When Keith Schamis, general manager of NAPAonline.com in Atlanta, the online division of the National Automotive Parts Association (NAPA), realized that the company needed to launch an e-commerce initiative in order to stay competitive, he was concerned. “We had such a large amount of data—more than 140,000 SKUs—and it wasn’t structured to be displayed and handled in this manner,” he says. “But we knew we had to get in the e-commerce game.”
Schamis was not alone in his dilemma. As consumers increasingly accept e-commerce, companies are finding that they have to jump in quickly or risk falling behind. “Regardless of the strategy or purpose, the benefits to having a website continue to demonstrate that the digital age makes businesses stronger,” says Chris Anne Wheeler, vice president of information services for ActivMedia Research, a Peterborough, N.H.-based e-commerce and online market research company.
But because most businesses don’t have the expertise or personnel necessary to build top-notch e-commerce systems in-house, more and more of them are turning to vendors to handle their e-commerce functions from end-to-end. IT vendors, in response, have launched multiple new e-commerce offerings in hopes of capturing a piece of this potentially huge market.
But end-to-end e-commerce systems—while appealing in theory—can be complicated and difficult to deploy.
In March, Cambridge, Mass.-based Giga Information Group released a report, “Who’s Overpromising, Who’s Underdelivering in End-to-End Internet E-Commerce Solutions.” The report asserts that e-commerce has become so broad and so fundamental to business that claims of complete e-commerce solutions are simply not credible. Andrew Bartels, author of the report and vice president and research leader for e-business applications and strategies at Giga, notes, “When you look closely at vendors who claim to have a broad offering and even have the products that meet each criteria of e-commerce, you find that many of those pieces are second- or third-rate.”
But the pressure to deploy e-commerce initiatives continues to increase, and business owners are being forced to make tough decisions. “It often comes down to a choice between a vendor that does a little bit of everything but doesn’t have the depth versus a vendor who has depth in one area but is weak in several others,” says Gene Alvarez, an analyst with Meta Group based in Stamford, Conn.
Though no two company offerings are exactly alike, most include tools for creating a Web presence equipped for secure payment processing, managing the supply chain and handling digital certificates, customer relationships, shipping, security and support. To further obscure the process, electronic storefronts must integrate with a company’s existing back-end and legacy systems as well as corporate data. The systems often require staff training and off-site hosting as well.
But this winding road hasn’t deterred many vendors from trying. The end-to-end e-commerce field is crowded with competitors, including some of the most well-known names—Hewlett-Packard, IBM, Microsoft, Netscape, Oracle and SAP—as well as newcomers, such as 360Commerce, Ariba, Breakaway Solutions, BroadVision, Commerce One, Net Sales, Open Market and Vista.com.
Because vendors have respective strengths and weaknesses, some companies are electing to work with more than one in hopes of getting the best overall solution. Office-supply giant Staples, for example, combined products from Ariba, Commerce One, IBM, Metiom and Oracle. And, Bartels notes, “using more than one provider may mean you get more services that allow you to differentiate yourself and more options that might be relevant for you.”
But the majority of companies go with a single vendor for one very important reason. “Using one vendor gives you the satisfaction of knowing who you can hold accountable when something doesn’t work the way it’s planned,” says Bartels. “The problem with patching together multiple solutions from multiple vendors is there’s a certain amount of buck passing that occurs. Given that these applications are hard to implement and that things do go wrong, having one person to yell at definitely has value.”
And there are other advantages, beyond simply having one company to hold accountable. Speed is one of the biggest. “When time to market is the single most important criteria, having a single vendor provide all the key elements of your solution—even if some of them are subpar—is the best route,” says Bartels. “You can always go back later and refit or replace the parts that aren’t as strong.”
Before you can implement, however, you need to decide on a technology direction and a vendor (or vendors). And choosing a solution provider can be difficult. But there are some basic rules to follow.
Kneko Burney, director of e-business infrastructure and services for Scottsdale, Ariz.-based Cahners In-Stat Group, recommends a company start by evaluating what it wants from its system. “Do you want to communicate better with customers, lower the cost of sales or both? Figuring out exactly what you want makes it easier to find the provider that can best meet that objective.”
It’s also critical to decide early on whether or not you want to outsource hosting services. The cost of the IT infrastructure required to host a system in-house can be very high. For companies not well versed in technology, leaving the technical worries to someone else can be extremely valuable.
However, most companies won’t want to outsource forever, since that means depending on and paying someone else. “Starting with a hosted solution allows a business to figure out what kind of interest there is for its website,” says Alvarez. “I usually recommend outsourcing for no more then 12 months before evaluating whether or not to bring services in-house or scale up the hosting agreement.”
Once a company evaluates what type of services it wants, it should carefully evaluate which vendor is best suited to its needs.
“A good match between the product offerings of the vendor and the needs of the customers is critical,” says Alvarez. “Also important is vendor viability. If you have an application that you expect to be using for multiple years, it’s critical to know that that vendor is still going to be around.”
The experience a vendor has understanding other businesses and building successful Web architectures for them is also important. Don’t be afraid to ask for customer references. “There are vendors that have definite industry and size focuses,” says Bartels. “If you don’t fit that focus, odds are you’re not going to get the kind of product and the kind of support that you need.”
In fact, since many companies don’t know exactly what they are getting into when they launch an e-commerce initiative, support may be the most important factor of all. “Even though we’re moving more and more to packaged applications, they still require installation, customization and integration,” says Bartels. “Having a vendor that has the resources to help you with implementation and support is critical.”
Then there’s always the old standby—custom programming. While the proliferation of companies offering all-in-one solutions has overshadowed companies that offer custom e-commerce programming, it remains an option. “If you already have a website or back-end infrastructure in place, you may be better off just using custom programming to integrate those things,” says Burney.
Concentrate on the Core
Providing a vendor can truly deliver what it promises, all-in-one e-commerce solutions can get companies into the e-commerce game quickly and easily while allowing them to continue to concentrate on their critical business practices.
“E-commerce was an area where we didn’t have a lot of competency,” says Mike Prince, CIO of Burlington, N.J.-based Burlington Coat Factory, who used a solution from 360Commerce. “Outsourcing an entire solution meant we didn’t have to divert resources from other projects to build this at a time when there were a lot of other initiatives going on.”
As for Schamis at NAPAonline.com, going with an all-in-one solution from IBM eventually helped ease his anxieties about e-commerce. NAPAonline.com’s website went live in approximately eight months. Since that time, Schamis says, the company has expanded its market share overall, extended the NAPA brand online and currently dominates the online market in this industry.
“By outsourcing our e-commerce functions we’ve been able to focus more on our core business and the thing that is most important—taking care of our customers,” he says.