Many businesses view re-platforming as a necessary evil in order to keep up with consumers’ demanding shopping habits. And it ain’t cheap. Selfridges recently spent $40m on a new ecommerce platform designed to be future proofed for omnichannel personalization.
Up until recently the event of purchasing a platform was cyclical in nature - every three years a business would embark on a new vendor selection process, then set about lengthy integration and training programmes to get the new system operational and optimized.
Not only is this undertaking a huge departure from business as usual, it is also a roadblock in the gradual evolution of your digital experience. Retail Week reported an 8% fall in sales with the launch of M&S’ new website, due to losses in conversions, SEO and Adwords quality score. Meanwhile, Forrester reported that 64% of businesses experience re-platforming delays between one and three months. In fact, we calculate the the entire re-platforming process to cost a medium-sized business in the region of $10m. See graphic:
Breakdown of where the $10m re-platforming cost goes
The chart shows that ‘cost of change’ ($4m) far exceeds the ‘integration’ cost of buying and installing the platform ($2m). ‘Distraction’ away from businesses as usual tasks comes in third at $1.5m. ‘Vendor selection’ and ‘mistakes and bugs’ add another $2m to the price tag.
The transition to SaaS technologies
In recent years we’ve seen a huge increase in SaaS web optimization technologies hitting the market including analytics, product recommendation, A/B testing platforms, reviews engine and social media widgets. These technologies are highly effective and have gained massive traction in the market, as cited here in Medium. In fact, everyone from Shopify, Magento and even the almighty Demandware have adopted a SaaS model to offer increased flexibility and agility.
The rise of these technologies reflect ecommerce professionals’ desire to create truly individualized experiences without leaning heavily on financial resources or being bound by lengthy development cycles. However, the question remains, is investing $10m on a full blown re-platforming project money well-spent? We’d suggest that money could be better utilized on a more nimble approach.
Choosing a nimble personalization platform vs. re-platforming an entire website
Nimble SaaS technologies have a few inherent benefits, primarily:
An inherently different approach; focusing on data and combining analytics, testing and targeting
More tailored personalization functionality, such as the ability to target more precise visitor segments than an ecommerce platform
More user-friendly controls for both marketers and developers
A lighterweight installation and smaller price tag
The ability to distribute data through an organization via API
Beyond these factors is the ability to deliver faster ROI. With more focused personalization techniques, businesses can enjoy increased conversion rates, and can typically repay the cost of a SaaS installation, several times over, in under a year. Qubit’s case studies present a good case for this.
Research by Gigaom presents a well-balanced discussion on the internal factors to consider when choosing between a new platform or a SaaS personalization vendor. Their take out is that investment in a SaaS ‘overlay’ solution is a “highly viable lower-risk and lower-cost option. Regardless of the state of the commerce system, the time-to-value is likely much more rapid with the overlay model.” Below is a decision-making matrix extract from the report that will help you assess the financial implications of a re-platform vs. going SaaS.
Key take outs
$10m is a massive investment for a business make on re-platforming - a substantial amount of this figure is related to inefficiencies in bringing the platform up to speed. Many businesses are now thinking about SaaS personalization technologies as a more effective developer solution, for example Topshop embraces Qubit’s platform as an alternative to developing their own in-house infrastructure.
With the highly competitive nature of the SaaS space, businesses such as ourselves are forced to innovate at a greater rate than traditional or clunky ecommerce platforms. With this focus on increasing functionality, combined with the smaller price tag, going with SaaS personalization seems like a no brainer for any business wishing to stay at the top of their game, or re-platform less frequently than their competition.
To find out more, download the full report here.