We previously discussed 13 Areas to evaluate ecommerce solutions  while selecting an ecommerce technology or platform(Part 2 can be of selecting ecommerce solution can be found here). Mainly you have three main options to choose from:

1. Custom built websites that are developed specifically for that site

2. An ecommerce package that is deployed on a server (think Magento, oscommerce, ATG, etc)

3. Hosted e-commerce solution (Yahoo!, Network solutions, Cloud craze, etc)

Each of these options has its pluses and minuses. As an ecommerce architect, I have experienced both ends of the spectrum, helping companies select the right solution for their business as well as the selling ecommerce solutions to companies.

During the selection process there are hundreds of criterion you must evaluate before deciding on the right solution. All of these factors can be summarized in selecting the most cost effective solution that will return the highest ROI. 

Hosted ecommerce solutions

These solutions come in many different forms and flavors. The most popular solution is software as a service (SaaS) model, where the vendor provides you with both software and hardware. You are leasing or renting their software from them. If you follow technology consulting, you know that many claim SaaS the way of the future. And while that might be the case, SaaS in the area of ecommerce does not make sense. I know some will argue that SaaS and hosted solutions are different but I will use the terms interchangeably in the blog!

Companies that sell hosted ecommerce solutions will focus on the following pluses:

1. The speed a company can be up and ready to go live. For a brand new website, go live can be a matter of one week or less. For pre-existing website, the largest time delay takes place in migrating data from the old system to the SaaS system.

2. There is also cost effectiveness of the solution. Getting a custom application written requires a huge time and resource commitment. In the SaaS model, you are spreading that cost over the different companies that share the software with you.

3. Support, upgrade and maintenance: Each of these comes with its costs and headaches. In a SaaS model, you do not have to worry about any of them. If the site is down, the SaaS company will take care of it. If the hardware or software needs an upgrade, that is all done for you behind the scene.

All of these are huge pluses. The biggest challenge with the SaaS model is the amount of control it allows the client to configure and customize the solution. The very flexible solutions provide each client with his own installation of the software. That allows the client full control over the solution. Of course with that level of flexibility, you will be giving up some of the advantages mentioned above.

On the other end of spectrum are hosted ecommerce solutions where you have few minor configuration tweaks you can deploy on your ecommerce website. This is typical of many of the small hosted ecommerce packages available. How much control you have over your own website can very limited to the point where you are only able to create a small number of categories, not change colors on buttons, or not even make simple layout changes.

Hosted solutions work well based on the assumption that all the hosted companies share the same general business process and that there is very little customization required for each of the participants.

That is where the problem start happening for e-commerce.

The assumption that all ecommerce solutions are the same shows a lack of understanding of how people buy on the web. Thinking that all catalog or product pages, checkout processes, main home page can be generally the same is absolutely false. We experience this every day, several times a day.

A product page that works very well for one website causes very low conversion rates on another. Checkout process complexities go beyond single or multistep checkout. What elements you include on the page, what colors you use, how you design the page, what checkout paths exists, and the list goes on and on. The SaaS model simply breaks down in e-commerce.

And while the hosted solution model gets high points for enabling clients to go to the market faster, adding new features becomes a lot more complex. As a client, you are held a hostage to the SaaS provider and when they might decide to add a new feature you desperately need. Ecommerce is continuously changing, can you rely on SaaS providers to adapt quickly?

But this is not unique to e-commerce.

Sales Force, is a leader in providing CRM application in SaaS model faces the same issues with enterprise clients who have different CRM needs and processes. To deal with this need, Sales Force allows these clients to customize their hosted application to a very high level. Sales Force provides the framework and does all the plumbing, clients are able to add modules, modify screens and integrate with external systems. I have had many clients who use and are happy with their customization of Sales Force.

The caveat of course is that these companies are investing in Salesforce and making a long term commitment to stay with the company. On top of that, these companies ended doing custom development which was the thing they tried to move away from in the first place.

It might be just me, but if I am going to invest in something, I would like to own it completely and have full control over it.  And no matter how much custom development you are able to do, there will always be limitations.

The SaaS provider must continuously worry that any upgrades they perform on the application will not cause problems to their clients. If they allow you to add a lot of custom code to your instance, they lose the control over that assurance.

An ecommerce hosted solution is a quick short term solution but rarely does it work in the long term.

I have many questions to ask you:

• Did you have to choose between a hosted solution versus another ecommerce package or even your custom development?
• What factors affected your decision the most?
• Do you think you made the right decision?
• What are some of the biggest lessons you learned?