A few weeks ago I wrote a post about taking advantage of cloud services, SAAS and other online services to help accelerate a new business. Rightly so David Deans, from the Business Technology Roundtable, posed the question ‘how does this affect scalability?‘ When should you consider a dedicated managed service (internal/external)?

Scalability is an interesting term as it has a different context depending on the person you are speaking to. I’ll put other articles up in the next few weeks to consider different perspectives, however I’ll start with probably the one that is key to a lot of new businesses and that is COST!

In order to understand the operating cost of an environment you would look at possibly the lowest factor which is the cost per transaction. This figure is commonly made up of the following costs;

• hardware infrastructure (servers, storage, backup devices)
• network infrastructure (telecoms, security)
• support overheads (backup, performance optimisation, user support)
• software overheads (license, vendor maintenance & support)

Note: I’ve not taken into account the cost of the person actually executing the transaction, as this is required no matter where the solution is hosted.

In a new business venture, the cost per transaction tends to be extremely high for an internally managed infrastructure, as the costs cannot be absorbed efficiently across a transaction. When a cloud service provides a business with a cost per transaction, they are charging you for all of the above factors, but they are spreading the cost over many customers and hence obtaining an economy of scale.

Let’s take a very simplistic scenario. A new business is considering the most appropriate infrastructure. They’ve got 2 different options, 1 is a SAAS product and the other is a dedicated managed service.

The managed service will charge around £360k for build of infrastructure, and then an annual charge of £230k for annual maintenance and support. The hosted service is offering a £30k setup fee and £1.50 per transaction fixed for 5 years. Based on 100,000 transactions and an annual growth rate of 20%, you can see that by year 4 the managed service is actually more cost effective.

Now this is an extremely simplistic scenario, and in real terms the benefit of the managed service may be realised sooner or later depending on how you absorb the cost of the initial platform or add functionality. The key for me is in the growth rate, as this will determine the point whereby a business will realise economies of scale through controlling their own infrastructure.

This leads me onto my next article in considering the value-add of a cloud service or SAAS solution and how you should factor this into your decision process.

I was just reading through this article “CRM and eCommerce Integration Means More Sales, Less Costs” posted by Richly Chhuey, and thinking that he is spot on in his article. Many companies throughout the 90′s and 00′s that were able to implement a successful CRM strategy saw an increase (sizable in some instances) in sales.

The same is true on the online space, those that can implement a successful strategy can realise the same benefits. There is a richness of data that is captured through many common eCommerce platforms that provides a solid understanding of customers at the point of sale and post sale.

However, there is one element that wasn’t considered – what about before they place the order? Or even before they register?

This information is extremely useful in understanding why a customer is coming to your site, what they are looking for and more importantly why the visitor didn’t register and didn’t buy. A low visitor:sales conversion ratio may indicate that the visitor can get the product cheaper elsewhere (fairly easy to establish through shop aggregators) in which case you may wish to use your CRM to define a segment that you can run a targeted campaign towards. Unfortunately it can’t help with more fundamental issues such as a sub-standard customer experience resulting in the visitor getting fed up, but I guess you need to invest some effort to make money online!

To capture this information, you need to consider an additional component as part of your eCommerce strategy: web analytics. It is this application or service that is able to interpret how many visitors you receive, what their journey is, what elements are effective. Without it, you may never know who is NOT buying on your site.

Andy Mulholland, Cap Gemini’s CTO, has pointed out two big technology events well worth tracking.  These are events where the industries big wheels come out and define where they have spent and are spending their R&D dollars.

First up is ‘The Cloud Summit’, (or rather ‘the next generation platform’ as the event subhead suggests) and the second is Enterprise 2.0.

To stay up to date on these events, follow Cloud Summit on Twitter here, join the group on facebook here, and if you are a LinkedIn user, join the group here. The official facebook page for Enterprise 2.0 is here.

….and it would be rude not to: the Cap Gemini CTO Twitter stream is here.

Today, Salmon announced the achievement of Gold Partner Certified status in Microsoft’s partnership programme.  In just twelve months, our Microsoft presence has grown from scratch into a mature practice, complementing our continuing desire to offer our customers choice; and a clear link between I.T. investment and the delivery of measurable business value.

Our solution development with Microsoft will predominantly be in the UK’s insurance and retail sectors.  In fact, we are already helping businesses in insurance increase revenue by improving customer satisfaction and employee productivity while reducing overall operational costs.

Microsoft’s Gold Certified Status recognises both Salmon’s technical expertise and the impact the company has made in solution development leveraging core areas of the Microsoft product portfolio; notably Security, Service Orientated Architecture (SOA), Business Process Integration and Information Worker solutions.

Gold status is the highest accolade in the Microsoft programme.

Salmon is also a Premier IBM Partner and holds partnerships and affiliations with a number of other leading ISVs.  There is a full list here.  The Microsoft practice is headed by Andrew Smith.

The eagle-eyed among you will have seen that Salmon has been very busy in the interim.  If you missed it – the latest version of Halfords.com recently went live, and already got a review yesterday by Graham Charlton, a researcher at e-consultancy.com.  Both are worth taking a look at.

The UK eCommerce community is blooming.  And although I couldn’t be there, I am told you needed no more evidence of this than at Internet Retailing 2008 (IR2008) where networking, buzz & innovation met with ideas, insight and research.  Salmon had three clients presenting in the conference.

The first stream was devoted to discussing the hot topic of providing rich customer experiences – and you can read a session review here. It studied the technical, marketing and operational issues related to rich media.

In this stream, Salmon customer Oliver Bishop, the e-Business Technical Architect from AkzoNobel Decorative Coatings, presented on “Making product choices simpler using RIA technology.”  The latest relaunch of dulux.co.uk has taken advantage of Rich Internet Application (RIA) technology to help customers to choose the colours they love and products that are right for the job.   This is achieved using functionality like Ajax, drag and drop and DHTML extensively within the site to create an interactive scrapbook, moodboard and the ability to upload and decorate photos of their own rooms.  Oliver’s presentation covered how Web 2.0 technologies can enhance the experience for your customers.

Stream two looked at second mover advantage on the web – and focused on the approach taken by retailers who have launched transactional websites only recently; and how they have taken advantage of their second mover position to succeed.

In this 2nd stream, Wendy Derbyshire from Scotts & Stow told delegates how the company had been running nine sites on four different platforms and faced a huge range of legacy issues and a major challenge to consolidate everything into one technical base that could underpin the whole business.  Scotts decided to bite the bullet and embark on a major project (with Salmon and SAFE™ – read the case study) to put in place one infrastructure for the whole business.

And then there was Stream three, which examined the latest trends in multiple channel retailing, i.e. Moving beyond multichannel to true, integrated “cross channel” solutions (is it me or does this makes our 2005 seminar series “eCommere Junkies: Cross Channel Retail” look impressively visionary?).

In this final stream Argos’ presentation looked at “Customer centric multi-channel development“.  There is no doubt Argos is recognised as pioneering new approaches in multi-channel high street retailing, introducing concepts (and delivering them with Salmon’s help) such as in-store reservations via web, phone and text, in-store stock-check and quick-pay kiosks, all tied into the overarching online experience and offline catalogue.

It’s funny.  You can have the biggest booth in the exhibition hall and learn to talk a good game.  But nothing compares to the experience you get from actually living, breathing and delivering state-of-the-art eCommerce.

Hot on the heels of news related to our projects for Novae and Boots.com, we are pleased to be able to draw your attention to an announcement of a successful implementation of a new B2C eCommerce platform – this time supporting Stylo plc – the UK’s second largest independent shoe retailer.  The project – built with SAFE™ (Salmon’s Application Framework for eCommerce) supports Stylo’s multiple brands including, PriceLess, Barratts, Discount Shoe Store, Petitfeet, Big Shoe Boutique and Nineteen Twentyone.

Talking about the project, Ken Platt (E-Commerce Manager at Stylo) said,

SAFE™ was affordable, fast to implement and supported our multiple brands. Its “out of the box” functionality met all of our requirements, supporting our online needs as well as giving us complete control over our eCommerce environment.  We now have a scalable platform in place that meets our customers’ desires now and will cope with increasing levels of traffic and our changing business needs in the future.

As a result of the engagement with Salmon, Stylo will benefit from sophisticated functionality for marketing campaigns, as well as better merchandising, content and order management. Common business processes are re-used across the business and at each point of interaction (store, contact centre, web, etc). The technology behind the eCommerce platform is a single instance of IBM WebSphere Commerce Enterprise Edition.

SAFE™ (Salmon’s Application Framework for eCommerce), is a series of pre-configured, reusable and customisable eCommerce components combined with a mature project delivery methodology.  SAFE™ speeds and simplifies the delivery of very sophisticated eCommerce solutions, significantly lowering the risks traditionally associated with launching a new eCommerce capability, or replacing an existing eCommerce platform.

Salmon has integrated IBM WebSphere Commerce with CyberSource payment gateway, Mercado for optimised search and browse and Coremetrics for online analytics and marketing optimisation.  The eCommerce platform has also been integrated with Stylo’s back office systems including sales, despatch and catalogue requests, so that information can be horizontally shared across the business, resulting in the ability to provide a totally integrated experience for the customer.

The sites will be hosted by Rackspace whilst Salmon are responsible for supporting the databases and application software.

Two great news announcements were made this week and last.  Apologies for not getting these posted sooner.  (For all the Salmon news hot-off-the press go here, or better still subscribe to the RSS here).

Multi-Channel Health and Beauty revamp

First up, Boots.com announced its complete revamp.  Because of the nature of the project (was there a bigger eCommerce project in the UK in 2008 by the way?) Boots.com partnered with Salmon to benefit from our multi-channel and eCommerce expertise.

The new look site for Boots boasts a host of new features and functionality to improve the customer’s shopping experience; including improved navigation and a one-page checkout, as well as a ‘wish list’ facility and product ratings and reviews.

“Boots.com was initially launched more than six years ago. In this time, e-commerce has grown beyond all expectations and technology has come on at pace. In addition, our customers have told us that they would like to see more information and advice alongside our thousands of health and beauty products.”
Tim Stacey, Director, Boots.com

Boots.com is seizing the opportunity to update the technology which is used on the site, whilst at the same time introducing the richer content which customers have requested, following extensive customer research.

Tim Stacey further explained; “We know our customers want a quick, simple checkout, delivery options that suit them and to feel part of a community online. This is the first stage in an exciting period of development for Boots’ online presence and we are committed to delivering customers a multi-channel shopping experience. There are many more exciting developments planned over the next few months including the launch of a ‘buy online and collect in store’ service, further developments in health advice and information, and online communities for our customers.”

The site’s new platform will also greatly increase Boots.com’s advice and information capabilities. As well as the existing ‘Ask Boots’ advice portal in partnership with the British Medical Journal, the site will have inspiring video content with advice on everything from morning sickness to beauty videos showing how to get the latest looks.

The new ‘live pharmacist’ service means that users can email a health question to the site and have a pharmacist call them back with online pharmacy advice within 20 minutes. The service is available nightly, Monday to Saturday from 6pm to midnight.

The site’s product range has also been expanded, to include new, exclusive lines and gift ranges in time for Christmas. For example, the site’s popular Beauty Boutique will now feature online exclusives from brands such as Bliss, Korres and Caudalie.

Online Underwriting for Motor Fleet line-of-business

The second announcement reflects our delight helping Novae launch its Motor Fleet line-of-business on RiskWrite, extending the web-based platform implemented originally back in 2004, to cater for a range of new productsto be marketed quickly and efficiently.  (You can read the announcement we made when we first started working with Novae here and get a complete case study here).

Steve Fookes, IT Director Novae said; “The introduction of Novae’s Motor Fleet Underwriting Service is an opportunity to strengthen our market position. We needed a completely integrated IT infrastructure that could be aligned across the business which was cost effective and would support ongoing growth.”

Designed as a series of fully reusable and customisable components that allow insurance companies to quickly leverage a truly open IT architecture; RiskWrite provides Novae greater visibility of the insured, policies and claims throughout the life cycle; encompassing such activities as quotations, placement of orders, policy production, financial management, document generation, management information and regulatory requirements.

For those not in the know (I am assuming everyone isn’t an expert in online insurance underwriting, thankfully Salmon are) this is a big deal.  The web-based system we have developed ensures that paper-based inefficiencies are a thing of the past and help Novae provide a high level of customer service to its brokers (such as providing online quotes and offering “acceptance” immediately, together with instant documentation).  Motor Fleet Underwriting is a complex business, and as part of the project Salmon has interfaced with third party systems likes the Motor Insurance Database, however, Salmon was still able to ensure Novae hit the go-live deadline and enabled Novae to commence trading on schedule.

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What a great end to the working week….And as if it couldn’t get any better I think we might just be able to squeeze another customer announcement out on Monday!  Successful enterprise projects…..just like buses.  Three coming along at once.  But then I am used to that here.