Custom eCommerce Development vs. SaaS: Key Considerations

By
Guest
March 24, 2016

The “Buy vs. Build” battle has been raging in IT circles for quite some time, and for some manufacturers and wholesale distributors looking to invest in eCommerce software, that battle is still being fought. The advent of software as a service (SaaS) eCommerce solutions is making it easier than ever for businesses of all sizes to implement customized B2B eCommerce portals with minimal up-front costs. At the same time, some companies are still actively considering custom eCommerce development. Let’s take a closer look at the pros and cons of each approach.

SaaS eCommerce Applications

1. Lower implementation cost.

Unlike purchasing an in-house solution or custom developing an eCommerce application that will be hosted on your own servers, a SaaS eCommerce solution is simply rented from the vendor. This means that any up-front costs will be much lower, making the implementation process much more manageable, especially for SMBs and mid-market companies.

2. Lower total cost of ownership & IT involvement.

According to Gartner, Total Cost of Ownership or TCO, “includes hardware and software acquisition, management and support, communications, end-user expenses and the opportunity cost of downtime, training and other productivity losses.” One of the major advantages of SaaS applications is that they do not require a large IT investment to implement and maintain over time. Because most of the technical tasks are handled by the application provider, it is not necessary to hire specialized IT staff to maintain the system. This leads to lower cost of ownerships on an ongoing basis.

3. Better support for mobile users.

The workforce is changing. By 2020, nearly half of the US workforce will be comprised of millennials, 67% of whom expect to be able to work from home at least part-time, according to a recent study by PWC. SaaS applications can be optimized for mobile right out of the box, and should be accessible from any device connected to the Internet. Choosing a SaaS application for your eCommerce portal is not without some risk. But while there are security concerns involved in running applications in the cloud without at least some degree of IT involvement and oversight, historically, the risk of data loss is actually higher with in-house applications than with SaaS. The other argument often levied against SaaS applications is that they are not customizable, or that customizations may interfere with upgrades pushed out by the vendor. This, however, depends on how customizations are handled. SaaS applications actually can be customized without interfering with future upgrades, often done with tools provided by the vendor. Furthermore, since SaaS eCommerce applications are often built to support current best practices, implementing them will modernize your business processes and allow you to more easily meet changing customer expectations.

Custom eCommerce Development

1. Higher initial and ongoing costs.

With custom eCommerce development, initial costs are higher, because you’ll need to purchase any necessary infrastructure needed to run your application. You’ll also have to pay for the development itself, whether the development is done by in-house staff or outside consultants. Unlike SaaS, where the application provider manages all the “backend” requirements around upgrades and maintenance, you’ll also have ongoing development and maintenance costs, including specially trained IT staff or consultants, to keep the applications working as they should and to improve them as business requirements dictate. Some estimates indicate that ongoing costs to maintain in-house applications are as much as 60% of the total cost of ownership.

2. Less scalable and adaptable.

Unlike the SaaS option, where you only pay for the resources you are consuming, a custom eCommerce portal is typically built with a certain business process and user base in mind. If your business expands beyond your infrastructure’s ability to accommodate, or if business processes change, a custom eCommerce portal will require additional development costs.

3. Customization.

For some enterprises, customization is a key reason why they turn to custom eCommerce development. However, it’s important to look at the customization options offered by SaaS applications, to determine whether or not custom development is really necessary. There is a lot to consider when making the decision about whether to invest in a SaaS eCommerce application, or custom build an eCommerce portal. Whether you’re considering using a SaaS application to build your eCommerce portal, or you’re looking at custom eCommerce development, we’d like to hear what is driving your decision in the comments.