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Why SaaS?

When a retail business is trying to go digital, it obviously goes through decision making process where-in the key decision makers has to choose from variety of options varying based on the managed / un-managed, hosted / self hosted, open source and customized further/ fully be-spoke, etc. Due to cloud technology advances in last decade, a new deployment – development model appeared in horizon is a SaaS model which at its very nature is managed, cloud – hosted and continuously upgraded.

“SaaS applications are subscription based, which means no huge technology licensing, purchase or hardware purchase costs. No upfront licensing or purchase cost significantly lowers the initial cost of starting the digital business. SaaS provider’s develop updates and manage upgrades, there are no complicated patches for customers to download or install. They also manage availability, reliability and scalability so there’s no need for businesses to add hardware, software, or bandwidth as the user base”

So the decision makers has to now choose between whether they would like to go with something which is customized by using a Open Source or close source, self hosted platform or go for fully managed SaaS platform. While both models work, one needs to decide on some key aspects of their e-commerce business when making a choice –

  • Is your core strength - technology or retailing?
  • What are you going to focus on to build & grow your business – acquiring more customers, marketing & promotions, getting the best products/deals to your consumers at the best prices? Do you think consumers would care about what technology you are using?
  • How much effort would it take for you to customize an open source platform or develop something from scratch? How much time would it take? Would it make a big dent in your startup fund? Would you rather not spend that time and money to acquire some customers & to keep them loyal?

The popularity of SaaS is rapidly increasing because it makes management of your online store very easy and also reduces customer acquisition costs. With a multitenant approach, you get a solution that is proven across thousands of businesses and incorporates requirements for all kinds of business scenarios. That means your system is flexible and ready for your requirements as you scale. Moreover, you can scale as fast and as much as needed without replacing costly infrastructure or adding IT staff.

Some of the highlighted capabilities that SaaS enables are -

  • Your online store and management interfaces are accessible from anywhere with an internet connection
  • There is no need for local server installation
  • You pay subscription fee only
  • You can scale very fast
  • System maintenance (backup, updates, security, etc) is included in the service
  • Upgrades, new feature additions etc. are automatically available to you
  • Your systems work with high reliability as the entire infrastructure is managed

SaaS has several benefits
over traditional software platforms including web-sites & online businesses.

Business value driver Traditional software platform SaaS platform
Installation Needs to be done at client end
(Minor time overhead)
Not required
Ongoing maintenance of infrastructure & software Is required separately at client end. Typically solution providers offer the maintenance services as an annual paid service
(Average cost overhead)
Done at software provider end. The hosted application & infrastructure is offered as a managed service to clients
Customization & architecture Specific design - Typically customized for a single customer or scenario – is difficult to extend to different or new scenarios. Features may become unusable or obsolete
(Huge cost & time overhead)
Generic design to support broad set of scenarios for various consumers. Ensures flexibility & usability on an ongoing basis
Updates & bug fixes Updates & bug fixes are infrequent and need to be delivered, installed & tested separately. This is often charged separately.
(Average cost & time overhead)
Part of the SaaS offering. The infrastructure & application are regularly updated & issues are fixed.
Upgrades & new features Upgrades & new features are sold as separate products/modules and need to be bought separately
(Huge cost & time overhead)
Part of the SaaS offering. The infrastructure & application are regularly upgraded & new features are added
Integration with other systems Integration is a one-time task and has to be decided up-front during development phase
(Huge cost & time overhead)
Integration modules are added on an ongoing basis and can be integrated with a wide-variety of systems at any time
Hidden or overhead costs apart from licensing fee Usually 91% hidden or overhead cost
  • Customization & Implementation (one time)
  • Hardware
  • IT team
  • Maintenance
  • Training (one time)
  • Updates & Upgrades
Usually 25% overhead cost
  • Customization & implementation
    (one time)
  • Training (one time)