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Can SaaS Ever Replace Self Hosted

    Mar 3, 2015, 9:51:00 AM 
  • Matt Rhys-Davies
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  • E-Commerce

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The ecommerce industry has seen SaaS solutions maturing in leaps and bounds over the past few years, as more and more retailers are able to realise the value of the web as a global marketplace where they can peddle their wares. More accurately, retailers are able to begin to trade on the web without a large initial investment in technology.    


This article will take a look at the current solutions available for online retail, and take a view as to whether the prevalence of SaaS solutions will spell the end for the self-hosted model of ecommerce.


The answer is a resounding no.


Platforms such as Shopify & Bigcartel have undoubtedly revolutionised the ecommerce landscape, by providing simple, straightforward and affordable solutions to retailers; enabling an operation to begin trading on the web without needing to know a lick of code (front or backend) or budgeting for a developer.


A store owner now does not require a technical team to work with APIs, or even to know what the acronym stands for, as everything technical is taken care of for them behind the scenes. Tucked quietly away in a place where they’ll likely never need to know what fits into what, or what 3rd parties are being talked to under the bonnet. They can happily go about their day focusing on product, traffic & margins as the platform is simply turned on, configured and works. That’s it. Works great. End of Story.


Or is it?


No, it’s not. Every business is bespoke in its needs and requirements, there is not a “one size fits all” turnkey solution for ecommerce technology. Operationally the technology (ie the platform) is there to support the business’s objectives and goals, and tailored to the existing strategy. If the solution is out of the box and built for the majority of business scenarios that are seen across all sectors - from businesses selling fishing tackle, to businesses selling ebooks; then invariably companies will find themselves tailoring processes and procedures to fall in line the technology.


Now when first starting to trade online and doing £250 a day, this may not be a concern. Although assuming the company is focussing on growth - which is a fairly safe assumption -  then 12 months down the line when the turnover is now £7500 a day, then conducting business processes based on the rigidity of the technology may make some operations think twice about where they’re headed and whether SaaS is the right solution to be working with.        


I confidently believe there is a gap between the £1 million - £20 million pound turnover businesses that is perfectly serviced by Magento CE / EE, and to a lesser extent Drupal. Magento offers the stability and functionality of an enterprise grade solution, with the ability for experienced developers (it’s not for the faint hearted) to view every line of code that allows the application to function as it does. This complete transparency coupled with the extensibility that the application allows, ensures that the platform can accommodate nearly all requests a business makes of it. As long as they’re based in logic and are feasible.    


The reason that Magento fills this gap so incredibly well is that companies that fall into this turnover bracket typically have the budget to bespoke their technologies, but are not ready to step into the million pound+ builds, that require layers & layers of project management. This is not to say that Magento cannot handle exceeding £20million per year, but typically the market segment it will service.


SaaS certainly does have it’s place in the market, both at the entry point to the market, e.g. Shopify - where an operation can begin trading successfully on a fraction of a budget; and at the high end of the market there are various sophisticated SaaS platforms. Such as IBM Websphere which can be fully tailored to requirements, but only available where the business has an extensive budget and the expertise in house to manage the project successfully.


Whilst there is the “middle ground” (spoiler: there always will be), Magento is able to cater well for this market.    


Matt Rhys-Davies is an Ecommerce Analyst, and as you may have gathered from the above article, is a strong advocate of open source and the need for a business to define the technology, not the technology to define the business.  

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