Why Some Merchants are Saying Yes to SaaS

Nov 24, 2009 4:46 AM  By

When determining your total e-commerce spend, you have to identify all online expenses, such as IT costs, personnel for marketing and merchandising, content and outside services, among other things.

The costs add up quickly, which is why Software as a Service (SaaS) is a growing trend in where multichannel merchants are putting their e-commerce dollars.

SaaS—outsourcing the development and hosting of Websites—can be a cost-effective way of gaining new site functionality, reducing operating costs with less reliance on internal IT and accessibility to continuous upgrades. In our experience, SaaS costs range from 1% to 4% of sales.

One $90 million merchant we interviewed about its e-commerce spending could no longer keep up with the IT requirements for its Website. Worse yet, the high-profile brand’s site was hit with a distributed denial of service attack.

(DDSA attacks are typically done via an onslaught of external communications requests so the targeted Website can’t respond to legitimate traffic—or it responds so slowly it’s rendered effectively unavailable.)

The merchant’s site was shut down for a week as a result of the DDSA. After recovering, the company quickly outsourced to an SaaS provider with which it could share the necessary hardware and IT infrastructure and grow its site functionality.

Other merchants are turning to SaaS to be ready for the July 1 deadline for complying with the Payment Card Industry Data Security Standards (PCI-DSS). One company we interviewed believes SaaS will give it added financial savings through sharing compliance costs with other firms.

This could be a considerable benefit of SaaS. Industry studies show that compliance with PCI-DSS may range from $20,000 to $70,000 for companies with fewer than 1 million transactions.

Curt Barry (cbarry@fcbco.com) is president of F. Curtis Barry & Co., a multichannel operations and fulfillment consultancy.


 

Why Some Merchants are Saying Yes to SaaS

Nov 24, 2009 2:58 AM  By

When determining your total e-commerce spend, you have to identify all online expenses, such as IT costs, personnel for marketing and merchandising, content and outside services, among other things.

The costs add up quickly, which is why Software as a Service (SaaS) is a growing trend in where multichannel merchants are putting their e-commerce dollars.

SaaS—outsourcing the development and hosting of Websites—can be a cost-effective way of gaining new site functionality, reducing operating costs with less reliance on internal IT and accessibility to continuous upgrades. In our experience, SaaS costs range from 1% to 4% of sales.

One $90 million merchant we interviewed about its e-commerce spending could no longer keep up with the IT requirements for its Website. Worse yet, the high-profile brand’s site was hit with a distributed denial of service attack.

(DDSA attacks are typically done via an onslaught of external communications requests so the targeted Website can’t respond to legitimate traffic—or it responds so slowly it’s rendered effectively unavailable.)

The merchant’s site was shut down for a week as a result of the DDSA. After recovering, the company quickly outsourced to an SaaS provider with which it could share the necessary hardware and IT infrastructure and grow its site functionality.

Other merchants are turning to SaaS to be ready for the July 1 deadline for complying with the Payment Card Industry Data Security Standards (PCI-DSS). One company we interviewed believes SaaS will give it added financial savings through sharing compliance costs with other firms.

This could be a considerable benefit of SaaS. Industry studies show that compliance with PCI-DSS may range from $20,000 to $70,000 for companies with fewer than 1 million transactions.

Curt Barry (cbarry@fcbco.com) is president of F. Curtis Barry & Co., a multichannel operations and fulfillment consultancy.