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An eCommerce Technology Buyer’s Guide to Cloud versus On-Premise Solutions

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Editor’s note: Recently, LiveArea announced a new partnership with BigCommerce to deliver strategy, design, technology, and digital marketing on the brand’s all-SaaS eCommerce platform. The following guest blog features BigCommerce’s Corinne Watson discussing cloud versus on-premise commerce solutions.

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Building an online business is kind of like building a house.

Bear with me.

  1. You need to choose the right plot of land (that’s your product and your packaging).
  2. You need to set a reasonable timeline for build-out (your go-to-market strategy).
  3. And you need to make sure you’re selecting the right materials that not only look good, but also fit the needs of your life down the road (these are your systems like your inventory management, your CRM, and your eCommerce platform).

Analogies aside, your eCommerce platform is truly one of the most important decisions you’ll make as you are building out your online business.

This choice has wide-ranging implications –– to your customers in engaging with your brand and reducing the friction of getting the product they need, to your employees that are implementing campaign strategies, and to your bottom line in terms of sales growth as well as cost of maintenance and installation.

Every online retailer has made this decision as part of their journey to create (or break) their business.

Humble Beginnings: On-Premise Hosted Environments

Five years ago, many brands were building their eCommerce technology in-house (otherwise known as on-premise.) This choice was made because of a number of factors — most notably, software-as-a-service (SaaS) eCommerce platforms couldn’t match the level of control and security brands needed.

In an on-premise environment, brands and store owners are typically responsible for hosting, installations, and manual software updates. There are certain types of on-premise environments, like Magento Open Source and Enterprise, that give brands the option to use third-party hosting providers.

An on-premise hosting environment relies on developers to maintain and update the website, which allows for total control but may become costly and time-consuming.

With an on-premise environment, brands get more control over their online retail platform, greater visibility of their own data, and a better understanding of the complexity involved in data security. Often times on-premise hosting environments make sense for extremely complex businesses, but be mindful of the tech debt often associated with self-hosted software.

All of this said, very little has changed with on-premise solutions in the last decade. Meanwhile, SaaS solutions –– which are hosted in the cloud –– have been able to catch up, now allowing for up to 95% of the customization and flexibility of on-premise solutions.

The Shift to Cloud-Hosted: Definition and Benefits

Within recent years, a migration has occurred. With the rising sophistication in eCommerce platforms and the need for efficient, fast innovation, businesses started moving from self-hosted eCommerce to cloud-hosted. Now, 33% of companies are using more SaaS applications than they did in 2016 — and that number is expected to rise.

Cloud-hosted eCommerce platforms offer hosting for their customers via off-site solutions like Amazon Web Services or Google Cloud Platform. In this scenario, the brand or merchant still maintains ownership of the storefront and the products, but the software is hosted online with two of the best-in-class solutions on the market. This platform-hosted responsibility aligns with better security, less downtime, and easier-to-maintain version control.

It allows brands to focus more on marketing and technical innovations in UX and CX rather than PCI compliance, fixing bugs or updating versions.

While in the past, IT and development teams were concerned about the flexibility and customization capabilities of SaaS solutions, APIs help to ease this concern, as well as non-proprietary coding and staging environments for UX build outs.

Cloud, SaaS, and CaaS

Not all cloud-hosted eCommerce platforms offer automatic installations of patches, updates or upgrades. Only SaaS (software-as-a-service) and CaaS (commerce-as-a-service) solutions do that.

There are four main ways to classify the different types of cloud eCommerce platforms:

  • Cloud Platforms (Sometimes referred to as IaaS — infrastructure as a service)
  • Cloud PaaS (Platform as a Service).
  • Cloud SaaS (Software as a Service).
  • Cloud CaaS (Commerce as a Service).

There are significant differences between these types of platforms.

On a cloud platform, you are able to rent space and network capacity to store data or run software on servers that are not in your physical location. In a cloud-only environment, users are still responsible for updating their software. The platform is still open source, brands are responsible for all updates and security — the only difference is that you’re hosting on a cloud platform. Often times, sites may need to be taken down to complete new upgrades and extra fees may go into paying someone to manage the platform. Magento Open Source has features that closely mirror on-premise, but many merchants choose a cloud hosting provider for their platform, so it is often considered Cloud. Many once on-premise solutions now market themselves as “cloud” solutions. The only difference in the cloud shift here is that the hosting is done via the cloud, rather than on-premise at your organization through a company like Rackspace, for instance.

On a cloud PaaS platform, hardware and software tools are provided over the internet, and people use those tools to develop applications. Additionally, cloud hosting is bundled into the platform. Magento Commerce Cloud is the most common example of PaaS for eCommerce. In a  PaaS scenario, any platform updates, security patches and general maintenance to their store are the responsibility of the merchant.

On a cloud SaaS platform, platform like BigCommerce, the vendor handles infrastructure and software updates. They also maintain servers, make improvements, and manage upgrades. With SaaS, all you have to do is use software. You save time with automatic upgrades, save money with less potential downtime, and have immediate access to new versions.

On a cloud CaaS platform, the presentation layer is removed from the ecommerce layer, allowing brands to serve up their content on popular CMS platforms like WordPress and Drupal, while adding on eCommerce functionality on the backend. The BigCommerce for WordPress plug-in is BigCommerce’s first initiative in the CaaS space.

Conclusion

Today, brands are constantly seeking innovation and are best served by a marketing model that’s informed by content, blended with commerce, and based on experience.

Choosing the right eCommerce solution is a big decision, and not one that should be made in haste. As you’re deciding on which platform and what type of hosting you need, make sure to factor in your business growth goals.

Don’t forget to ask lots of questions, do some exploring, and consult with an agency to see if they have any opinions on what type would be best for your business.

Corinne Watson

Corinne is a writer and researcher at BigCommerce, where she works directly with agency and technology partners to bring their tools, services, and ideas to the commerce industry at large. As the manager of the content program for BigCommerce partners, she develops articles and stories to help illustrate the value of being a BigCommerce partner.

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