The average American spends $1,800 shopping online each year, according to the Statista Digital Market Outlook. That’s an enormous market. Efficient operations and great customer service will help you attract and retain more of those customers, and an Enterprise Order Management System (OMS) is designed to do just that—by improving internal operations, inventory management and stocking, and customer service. Picking the right one for your business is a big, complex decision, but it all starts from understanding which fundamental approach is right for you.
The Two Approaches to Enterprise OMS Deployment
There are many important decisions along the road to choosing an OMS, and one of the earliest you’ll need to make is the deployment model:
- Software-as-a-Service (SaaS): A SaaS solution is deployed and maintained by the vendor, on their local servers or on a cloud server. They’re responsible for maintenance, uptime, and hardware upgrades.
- On-Premise Solutions: In this model, the software is installed on a local server, which is operated and maintained entirely by the eCommerce business.
Each model has its own advantages and disadvantages, and the decision will depend on your strengths and needs.
SaaS Solution Pros & Cons
SaaS has transformed the tech world, including OMS, by providing solutions at a lower cost and with greater scalability. SaaS vendors can provide robust hosting environments, high performance, and excellent security and compliance features by distributing the costs across their many subscribers. You’re also protected from sudden spikes in cost, such as costly hardware upgrades, or emergency security patches. Deployment is generally simpler than an on-premise solution, allowing your tech team to focus on tackling other problems.
Data from Forrester Research shows that over one-fifth (21%) of OMS users at medium to large organizations have already made a switch toward SaaS for their primary OMS deployment. Another 40% are planning to either fully replace or complement their existing OMS with a SaaS solution over the next two years.
There are few drawbacks to SaaS deployment. For some large, long-established retailers, losing direct control over the server environment or having their data reside outside the company firewalls may be uncomfortable. If it’s important to you to have a direct role in security and compliance, SaaS will likely be out of the question. Finally, SaaS vendors have the power to schedule maintenance windows when necessary, so you may not have control over scheduled downtime.
What About On-Premise Solutions?
The market for on-premise OMS solutions is shrinking, but still going strong. Their strengths include the potential for greater customization, flexibility and dedicated custom IT environments designed for high scalability, which is valuable to large retailers with outstanding technical resources. If your company already has a powerful data center, you may be able to leverage that investment and reduce the cost of an on-premise deployment. Finally, you’d maintain complete control over your data, security, and compliance, which may make this model more palatable to some businesses.
According to Forrester Research, the average life expectancy for an enterprise ecommerce platform was over seven years in the last decade, but this trend is changing. Today, the pace of change and rapid innovation means that businesses that still host their own software will need to significantly upgrade their software as often as every four years. Thus, on-premises merchants will need to replatform every four to seven years. These shortening replatforming life cycles will continue to drive on-premise, licensed-based solution upgrades but we’ll see a gradual decline in the popularity of new on-premise solution installations going forward.
The weaknesses of on-premise deployments are considerable. There are a lot of unknowns and potential headaches, as your organization is entirely responsible for deployment and maintenance. IT costs can be highly variable and difficult to predict, and you’re responsible for hardware costs, network maintenance, monitoring, and security. These issues should be seriously weighed against the advantages of on-premise deployment.
First, Know Thyself
This important decision truly comes down to you: examine your operational strengths, current pain points, and plans for scale, and compare them against the pros and cons of each approach. This blog can help you start that process, but there’s plenty more to consider before making this complex, nuanced decision.
About the author:
Manish Chowdhary is the CEO of Pulse Commerce, the leading cloud platform for order & inventory management. He is a thought leader and speaker for technology innovation and all things ecommerce. In January 2017, Manish was recognized as one of The 30 Most Innovative Business Leaders by Insights Success Magazine. He has been featured in the New York Times, Internet Retailer, and other leading publications. Follow Pulse Commerce on LinkedIn for company updates and industry news.