Taking the right decision whether to use premade or custom enterprise e-commerce software is not easy since both over specific advantages and disadvantages. A popular delusion is that the global software market is dominated by behemoths such as Apple, IBM, Microsoft, Oracle or Salesforce, all of which are developing off-the-shelf enterprise software.
The truth is that these companies, together with Dell EMC and Activision control roughly 14 percent of the world market for software products.
Other companies dominate the overwhelming 86 percent of the software market worldwide. And while the largest companies in the software industry rarely make custom software, or take only orders for developing a tailored system worth billions of dollars, a good number of software developers specialize in development of customized enterprise software.
The main difference between proprietary software and off-the-shelf software is that off-the-shelf software is a one-size-fits-all solution while tailor-made software provides a solution that meets your specific needs and requirements. Additionally, bespoke software enables organizations to further develop and customize the application to scale it up or add new features and functionality.
Conducting a reliable buy vs. build enterprise software analysis requires significant efforts on your side but our analytical review will give you the basics on which you can build on and tools to determine what kind of software solution you really need and what software type is feasible for your business.
What is Enterprise E-Commerce Software
As a whole, enterprise software systems are ones that bring one roof to all the departments of a large organization while offering diverse features and functionalities that meet the needs of the organization. Such a system might incorporate modules for accounting, procurement, sales, order processing, customer relationships, customer support, internal and external communications and many others. Enterprise software may be installed on-premise, may run in the cloud while many hybrid solutions are available.
E-commerce enterprise software is designed to perform multiple tasks such as, publishing of editable product catalogs, order processing, customer relationships management (CRM), inventory management and content management systems (CMS). These are responsive solutions you can use on various desktop and mobile devices.
A typical enterprise e-commerce software or platform provides the following major features:
- Capability to have unlimited number of products and product variations in one or multiple online stores.
- Single sign-on, which gives you access to multiple services.
- Order and inventory management
- More than one payment gateway and type of payment e.g. credit/debit card, pay on delivery, cash by cheque, online wallets or cryptocurrencies.
- Support for multi-channel and multi-store e-commerce.
- Integrated Point of Sale (POS).
- Customer Relationship Management (CRM).
All ready-made enterprise solutions for e-commerce are actually based in the cloud. Those include cloud-based e-commerce platforms for the enterprise such as Shopify Plus, Bigcommerce Enterprise, Mozu or Magento Enterprise. When you compare them to the regular plans of the respective platforms, you will find a number of advanced options and features that are aimed at enterprise users as opposed to small online merchants.
Since these e-commerce platforms run entirely in the cloud, they are highly scalable while offering integration with third-party services such as business accounting apps, CRM software, payment gateways and even enterprise resource planning (ERP) software to name a few.
When a Business Needs High-Quality Enterprise E-Commerce Software
There are no specific criteria defining if and when your business needs to deploy ready-made enterprise e-commerce software or when you need to develop a kind of a custom web store.
Presumably, you do not need an enterprise-grade e-commerce platform if you are a sole merchant that sells one specific product only. If your online store is offering multiple products, you may need a high-quality e-commerce tool, however.
In fact, a business needs enterprise e-commerce software when you can define your business as “enterprise”, which is quite a flexible definition. Let’s then try to define what an “enterprise” means in regard to e-commerce.
Defining an e-commerce business as an enterprise has nothing to do with the number of your employees or the number of your customers. The annual revenue of your e-commerce business does not define you as an enterprise either. The most important factor that defines an enterprise is your business’s structure.
A typical enterprise meets the following basic criteria:
- You are selling more than one kind of product or service online.
- You are using the same resources across your business structure:
o Financial resources
o Technical resources
o Management team
That is why any business that shares these resources across the entire organization may need to adopt enterprise e-commerce software at some point.
There is an agreement that the term “enterprise company” refers to any business whose annual revenues are $7.5 million. This is not necessarily the truth as many organizations with markedly lower revenue are exploring their options to adopt off-the-shelf vs. custom e-commerce software for enterprise and then make a final decision that best fits their requirements, even though their revenue is much lower than $7 million a year.
Thus, we come to the question of what makes an e-commerce software a viable solution for your enterprise and how to compare build vs. buy enterprise e-commerce software.
What are the Major Components of Enterprise-Class E-Commerce Software
A major disadvantage of the first e-commerce platforms, even enterprise ones, was the lack of features to have an all-in-one solution for online sales.
Naturally, the specific e-commerce features will vary depending on your business model i.e. whether you are a B2C business selling products to individual customers or a B2B enterprise selling products to business clients. The B2C against B2B differentiation applies to both vendor-based systems and customizable or custom-made solutions for e-commerce.
All feasible enterprise-class e-commerce software share a number of common features and functionalities, though. What are the major components of enterprise-class e-commerce software, really?
We are setting aside the basic online retail features, as this is the core of any e-commerce platform. Nonetheless, enterprise e-commerce solutions, both vendor-based and bespoke, should have the following major capabilities:
- Sales of online multiple product categories from numerous online stores in different locations.
- Seamless integration with various business systems such as bookkeeping, inventory, CRM, CMS or ERP.
- Personalized recommendations for further customer purchases due to capability to track every purchase.
- Multiple channels to sell online.
- Scalability to expand your business operations when demand is growing.
- Compliance with various industry standards such as the Payment Card Industry (PCI) Data Security Standards (DSS) and other standards that govern online sales and your specific industry.
- Responsiveness for users to be able to work with them both in office environment and accessing them remotely or on the go through a mobile device.
These are all components of robust e-commerce software for the enterprise. When you have all these components working seamlessly within an integrated system, you can take advantage of all the functionalities below:
- Instant ordering and reliable shipping.
- Flexible pricing for all products.
- Multiple payment methods with a function to set specific taxes, delivery fees and discounts for an entire region or an individual customer.
- Order and inventory management.
- Analytics and reporting, including customer behavior and history of purchases.
- Procurement and automated procurement.
- Customer support inside and outside the e-commerce platform, including automated chatbots.
- Marketing of products and services.
- Content management for your online store.
Evidently, there are vendor-based platforms that provide all those features while you should bear in mind that there are also e-commerce platforms that allow for certain customizations while custom-made e-commerce software may have additional features that no ready-made system is offering.
If we are to get the full picture, though, we need to evaluate the major advantages and disadvantages of build vs. buy enterprise software for e-commerce in more detail.
Advantages and Disadvantages of Commercial Off-the-shelf Software for Enterprise
The truth is that vendors of enterprise-class e-commerce software are making every effort to introduce new features and expand the reach of their respective platforms. Such platforms, cloud-based or on-premise, offer all the major features an online merchant may want. Nonetheless, there are specific disadvantages as well.
Let’s take a closer look at off-the-shelf software advantages and disadvantages.
Advantages of Off-the-Shelf Enterprise Software
- Rapid deployment since those are ready-made solutions and you can install the e-commerce software fast and start using it right away. You only need to research and compare the specific features and pricing of a number of platforms which to choose from.
- Lower initial cost and time to market.
- Immediate security and stability, as the vendor takes care of online security, certificates and fraud protection. The same applies to updating the e-commerce platform.
- More functionality than you need, especially for small enterprises may need.
- Extensive support options for enterprise-level plans.
Disadvantages of Off-the-Shelf Enterprise Software
- Flexibility is one of the major drawbacks, as a ready-made solution does not allow you to control specific functionalities of features of your e-commerce stores. You need to accept their set of parameters if the vendor does not offer an integration, plugin, an API or customization capabilities. Can be impossible to customize when you need even small changes.
- Fees can easily become overwhelming when you pay for additional features, integrate with other services and need to hire people to deal with the platform.
- You have no control over platform’s price increases, feature rollback or development of new functionalities.
- Upgrades cost extra, if available.
- Customization is barely available and the platform might not be a good fit for your business processes and procedures.
- Risk for the vendor to go out of business is always present resulting in the platform not being supported anymore.
Advantages and Disadvantages of Custom Software for Enterprise
Custom software for enterprises also has its advantages and disadvantages. The biggest advantage of a custom-made e-commerce platform for your enterprise lies with the fact that you have full control over the software development and the intended functionality of the e-commerce application.
Unsurprisingly, the market for custom software is booming with market analysts expecting this industry to grow by $26.74 billion during 2020 and 2024. Estimates are the market’s growth momentum will accelerate during the forecast period while the growth in 2020 is expected to stand at 6.8 percent year-on-year.
Global Custom Software Development Service Market 2020-2024
Advantages of Custom Enterprise Software for E-commerce
- Tailor the custom e-commerce enterprise solution to all your specific needs and requirements. There are no limitations on what features you will have or what basic features will be designed in a way to reflect your specific workflows and business procedures.
- Full ownership over the software, which makes it proprietary software you control entirely. This gives you greater flexibility to meet customer expectations, respond to market and industry changes and helps you get to the next level of business continuity.
- Gradual production and upgrades where you are in control of development time and pace.
- Elimination of compatibility and integration issues as you develop any and all integration options as you think are appropriate.
- Better usability and higher efficiency because the e-commerce solution is tailored to your needs.
- You only pay for what you get and your investment pays off over time.
Disadvantages of Custom Enterprise Software for E-commerce
- Hard to implement in-house and you usually need to outsource the software development.
- The software maintenance you might need to outsource unless you are willing to hire and train an in-house IT team.
- Maintenance of constantly updated technical documentation that you need if you are to maintain the system properly and develop it further.
- The initial cost is higher and it takes time to build and test the software.
Off-the-shelf vs. Custom Software for Enterprise: Recap
Before we draw the final picture, we are providing you with a simple matrix to evaluate the suitability of off-the-shelf vs.custom software for enterprise.
The below matrix assesses the major business and technical factors you should have in mind when selecting between two or more solutions for e-commerce and especially build vs. buy enterprise software.
E-commerce Enterprise Software Evaluation Matrix
|Factors to Consider||Build in-house/Outsource||Buy Option 1||Buy Option 2|
|Skills to complete work||3||1||2|
|Time to market||3||2||4|
|Scalability and expansion options||3||2||2|
|Expertise in the field||4||2||3|
|Stick to budget||2||1||1|
|Integration with all required systems||3||2||1|
|Reliability and availability||3||2||2|
|Compatible with existing processes and procedures||4||4||3|
Whatever your decision might be, you should be aware that by simply comparing features offered by off-the-shelf vs. custom software for enterprise platforms, you do not get an idea what functionality a custom-made or customized e-commerce solution may have.
Although enterprise-grade platforms by multiple vendors offer a plethora of features, they are rarely customizable to the extent any enterprises require. Furthermore, with vendor-based software you never know how the platform will develop in the future and whether you will be able to integrate it with both legacy and newly emerging business applications by third-party vendors.
An off-the-shelf software gives you the stability of a tested application where you do not have to deal with updates, certificates or management of payment gateways. Nonetheless, it limits you to a set of functionalities and integrations that may not reflect perfectly your specific needs.
Customizable and tailor-made solutions enable you to have full control both over the desired functionality and the programming code, which in turn allows you to add and remove features all the time as well as to scale up or down depending on the economic cycles.
A very thorough business analysis is required for an enterprise to make the right and informed decision whether to implement one or another e-commerce platform, customize an existing one or build a custom e-commerce solution.
Nonetheless, almost any enterprise comes to a point when it needs at least partial customizations of some components, functionalities or integration options in the e-commerce software it is using. You should definitely build your own e-commerce software when it concerns the core processes that differentiate your company.
Now you have a good idea what is the difference between proprietary software and off-the-shelf software and we come to the point where you need to decide for yourself what e-commerce solution is more suitable for your enterprise.
An unbiased build vs. buy enterprise software analysis tells us that both solutions offer benefits and have drawbacks depending on your specific current needs but also based on your long-term business development plans. The latter is very important because when you make a decision whether to build or buy enterprise software, you need both to have a bigger picture before you and plan for the future.
If you are a sole merchant or a local family business, the chance is good that an off-the-shelf platform will provide you with all the features you need and even more features you never use.
But what if you are a rapidly growing business or an innovative enterprise willing to have, say, smart contracts on its e-commerce platform. What if you are working in a specific market niche and both you and your customers need functionality and options not truly available in any ready-made e-commerce software.
Then, you have two paths to follow when considering build vs. buy enterprise e-commerce software.
You either opt for open-source e-commerce software where you can customize the source code of the application or build a custom e-commerce application from scratch.
In the first case, you build upon the existing ready-made enterprise software, which you customize to your needs. If you decide on building your e-commerce platform from scratch, you will have to go through the entire procedure of collecting requirements, finding reliable software developers, testing for quality assurance, finding customers as beta testers and only then you will be able to implement the solution.
The process might seem too complicated but in fact even the simplest business app goes through this software development cycle. What you will have in the end, though, is completely custom e-commerce software for your enterprise, which you can scale up and expand as you wish and whenever you need.