Choosing Between SaaS or Open Source Platforms for a Growing Business
There are so many ecommerce platforms available in the market today that it can be difficult to get started when trying to find the ideal platform for your business. To help you narrow down your options, this post discusses the two software models that the majority of platforms fall into, Software as a Service (SaaS) and Open Source. Determining what type is best suited to your business will greatly narrow down your options.
Software as a Service (SaaS)
SaaS models are an extremely popular route in developing ecommerce sites. At the core, these are pre-built, configurable tools that allow you to choose from a massive list of features and functionality. You can turn them on or off and access the use of this platform model by paying an annual fee and a percentage of sales revenue on all transactions.
Example: BigCommerce*, Shopify, WooCommerce, Volusion, Squarespace
* BigCommerce can be used as a commerce-led architecture, however, unlike the other platforms listed, 90% of BigCommerce platform data is exposed to API’s!
The SaaS model offers exactly what many companies need in the way of ecommerce. You get:
- A prescribed and provided future development path
- New features released on a planned schedule
- Security updates on a planned schedule
- Decommissioning schedule of in-use modules
- An external development team which is self-sufficient
- Plenty of feature-rich tools, widgets and extensions to pick from, right off the shelf
- A component in a suite of web tools that will be required to marry products, content and database tools together
- A powerful and hands-off hosting environment
Best suited for
What type of customer is best suited for a predetermined roadmap and technical path from a SaaS provider? This model really fits customers that don’t want to be too closely involved in the features of functions of their site, and don’t have many (or any) unique products and or external integrations. This is a set-it-and-forget-it model that works well for many businesses.
SaaS tends to be most popular for businesses in the startup and expansion phases of growth (typically the first 3 years). Businesses in these stages are typically cost-conscious, have a lower budget for IT and are focused on stabilization of the business. A SaaS ecommerce model makes a lot of sense since cost and implementation are straightforward and the underlying platform is fully managed by the service provider.
So what’s the alternative to SaaS? Are you assuming it’s a large in-house development team working around the clock on a self-hosted home-brew masterpiece? That was a common occurrence in the early 2000s which many organizations are still dragging along; but there’s something else out there: Open source ecommerce.
What’s open source? It’s license-free, owner-free code bundled into modules, written by a community of developers distributed across the world and donated to a central hub for use by any person. It’s marked by free redistribution and license-free implementation. It provides community-built tools and components, neatly organized in a group pile, that programs can grab, install and modify in any fashion. For free.
Example: Drupal Commerce
What type of customers and ecommerce stores use this methodology of development? Any business that:
- needs to make their own development roadmap due to unique products or large / multiple integrations
- doesn’t want to pay annual rental fees and share their profits per sale
- knows the importance of owning their customer data and hosting
- wants to innovate their customer experience to gain a competitive advantage
With open source, you get:
- A completely open development path and roadmap – you list the features and integrations you want to release to your site and your internal development team or partner agency uses open source modules as a base to customize and build these tools
- New features and integrations only needed by your company released on your planned schedule
- Security updates on a planned schedule specific to your site (no waiting for platform-based updates), your hosting provider and your business cycle
- Free security patches and updates provided by the community – you’re notified of them automatically in the backend of your site
- The opportunity to invest in the initial planning, design, build, and launch of your site
- 100% ownership of your sales – no revenue share model
- Choice in your hosting provider; keep it in-house or use managed hosting for 24/7 emergency support and PCI compliance
- 100% ownership of your investment, site and all of your code
- The ability for In-house developers and/or external developers to work on your site
- A choice between pre-made features/integrations and custom functionality
- A single source of data to update products, content, stock, and inventory, and complete shipping and fulfillment
Best suited for
What type of customer is best suited for a highly flexible and customizable open source ecommerce platform? This model fits customers that either want, or have a specific need, to have full control over their development path. Open source is uniquely designed for custom integrations, automation, and the sharing of data instantly with any number of other software components within a businesses commerce architecture.
Open source is more popular with established and mature businesses. These businesses tend to have a higher technology budget and are at a point where investing in the efficiency of their ecommerce operation for scaling is a high priority. Many of these business may have started with a SaaS platform, but platform limitations and functionality requirements have surfaced which can only be solved by replatforming to a more flexible software model.
While you don’t typically see new businesses adopting open source right away, some businesses may still start with an open source platform if they require non-standard customer experiences, integrations with new and legacy systems, or other unique requirements not served by the “most common use case” SaaS model.
Which should you choose?
Each platform model has merit. While many companies value being in charge, what they don’t realize is the time and investment required to make this a reality. If your company doesn’t put premium value on the web as a revenue stream but knows that you “have to have an ecommerce site, it’s expected,” SaaS is the first avenue to explore. On the other hand, if the web is your main portal to customer’s pocketbooks, think about the value in driving the site’s outcomes and customer experience, feature by feature, open source may be best for you.
Ultimately, you can choose the platform model that works best for your company now, and then change your mind later on. But wait, isn’t it expensive to change later? It can be, but this is where I introduce the concept of your “commerce architecture”.
Your ecommerce platform is just one software component within the ecosystem of software used to run your business – your ERP’s, CRM's, OMS's, PIM's, marketing suites, analytics and reporting, etc. Your ecommerce platform and all of these other components together make up your commerce architecture. What allows an ecommerce business to truly scale and become successful is how well all of these systems work together, talking to one another and passing data between them efficiently. As a business grows, it’s commerce architecture becomes more and more important. Any of the software you use may potentially have limitations that will require that it be swapped out with something different in the future. This isn’t a bad thing. In fact, by focusing on your architecture and making these necessary changes as it makes sense to do so, you’re enabling your business to continue to grow and scale efficiently to higher levels. This swapping of software may one day include your ecommerce platform. But remember, this is all for the betterment of your commerce architecture, which should really be your focus.
That’s a lot to think about, I know. How can you make this platform decision now? Well, there are a few different ways. The more you know about your businesses technical goals and your overall commerce architecture, the easier the decision is to make. If you need help, contacting a digital commerce consultancy like Acro Media will guarantee that you’re on the right track. This is our expertise and we’re more than happy to offer guidance.
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