The process of buying software is not an easy one, especially when the decision involves a large investment extended over a long period of time. When it comes to digital commerce, the decision on which platform to buy has the additional requirement of satisfying two different groups of demanding stakeholders– your business team and the individual consumers that will be engaging with the commerce storefront built with the software you procured.
Like any large purchasing decision, a helpful guide can enable you to make an educated choice. Cost Plus Value: An Equation for Maximum Return on Your Digital Platform Investment, is a comprehensive and objective resource that navigates you through the complex process.
First, Establish the ‘Why” and “How”
The whitepaper does not jump straight into the pros and cons of one platform over another. It first makes you ask, “why do you need a new platform in the first place?” The paper itemizes some common challenges retailers face in executing their digital strategies, and after establishing that you’re in the market for one, it subsequently outlines “how” the software can be implemented, including the three predominant delivery models available to the buyer:
- Licensed, client-managed on-premise
- Licensed, vendor-managed
Next, Take a Deep Dive on “Cost”
The Total Cost of Ownership (TCO) should be top of mind for anybody procuring software. In the paper, the “T” in the TCO is a key emphasis and identifies different categories of costs, both hard and soft. There are the upfront expenses, recurring expenses as well as “future enhancement costs” that may not require immediate investment, but could become a substantial expense down the road.
|One-time or implementation cost||Implementation costs can include creative, site build / development, integrations, setup and license fees, depending on delivery and cost model.|
|Recurring costs||Recurring costs are charged on a monthly or annual basis and can include hosting, disaster recovery, security, monitoring, hardware, support, and license fees. These are important considerations for every company, and especially critical for businesses subject to volume spikes requiring varying levels of capacity seasonally, monthly, and sometimes even hourly.|
|Future enhancement costs||Future software upgrades and enhancements should also be clearly defined and understood. These costs are typically associated more with licensed delivery models vs. SaaS.|
As a final note on cost, the paper plays out different scenarios to illustrate how the major components of your TCO can vary widely based on which of the three platform delivery models you may be considering:
The “Value” of Value
It’s not only about what you pay but what you get for what you paid. And on this topic, the report explores each of the major sources of value from the commerce platform:
- Time to Market: Can reduced time in execution lead to faster realized revenue?
- Capabilities Included: What powerful features will be included in the price of the platform?
- Global Expansion: How much potential is there for your brand if you launched internationally?
- Scalability: Are you missing opportunities by using brittle and unstable systems?
- Community: Can you glean best practices from others that have experienced success?
- Flexibility / Control over Code: Is there a need to make your site truly one of a kind?
- Security: Can you optimize resources keeping your site and customers safe from intrusion?
Similar to how the TCO is impacted by the software delivery model, the pros and cons of choosing an on-premise, managed, or cloud platform is just as important. For example, if elastic scalability is an essential requirement for your business, there is value in procuring a cloud platform that dynamically provides the processing capacity to handle spikes instantly, rather than the meticulous staging and planning that may be required with an on-premise platform.
Bring it all Together
The decision? It depends. On its face, the Return on Investment equation (Cost + Value = ROI)seems straightforward but it’s the combination of a lot of different factors. You’ve established that a powerful platform is required to accelerate your business, and both the cost and the value have been carefully weighed based on your priorities and the platform delivery model that you can best meet your needs.
It’s important to realize that there is no correct answer, but a rigorous process that evaluates both the cost and value to tease out the highest ROI for your organization is always the best choice.