IDC recently published a white paper sponsored by Digital River, ROI Analysis of Digital River’s Value Proposition (November 2013) that identified “tremendous business performance improvement” for companies using Digital River’s multi-tenant SaaS (MTS) e-commerce solutions. The return-on-investment (ROI) for the companies interviewed was considerable; the average five-year ROI was 454 percent, validating the technical, operational and marketing benefits of Digital River offerings.
To expand on the results of the study, available for download at no cost at http://info.digitalriver.com/IDC_Whitepaper_2013.html, the Digital River blogging team interviewed Jason Nyhus, its vice president of marketing strategy and demand generation.
Blog Team: In your experience working with companies, what are the biggest obstacles they talk about when building their online businesses?
Nyhus: The biggest challenge today for e-commerce companies is to create a great experience, in every region in which they do business, all around the world. Doing business in one country is relatively easy; but when you take your business global, there are many traps and pitfalls that can trip up even the largest and most sophisticated companies.
Effective localization, proper payment methods, legal compliance—each of these can vary greatly by geography, culture and competitive environment. Inadequate attention to the details of localization can consequently leave the customer with a sub-optimal shopping experience.
Blog Team: What do you believe are the greatest benefits of a multi-tenant SaaS solution?
Nyhus: Multi-tenant SaaS (MTS) is the future. Look at the momentum of companies like Salesforce, Marketo, Workday and even NetSuite. These solutions deliver a much better ROI for users when compared to traditional on-premise or even single-tenant, hosted SaaS solutions.
MTS gives customers the benefit of the community and all the features and capabilities that come along with it. For example, when a tool or piece of functionality is upgraded, everyone has access to it at the same time; when a bug is fixed, it’s fixed for everyone. Add in improved time-to-market, especially when entering new markets, and you get a huge competitive advantage and the ability to generate revenue quicker. MTS can often condense time-to-market from 18 months down to as little as three months.
Blog Team: What is the most misunderstood aspect of a SaaS solution?
Nyhus: One of the original limiting factors of MTS was the way people paid for it, generally through revenue sharing plans. Today, there are a variety of flexible business models that support companies’ needs for CAPex or OPex management.
Blog Team: If you could only share one bit of advice with a company weighing on-premise, single-tenant SaaS, or multi-tenant SaaS options for their e-commerce platform, what would it be?
Nyhus: I would say, make sure the solution you select is able to scale to meet your future needs. If you make the right decision, you should never have to stop mid-stream to upgrade or re-platform your solution.
Blog Team: What is the most costly mistake companies make when deciding on an e-commerce solution?
Nyhus: The biggest mistake is not doing adequate research about the components required to deliver a world-class experience and the cost of making those components work together seamlessly.
At first blush, MTS solutions might appear more expensive. But in reality, they drive a much lower total cost of ownership over a three-to-five year timeframe as our new TCO study indicates. Companies fall into the trap of assuming that work done by internal resources is “free,” and that the commerce expenses are generally very distributed inside organizations. Leveraging an MTS e-commerce solution gives you true clarity around the costs of doing business online.