Make sure business strategy drives technology objectives, and not the other way around.
According to the latest from Internet Retailer, nearly half of the folks who responded to their recent survey are looking to make a commerce platform switch this year. I can’t say I am surprised.
A few of the main customer complaints about commerce platforms in general are:
- Complicated pricing, contracts, and licensing
- Complex and often redundant product offerings
- Problems with interoperability / usability
Let’s look at them one at a time.
1. COMPLICATED PRICING, CONTRACTS, AND LICENSING
First, let’s consider complicated pricing, contracts, and licensing.
One of the initial concepts that comes up is SaaS versus perpetual license. SaaS typically means that you are running on a shared system and shared database with all of the other platform customers, whereas perpetual license typically means you have some increased level of autonomy. SaaS typically cannot be customized (since any changes apply to all users) and offers lower up-front fees. With a perpetual license, users have greater control over their own systems, pay higher up front fees, and can run the system indefinitely.
Plenty of strategic pros and cons to consider. Looking for “commodity” functionality like a basic B2C web store front, or a standard set of HR tools? SaaS could be the way to go. On the other hand, if you have unique business processes, want to unify a broader set of business operations, or consider the ability to customize your system now or in the future to be a competitive advantage, then perpetual license is a better choice. Sometimes you can buy your way out of a SaaS subscription into a perpetual license, so that option is worth investigating as well.
Along with license or subscription fees, you’ll also want to consider implementation fees. Based on my discussions with industry analysts and my own digging around, digital commerce platform implementation fees are often 2–5 times the cost of the license. Our standard HotWax Commerce platform implementations are less than this, but that is mainly due to current hourly implementation rates, which can always go up, especially as we develop a broader partner network.
2. COMPLEX AND OFTEN REDUNDANT PRODUCT OFFERINGS
Next, let’s consider complex and redundant offerings. On the one hand, I appreciate the idea of choosing a narrow focus, and then just perfecting it. That “keeps it simple,” at least for a minute.
On the other hand, a stand alone simple system can go from elegant to Frankenstein pretty quickly once you try to get it interoperating with the rest of the business. Business processes are all interrelated, and isolated data silos are the most common source of errors when we are evaluating performance across an entire operation (and not just digging down into one silo.)
Who needs orders without customers? Who needs warehouses without inventory, which was procured from various suppliers, and possibly manufactured by the seller as well? Business processes can get a little complicated, and I suppose there is no way around that. It follows, then, that a solution that manages these complex processes will be complex itself.
One of the key ways to judge the value of a commerce platform is to observe how well it can help simplify these otherwise complex processes. Modern UX behaviors, clean screen designs, and well-planned workflows are a few of the criteria you should be seeking. Flexibility, customizability, and configurability are also key to helping you minimize the disruption within your organization and find a long term solution.
Who needs orders without customers? Who needs warehouses without inventory?
Redundant offerings is a problem that I often hear in relation to the larger commerce / ERP companies out there. These companies sometimes grow through acquisition, and along the way they buy companies with products that are at least partially redundant with their pre-existing offerings. Or they target different market sizes and segments, for example. Think SAP Business One versus SAP S/4HANA versus SAP hybris Commerce. Or Microsoft Dynamics NAV versus Microsoft Dynamics AX versus Microsoft Dynamics 365. It’s not always obvious where the boundary lines are drawn, and it can be an expensive proposition if you guess wrong.
This common confusion in the industry influenced our approach to HotWax Commerce. We figured it is best to offer a full set of business processes, from quote to cash, order to cash, b2b2c, inventory, warehouse, fulfillment, you name it. From your supplier, through your warehouse, to your customer’s door. If you need to do it as part of your (digital or physical) product business processes, you can do it in HotWax Commerce. Also, if you need to do some portion in another system, that’s OK too. Our product is very open by design, so integrating with any third party systems is as easy as it can be.
Regardless of how you use it, we sell our product for one easy license fee. The deal is simple, clean, and affordable. We want to avoid up-selling clients on additional license fees to enable standard processes like returns. We want to clarify and simplify the decision, not obfuscate it with multiple / redundant / tiered offerings. We don’t like Gotchas! ourselves, and we don’t want to adopt a licensing approach that makes Gotchas! more likely.
3. PROBLEMS WITH INTEROPERABILITY / USABILITY
A third common complaint centers around usability and interoperability. This complaint often has something to do with ERP and how the company manages its financial information, but it can also have to do with extension marketplaces (like Magento’s).
In his recent LinkedIn article, Petri Malmelin goes so far as to present ERP as the typewriter of our time, making a reasonable argument that ERP actually hiders progress within an organization. I see his point, and I would also add that ERP tends to mean something different to everyone you ask, including ERP industry analysts.
But it’s not only ERP. This complaint applies across the spectrum of digital commerce applications. Not only are the user screens often bad (poor usability) and the systems often disparate (poor interoperability), in many cases the esoteric nature of the applications leave inherent blind spots. We end up with systems that do great e-commerce store fronts, but the product information management is just mediocre, and the order management is downright poor. Or a system that is great for the accountant, but sub-standard for the warehouse and almost unusable for e-commerce.
Enter the plug-in marketplace! To try and get around the poor or incomplete product design that leads to poor usability / interoperability, we often see plug-in and application market places. While I think this is a pretty cool idea in theory, in practice we mostly see the equivalent of duct tape and knotted rope. Quality standards vary widely, there is no guarantee of interoperability across applications, and you have yet another vendor to try and work with, whose interests may or may not be aligned with the rest of the partners in your ecosystem.
Write 10 new plug-ins yourself? Seek out a new vendor with a current plug-in? Or wait until a usable plug-in becomes available? Not ideal by any means.
With regard to the Magento 2.0 re-platforming, we also see people using 12 plug-ins, where 10 of them are not ready for Magento 2.0 yet (and may never be). That will put a damper on re-platforming plans. Write 10 new plug-ins yourself? Seek out a new vendor with a current plug-in? Or wait until a usable plug-in becomes available? Not ideal by any means.
This complaint goes to our decision to build HotWax Commerce on top of a master data foundation. It’s like the system of record for your commerce processes. The data model is both comprehensive across a wide set of business practices for a range of industries, but it is also fully extendible and customizable. Once you have the key information about your products, orders, and customers in one place, the world looks a lot less confusing and frustrating.
Do it all on a natively integrated set of applications like ours, or integrate with third party systems at will, but know that you have all your key data handled in one, harmonized, accessible place. Then you can get back to doing whatever it is your business actually does outside of IT!
Unified Commerce platforms blur the traditional boundaries of business process IT systems. That’s simply a reflection of these changing times, new capabilities, and accelerating potential. Embrace the future. Worry less about the traditional names and applications, and more about the strategic goals you want to accomplish within your company. Make sure your business strategy drive your technology objectives, and not the other way around!
Originally published at https://www.linkedin.com on March 13, 2017.
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