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By Business Wire |
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November 20, 2012 09:31 AM EST |
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Demandware®,
Inc. (NYSE: DWRE), a leader in on-demand
ecommerce, today released the results of a new study examining how
online retailers evaluate specific cost considerations when comparing
cloud-based and on-premise ecommerce solutions. In a study commissioned
by Demandware, Forrester
Consulting surveyed 156 retail CIO and business executives across
the U.S. and Europe and found that 81 percent of online retailers use a
home-grown or a licensed on-premise ecommerce platform. The study shows
that retailers spend an average of seven percent of total online revenue
to support their ecommerce platforms. Despite this level of investment,
74 percent of respondents report immediate concerns that their current
solutions will not scale to support the growth plans of the business.
The findings are summarized in the study “Understanding
TCO When Evaluating eCommerce Solutions,” by Forrester Consulting,
November 2012.
TCO Higher Than Predicted for Many Retailers
The study reveals that the total cost of ownership for ecommerce
solutions is greater than expected for many retailers and restrictive
contracts tend to amplify the high costs. The majority of retailers
noted that the contract terms for their on-premise platforms require the
purchase of additional licenses in order to scale their online
businesses, as well as restrict the use of the platform to support
strategic growth initiatives, such as international
and multichannel
expansion.
-
43 percent of online retailers found that actual cost of ownership was
higher than their projections.
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67 percent of retailers using a licensed on-premise solution report
that they are contractually obligated to acquire additional licenses
when reaching a certain threshold of online traffic.
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78 percent of retailers report that the vendor contract they have in
place restricts them from using the technology to expand into new
markets.
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72 percent of retailers surveyed have concerns about the ability of
their current ecommerce platform to meet multichannel requirements in
supporting future growth initiatives.
Retailers Are Distracted by Complex Upgrades and Risk Falling Behind
The research also shows that retailers are distracted trying to keep up
with the complexity of platform upgrades and risk falling behind
competitors in the rollout of basic online functionality and user
experience enhancements. “Given the strategic importance of the online
channel…eCommerce leaders can ill afford to get left behind; they need
regular access to innovative new capabilities from the vendor community.
The problem with upgrading on-premise solutions this frequently is the
opportunistic cost. This constant and never-ending cycle of upgrades
means that valuable development resources are being utilized in a
tactical manner to keep up with the competition, rather than being used
to develop innovative feature sets that differentiate in the
marketplace,” the study states.
-
39 percent of retailers upgrade their ecommerce platform to the latest
version only once every two to three years
-
76 percent of the ecommerce leaders surveyed report that each upgrade
takes more than a month to complete
Retailers Embracing Cloud-Based Solutions
Though TCO models are customary, the research found that the process
lacks rigor and can be misleading. The study states: “As eCommerce and
technology leaders factor in costs to their TCO model, they leave many
stones unturned, which leads to a situation – intentionally or not –
where the model can favor on-premise solutions versus those from the
cloud. …Perceptions that cloud-based revenue share models are more
costly than owning and operating ecommerce technology in-house are often
misguided.”
Demandware is seeing many leading retailers shifting their businesses to
cloud-based ecommerce platforms to benefit from capacity on-demand,
seamless upgrades and unconstrained growth possibilities, including
Demandware client, Finish
Line, a premium retailer of athletic shoes, apparel and accessories.
“Our goal is to transform our business, not just maintain it. We want to
drive innovation and propel the business. Demandware reduces operational
complexity and puts the power in the hands of our users to create
world-class brand experiences. It provides customers a better and faster
online experience, rather than having technology get in the way,” said
Chris Ladd, executive vice president and chief digital officer for
Finish Line.
“In the first generation of ecommerce, when CIOs had to build everything
from scratch, retailers took on major new costs to develop and operate
platforms, which over time became assumed – and sometimes forgotten – in
the P&L. We believe the study clearly shows that as retailers move
forward into a new digital world, they also need to pause and challenge
yesterday’s assumptions regarding the costs of ecommerce. It’s time to
think differently,” said Jamus Driscoll, senior VP of marketing for
Demandware.
Learn More
Survey Methodology
Demandware commissioned Forrester Consulting to conduct an online survey
of 156 ecommerce, IT and marketing leaders across retail, branded
manufacturer and consumer products companies in the US, UK and Germany
to evaluate the cost considerations of cloud versus on-premise ecommerce
solutions. The study, conducted by former Forrester Consulting analyst
Brian Walker, began in June 2012 and was completed in September 2012.
About Demandware
Demandware (NYSE: DWRE) is a leading provider of software-as-a-service
(SaaS) ecommerce solutions that enable companies to easily design,
implement and manage their own customized ecommerce sites, including
websites, mobile applications and other digital storefronts. Customers
use our highly scalable and integrated Demandware Commerce platform to
more easily launch and manage multiple ecommerce sites, initiate
marketing campaigns more quickly, and improve ecommerce traffic. For
more information about Demandware, visit www.demandware.com,
call 1-888-553-9216 or email [email protected].
Connect With Us
Demandware is a registered trademark of Demandware, Inc.

Copyright © 2009 Business Wire. All rights reserved. Republication or redistribution of Business Wire content is expressly prohibited without the prior written consent of Business Wire. Business Wire shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon.
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