above, LNS research has shown that 25% realize success with solutions that are a hybrid of 80% out-of-the-box and 20% bespoke solutions; 29% use a 60-40 mix; and 19% find a 40-60 mix preferable.
Then we get down to the diehard companies that try to create a unique solution themselves or contract with vendors to have a custom solution. Of these, 11% find success with a solution that’s 20% out-of-the-box and 80% made to order; and the remaining 10% are the purists who take a completely DIY approach.
So, given this data, the goal of minimizing upfront cost is achieved by selecting a platform that covers 60% to 80%, or better, of your customer’s buying process combined with your company’s order creation process. The rest of the process needs to be covered by configured functionality with little to no hard-coded customizations to fill gaps. Figuring this out requires a clear understanding of business requirements and objectives on your part — but it’s not a good idea to proceed without a handle on the nuances around the many Cloud Commerce platforms on the market. This can be tricky, and areas that are particularly challenging to come to grips with are:
A. Integration — Impact to Cloud platform functionality caused by integration to supporting systems (ERP, POS, etc.), and cost of that integration. Will new paths need to be forged with custom APIs?
B. Data Synchronization — How does the platform synchronize to your catalog maintained in a separate system (typically a PIM)?
C. Mobile — Impact of mobile on a consumer’s purchasing decision, and how does that data get back to the Cloud?
Each of these areas comes with different challenges, given your unique environment, and each area must be measured against each considered platform, keeping in mind project costs to make these things happen in your environment. Once the functionality that requires configuration has been identified, it is up to you, your team and a trusted solution provider to install and implement that solution in the most time-efficient, cost-effective manner possible.
So, except for the lucky 7%, Cloud, despite all the hype and promise, is not a 100% pay-as-you-go solution. It requires an upfront investment in time and money to set it up — a capital expense. But really, did Marketing somehow convince you there was a plug-and-play app for the way you do business with your customers? The good news for companies jumping to the Cloud is the higher probability of project success. Cloud platforms enable agile project methodology. And according to the Standish Group’s infamous CHAOS report, agile projects have a much higher rate of success.
So the Board might not like to hear that it’s not quite pay-as-you-go software, if such a thing ever existed, but here are the advantages of taking commerce to the cloud that should make sense to any executive board, whatever the edict:
• Faster time to value — Despite setup fees, no upfront licensing fees still means a lower cost of entry to take it to the cloud, versus traditional projects.
• Higher chance of project success — Cloud platforms enable agile project methodology.
• Simplified internal operations — With the platform supported in the Cloud, there’s no need to hire or train internal expertise to maintain it. Your most valuable resource, your people, have more time to help the customer instead of putting out system fires.
• Significant competitive advantage — Faster implementations with faster time to value will keep your team agile and one step ahead of the competition.
Bottom line, you must purchase an advance ticket to get to the Cloud, but once there, your new digital commerce platform in the cloud will give your company the business agility needed to compete in your market.