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This holiday shopping season seeing more cloud-based e-commerce

Transition brings new set of benefits and challenges, experts say

By , Network World
November 16, 2012 10:40 AM ET

Network World - Everyone knows this is the time of year retailers yearn for.

Take Stephen Enfield, founder of POS Supply, a company that provides point-of-sale receipt papers for registers and bank ATMs. Using an e-commerce platform from NetSuite, Enfield knows which customers last year stocked up on their purchases of receipt paper. This year, he'll be sending those customers and others like them promotional emails, complete with a custom landing page, offering a discount for bulk purchases. "I couldn't do it without it," he says about his back-end e-commerce platform.

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Forrester analyst Peter Sheldon says e-commerce platforms have become mandatory, must-have software for any retailer, be it a business-to-business or business-to-consumer entity. And there's a robust industry of e-commerce platforms available on the market, dominated by big software players such as IBM, Oracle and SAP. Like many industries, these e-commerce platforms are evolving with the times though, shifting from on-premise software packages to cloud-hosted software-as-a-service packages. And Sheldon says when a retail business goes to the cloud, it can open up a whole new can of worms.

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This migration to the cloud is being driven by a variety of factors. First and foremost, managing e-commerce has become extremely complex, so being able to outsource it to a vendor that specializes in this work can be a huge advantage. E-commerce makes up about 8% of total retail now, Sheldon adds. "This is not some nascent channel," he says. "An outage during the holiday season will cause some heads to roll and some CIOs to lose their jobs. That's a game changer." Mid-market retailers, he says, are "feverishly" looking to host their e-commerce platforms in the cloud, if they haven't already made the jump.

That doesn't mean it's an easy transition, though. Security controls, such as payment card industry (PCI) protocols and audits certifications, are must-haves for cloud-based e-commerce SaaS vendors. There can also be political issues that hold up launching of e-commerce programs.

While CIOs used to be in charge of e-commerce systems in-house, when that technology is outsourced, some companies have created new executive-level positions specifically to oversee online commerce, or it is rolled into a marketing officer's role because the technology is outsourced to a vendor. "Many CIOs are supportive of the move, but some see it as a job threat," Sheldon says.

It's getting to a point though where the migration is unavoidable for many organizations though, Sheldon says. E-commerce platforms aren't just about "e-commerce" anymore, either. The new and more appropriate term is a "commerce suite," because it handles not just the electronic channel sales, but also management tools for the entire process from creating a website for desktop, mobile and tablet browsing, to allocating the technical infrastructure on the back end to host it, to the order and shipping process when a customer makes a sale and inventory management.

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