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Benefits of Licensed ecommerce software over SAAS or hosted shopping cart
It important for a serious business to analyze both technological and financial impact before selecting licensed model or SAAS model based shopping for selling products online. Recently, there has been a big hype around SAAS based model. However with an ongoing business, most of the long term players have realized that SAAS can be hurdle when it comes to expansion or rolling-out to new areas.
SAAS based shopping carts go down for hours when server of the provider is out of order. Because of size of data, it is quite difficult for a SAAS provider to has contingency plan in place or to deploy a fail-over plan. Downtime does not only impact sales but also the loyalty of your customers. Failed transactions are another source of highly dissatisfied customers. Having own or outsourced infrastructure in place, you have an option to keep performance under check and expand resources as and when required. With no control over SAAS based hosting, you are left out to just guess ‘What went wrong’?
Consider the top businesses in ecommerce market, you will find that only a few select to base their model on SAAS. Rest all believe in setup in environment where they have maximum control over system.
Given below a quick comparison of SAAS model and Licensed model. Do check common myths and reality of SAAS based ecommerce at the end of comparison sheet.
|Google Friendly Solution||No||Yes|
|Data control||No direct control of the data||Full control over data|
|Hosting Model||Shared Hosting Model||Dedicated Server Model|
|Ownership & Risk||A total loss if service provider closes down||You get the ownership|
|Customization||Minimum or no customization in the code||Fully customizable|
|Design Control||Minimum/limited||Full control|
|Total Cost of Ownership||High||Low|
|Dependence on an outsider to run your business||High||No|
|Support Services||Paid/Highly dependent on service provider||Lease it, Outsource it, Setup your own team|
|Security issues||No awareness of security issues||Full control|
|Cost of server resources||High||Low|
|Control on server resources||No||Yes|
|Server farming/Multiple-server support||No or Limited||Yes|
|Limitation on application development as per your business requirements||Yes||No limitation|
|Control of software version||No||Yes|
|Bugs control/issues resolution||Highly depenent on service provider||Fully controlled|
|Ease in adding future oriented features and functions||No||Yes|
|Dependency on one party for new development||High||No|
|Confidentiality of data||No||Yes|
|Risk of data loss||High||Low|
|Predictability of ongoing operational cost||No||Yes|
SAAS based Ecommerce – Myths and Reality
Myth – SAAS is economical because there is no cost of IT setup
Reality – Incorrect, there are no free lunches. Service providers bill to you both software cost as well as IT setup/management cost. Cost is shared by many business, so is the platform. You become part of multi-tenant system where in you share same server with many others. Because you do not have control on server, this is not known to many.
Myth – Setup cost is low in SAAS model
Reality – The cost of setup depends on the rate that service provider will quote to you. Because you cannot change the code or modify features based on your business requirements, the service provider can quote to you on his own terms and rates. Rates of SAAS service provider is comparatively higher than other parties in the market. They know you are so dependent on them that you will pay what they ask for. Either you have to compromise with their only-set-of-features or have to pay heavy amount.
Myth – There is no hassle in managing IT
Reality – SAAS is a model in which you outsource IT management to service provider and are dependent.
Myth – I am the owner of my online store
Reality – No, you do not own anything in SAAS model. It is a contract in which you take everything at lease. Moment the contract is off, you are totally out of business. Refer to terms of services of many SAAS ecommerce provider, they do not guarantee the handover of data also. Even if they do, it might be so messed that it is equal to unusable.
Myth – My online store is secured in SAAS model
Reality – You don’t know. This is what is told to you. You cannot audit the security, nor you can analyze the data integrity. Refer to contract of many SAAS service providers, they disclaim the liability if your data is lost in case of security breach.
Myth – SAAS is fast
Reality – Provided you have server with good resources, performance of SAAS based ecommerce is no alice in wonderland. SAAS based service providers use similar servers that might be using for your online store. Of course, we are not referring to hosting on some cheap shared hosting for a penny or so.
Myth – My store is always upgraded
Reality – Incorrect. Once SAAS service model is ready, there is hardly any “major” development in SAAS software because it brings along the threat of kicking out of control. Any enhancement or new service is “then” made available as a module which is a standard module, paid, and is still not as per your requirements or expectations.