The ultimate e-commerce software shopping list

To avoid getting lost in today’s constantly evolving online marketplace, you should be looking to upgrade your e-commerce system within the next six to 12 months.

According to industry analysts, finding a proven vendor that can provide an open Web-services-based architecture is crucial to getting you on the right track. With the economy continuing in its downward spiral, more businesses are turning to the Web as an inexpensive way to retain and grow their customer base. But from the consumer’s point-of-view, just having the ability to accept a payment is not enough in today’s world.

“Your Web site is one click away from being compared to sites like eBay and Amazon — even if you are selling industrial goods,” Gene Alvarez, senior analyst at Gartner Inc. and author of the firm’s recently released Magic Quadrant for e-commerce report, said. “This is forcing business-to-consumer (B2C) and even business-to-business (B2B) Web sites to continually raise the bar on new capabilities.”

Alvarez said that means adding AJAX or Flash-based user experience improvements, community blogs, wikis, product reviews, and social shopping capabilities to your site. “Organizations need to re-look at e-commerce,” he added. “The nuclear winter of e-commerce is over.”

IBM’s Mark Stankevicius, manager of WebSphere Commerce development at the software giant’s Markham, Ont.-based development lab, said that because shoppers have become more empowered in recent years, companies will need to keep finding ways to integrate user-generated content into their e-commerce experience. He added that vendors will also need to stay on top of the latest social shopping trends.

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“Even though the big dot-com bust happened back in 2000, there has still been a lot of invention and innovation going on in the e-commerce space,” he said. “With Web 2.0 capabilities and personalization at the forefront of the e-commerce space, we’ll see it continue to grow business channels for a lot of our customers.”

Alvarez agreed that today’s e-commerce market is vastly different compared to several years ago. Users now have a wide range of ownership and operating choices, including the increasingly popular software-as-a-service (SaaS) model, as well as a wide range of new Web 2.0-like feature offerings.

“The trend today is that you better have the core stuff around the store right,” he said. “And after that, you need to focus on improving the user experience with things like rich Internet applications (RIA), Web 2.0 and multi-sites.” Historically, enterprises have used products like Oracle Corp.’s BEA WebLogic platform as a toolkit for assembling an e-commerce site. But now, according to Alvarez, organizations are trading in full control over their e-commerce services in favour of pre-packaged solutions.

“Organizations are starting to realize that they can’t have their large IT departments continue to get bigger and support everything,” he said. “They’d rather have a core set of e-commerce capabilities that is managed, maintained and moved forward by a vendor, and then add features to it to create a differentiating experience.”

Brian Walker, Forrester Inc.’s senior analyst on e-commerce, said that companies preparing to re-platform will also need to bear in mind the vast number of players on the market today and how each of them can fit into an enterprise’s IT infrastructure. “I’m tracking upwards of 50 companies in this space with a variety of different models and capabilities,” he said. “So there’s a lot that will continue to evolve here and this is still a very young market overall.”

In Canada alone, Walker said, several emerging players such as Montreal-based iCongo Inc. and Vancouver-based Elastic Path Software Inc. are providing viable e-commerce options for both smaller and bigger IT organizations. iCongo offers a strong multi-channel and order management component to their product, he said, while Elastic Path has done a sold job in building a product that’s based on BEA WebLogic and can really resonate inside a large IT shop.

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“It remains a fairly fractured and nascent market where there will be a significant amount of evolution and perhaps even some consolidation,” he said. “Quite a wide spectrum of solutions are available today.”

To help get you started, we took a closer look at some of the pros and cons of the e-commerce market’s biggest players — including those offering hosted, licenced and SaaS options.

IBM WebSphere Commerce

Big Blue’s e-commerce platform is one of the most well-known in the market and has a wide variety of clients using it for both B2B and B2C capabilities. In IBM WebSphere Commerce, Version 6, Feature Pack 3, the Armonk, NY-based company has focused on adding Web 2.0 functionality as well as better management of region specific e-commerce sites. IBM’s Mark Stankevicius said Extended Sites is the biggest differentiator that WebSphere offers over competing products.

“This allows users to easily create and maintain multiple sites, with different geographies, for their storefronts,” he said. “For example, they might have one for Canada, the U.S., Germany and so on. When you get into a couple different regions, with each having a slightly different look to them, it can get very complex to manage.”

Along with Extended Sites, IBM also made significant improvements to WebSphere’s user interface, according to Alvarez. This includes an RIA-based single-page check-out that can be integrated into your online store, among a multitude of other social shopping features.

Where the platform currently lags behind its competition is in the lack of a software-as-a-service (SaaS) option. But IBM said it does offer alternative Web delivery options through its large collection of partners.

“For customers that want a hosted version, we recommend they work with some of our partners to get support for that kind of capability,” Stankevicius said.

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Another thing to keep in mind, Alvarez said, is that IBM WebSphere Commerce comes in three varieties — Express, Professional and Enterprise. He said that clients with a lower e-commerce budget may find the Professional bundle to be out of their price range and the Express bundle lacking too many of the features they need. Despite this, Alvarez said IBM is still one of the most complete offerings an organization can choose.

ATG Commerce

Along with IBM, Alvarez also ranked ATG as one of the e-commerce leaders in the Magic Quadrant.

“It’s very strong in personalization, it’s very strong in search merchandising, and it offers a wide array of capabilities beyond the core Internet selling capabilities,” he said. These features, Alvarez said, are extremely popular with ATG’s largely B2C-focused client base.

Unlike IBM, the Cambridge, Mass.-based company focuses all of its attention on its e-commerce platform. And while it also offers a multitude of deployment choices — including licenced, hosted and SaaS options — ATG said its biggest differentiator is in its merchandising application.

“With ATG Merchandising, merchants have complete control of cross-sells, up-sells, and promotions,” ATG spokesperson Tucker Walsh said. “We also have something called ‘searchandising.’ This key differentiator inside of the application is integrated search and merchandising.”

He added that with this application — which combines merchandising capabilities with search to match up with users’ personal shopping interests — the need for IT involvement in making these dynamic changes to a Web store becomes a thing of the past. Alvarez said that ATG’s recent acquisitions of CleverSet and eStara has helped boost its recommendations and Click-to-Call capabilities respectively. “So, ATG is not only able to help you with your core selling capabilities, but it’s also expanding this set around a larger CRM-focus for organizations,” Alvarez said.

On the downside, the company was not profitable via generally accepted accounting principles (GAAP) in 2007, due in part to slow adoption for its SaaS offering. Alvarez indicated that some users might also have concerns about how to migrate from ATG’s licenced model after starting out with the SaaS option.

Lastly, he said, because e-commerce products from ATG and IBM are large and costly solutions, some companies might be spending more than they need. “If it’s not a match with your requirements, you may be actually over-buying, because you can pretty much build an e-commerce Ferrari with it,” he said.

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Forrester’s Walker said that both IBM and ATG are similar in many respects and continue to perform strongly among larger enterprises looking for in-house e-commerce software. “ATG tends to be more focused on providing merchandising tools and business user-focused tools,” he added. “IBM is more focused on overall enterprise integration.”

Microsoft Commerce Server

The Redmond, Wash. giant’s e-commerce offering follows both ATG and IBM’s lead with a strong focus on Web 2.0 capabilities. Microsoft Commerce Server 2007 SP2 is the current incarnation of the product, which offers shopping cart management, taxation, personalization, settlement and product visualization capabilities. The company has even integrated live MSN functionality into the platform so that businesses can tap into those users.

“With the current service pack, Microsoft has moved more toward a platform than a toolset,” Alvarez said. “If you’re looking to build something entirely from scratch, you might look to a WebLogic. But if you’re looking for something a bit more modular, you should be looking at Microsoft.”

With that said, however, the Gartner analyst warned that companies will need to be prepared for a lot more development and customization with Microsoft, as compared to other offerings.

“If you’re looking for a lot of capabilities out of the box, it’s not there,” he said. “It’s appropriate for those companies that want to do custom built sites, but if that’s not what you’re organization is looking to do; it might not be the right one for you.”

Walker agreed and characterized the offering as an e-commerce toolkit for large Microsoft-based environments. “Along with this toolkit approach comes flexibility, so some organizations are going to be attracted to that,” he added.

The biggest differentiator for the platform will actually be arriving in the company’s Mojave update set to launch early 2009. It comes in the form of a Solution Accelerator, which is designed to get a B2C e-commerce deployment up and running quickly.

“Companies now have to manage a multitude of sites, so if you’re a retailer, you can buy Microsoft’s solution accelerator and low and behold you can get a site up very quickly,” Alvarez said.

Despite the touted Web 2.0 offerings, Alvarez warned that organizations looking to take full advantage of the rich Internet and community-based capabilities would need to use additional products from Microsoft. “If you want to add community aspects, it will require SharePoint,” he said. “Rich Internet applications will require users to buy SilverLight.”

SaaS players: DemandWare, NetSuite, Venda

Another emerging trend in e-commerce is the variety of vendors turning their attention exclusively to subscription-based models. Alvarez grouped his three biggest SaaS players — DemandWare Inc., NetSuite Inc., and Venda Inc. — in the “visionaries” section of Gartner’s Magic Quadrant. And while he said all three companies have much in common, a few minor differences can be found among the vendors.

Woburn, Mass.-based DemandWare’s eCommerce Platform sports an easy to navigate UI for organizations looking to manage their product catalogues. IT administrators will also feature SEO functionality built into this catalogue management.

“DemandWare is making a name for itself through customizability of the consumer facing user interface,” Walker said. “It’s also relatively quick for implementations. It’s definitely targeting larger e-commerce organizations with the product.”

Alvarez said the company’s site management tool will also come in handy for administrators looking to make changes to the e-commerce system without having to depend on DemandWare for support. His only word of caution was with the company’s revenue share pricing approach.

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“The more successful they are at running your site, the more you pay them,” he said. “It’s great at the beginning, but as you start to generate more sales, it might become an issue.”

At NetSuite, the company’s e-commerce platform strives to provide all the core e-commerce capabilities of the bigger players in a SaaS package. This includes check-out, shopping cart, product catalogue, inventory management, product comparison and UPS/Fed Ex shipping functionality.

“It’s a system that manages not just the Web site, but also the accounting, order management, warehouse management, marketing and customer support aspects of a business across both online and offline channels,” Baruch Goldwasser, e-commerce subject matter expert at the San Mateo, Calif.-based vendor, said.

Alvarez said that NetSuite is geared to small organizations that wouldn’t have the IT capabilities to utilize some of the bigger e-commerce software platforms. Walker agreed with his Gartner counterpart that NetSuite is strongly positioned in the SMB market, but warned that the tool is largely unsuitable for larger organizations

“It’s really focused on the SMB market using it for B2B selling,” the Forrester analyst said. “So it’s not really proven as a B2C solution for medium-to-large organizations.”

With New York-based Venda, Walker said the company offers a very strong and often updated product for medium-to-small businesses looking to get online quickly with a complete toolset. One key feature is a tabbed interface UI for managing the site, which allows for a multitude of user management, customer service, order management, and security capabilities.

On the pricing side, Alvarez said, Venda is the most unique of the SaaS players in that it offers a fixed price per month. “For $12,000 a month, you get a full service e-commerce site,” he said. “If you sell more than that every month, it’s great. If you don’t, it’s not so great.”

The Gartner analyst also warned that the company’s SaaS model is all-inclusive for B2C e-commerce capabilities, but the fixed monthly price doesn’t include back-end system integration or customization options.

Alvarez said the collary with all three of these companies, as with anything in the SaaS realm, is that there is no way to licence any of these tools. “So later on if the rental or subscription model is not appealing to you, you might wind up having to migrate to a different company’s solution,” Alvarez said.

ERP players: Oracle, SAP

In terms of the two major ERP players, Oracle’s iStore and SAP’s E-Commerce platforms tend to have adoption for B2B users within their respective install bases.

“Oracle is very strong in Oracle, so it sells well in its install base because of its integration to Oracle,” Alvarez said. “And the same applies to SAP. If you’re looking for something that’s open to non-Oracle or non-SAP environment, that’s when an IBM WebSphere or ATG come into the picture.”

Walker agreed, saying that both platforms tend to be a component of the back office systems in larger IT shops that use the product. “Because of this, it’s often very rare that you’re going to find a B2C e-commerce site running or Oracle or SAP,” he added.

Alvarez said Oracle has added B2C-focused UI improvements, shopping cart pricing enhancements and single page checkout capabilities. SAP’s improvements, on the other hand, are part of its larger CRM offering.

“If you’re looking to have e-commerce as part of a single CRM solution from one provider, than SAP E-Commerce for SAP shops would be the one to look at — especially for B2B,” he said.

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