Demandware tco webinar final 12122012

Copyright 2012 Demandware, Inc. - Confidential

Maximizing Commerce Investment: How to Avoid Hidden Technology Costs and Accelerate Growth

Guest Speaker – Peter Sheldon, Forrester Research

November 30, 2012

@peter_sheldon


Digital Commerce: The New Way to Web

Powers world-class global ecommerce/ web businesses

Enables amazing branded consumer experiences

Links devices, channels and applications into a cohesive consumer experience

Empowers users to drive business growth

Is always on

2Copyright 2012 Demandware, Inc. - Confidential


Digital Commerce Options

Host and manage software

Manage upgrades

Tinker with infrastructure

Stitch and glue integrations

Build It Yourself

Launch new brands and channels

Create innovative consumer experiences

Synchronize devices, channels and apps

Go global

Plug into Demandware



Leading Brands Choose Our Model


Copyright 2012 Demandware, Inc. - Confidential5

Survey Objectives

Base: 156 eCommerce, marketing and IT technology leaders

Source: A commissioned study conducted by Forrester Consulting on behalf of Demandware, September 2012

Forrester Consulting conducted a study of 156 US and European marketing and technology leaders during the summer of 2012 to:

•Uncover most common challenges with ecommerce platforms

•Determine detailed line-item capital and expense costs to maintain ecommerce platforms

•Establish best practices for creating true total cost of ownership analysis

Making Leaders Successful Every DayMaximizing Commerce Investment: How to Avoid Hidden Technology Costs and Accelerate Growth

Peter Sheldon, Forrester Research

November 30, 2012

@peter_sheldon

© 2012 Forrester Research, Inc. Reproduction Prohibited

Demographics

Forrester surveyed 156 US, UK, and German based eCommerce, marketing, and IT leaders responsible for eCommerce technology decisions at their firms.

Retail83%

Consumer Products

9%

Branded Manufacturer selling

direct5%

Brand Manufactu

ring3%

“To which industry would you say that your company belongs? ”

Information Technology

74%

eBusiness/eCommerc

e20%

Marketing6%

“Which of the following most closely describes the department you work in?”


Agenda

Online retailers continue to invest in eCommerce technologies

Supporting eCommerce technology does not come cheap

Cloud solutions represent a viable alternative

Building a realistic TCO model & using it correctly is imperative

Recommendations

8

Across every industry sector, online channel share is growing.


By 2016, Forrester forecasts that online retail sales in the US will reach $327 billion

10Source: Forrester Research Online Retail Forecast, 2012 to 2016 (US)


Online generated over $1.5b revenue on Cyber Monday 2012

11Source: Forrester Research Online Holiday Retail Forecast, 2012 (US)


Investment growth in eCommerce technologies continues in 2012

12Source: May 2012 Global eBusiness & Channel Strategy Professional Online Survey


0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

$50M to $100M $100M to $250M $250M +

Home-grown solutiondeveloped andmanaged in-house

Licensed on-premisesolution from a softwarevendor

Open-SourceeCommerce solution

Cloud-basedeCommerce solution

13

Base: 156 US, UK and German eCommerce, marketing and IT technology leaders

Today home-grown and licensed solutions dominate

“Which of the following best describes the eCommerce solution your company currently uses for your B2C eCommerce channel?”

Today, cloud-based solutions are favored by smaller retailers ($50m - $100m online revenue)

Source: A commissioned study conducted by Forrester Consulting on behalf of Demandware, Inc September 2012

© 2012 Forrester Research, Inc. Reproduction Prohibited 14

eCommerce leaders are concerned that their existing

solutions won’t scale for tomorrow’s needs

Consumers demand integrated, cross-channel brand experiences

Online retailers have ambitious global expansion plans

Mobile is no longer just about mobile


Confidence in existing solutions to support tomorrows online growth is alarmingly low

18

18%

20%

17%

20%

16%

13%

13%

14%

43%

41%

31%

31%

31%

34%

31%

30%

27%

34%

38%

41%

44%

46%

47%

48%

Managing ongoing cost of ownership to maintainand grow the business

Speed to achieve new and fully integrated mobileexperiences

Multi-brand expansion requirements

Multi-channel requirements to satisfy consumers'needs

The scalability of the platform to attain corporategrowth plans

Adoption of new eCommerce features andrequirements

Global expansion requirements

Order management requirements for orderconsistency across channels

1 (no concern) 2 3 4 5 (Immediate concern/requires change)

“How would you describe the confidence level your organization has in the ability of your current eCommerce solution to support the future growth of your B2C channel over the next 5 years in respect to:”




Consequently, 25% of online retailers plan to re-platform in the next two years

19

1%

3%

3%

8%

12%

13%

29%

30%

Don't know

We have selected and implemented a new platformwithin the last 2 years

We have recently selected a new platform, but it isnot yet implemented

We have recently started a selection process for re-platforming

In the next year

We expect to engage in selection process for re-platforming within the next 2 years

We expect to engage in selection process for re-platforming in the next 2-4 years

We have no current plans to re-platform

“Which of the following best describes the timeline for replatforming your current eCommerce solution?”




As they do so, they seek to align TCO with revenues & improve business agility

20

40%

40%

41%

51%

56%

27%

44%

58%

45%

51%

51%

29%

36%

36%

29%

24%

54%

39%

27%

41%

37%

37%

To gain access to an ecosystem of value-add solutions that wecan leverage

To support our global initiatives

To reduce our reliance on in-house IT staff and developers

To increase the speed at which we can deploy new features andfunctionality

To lower overall operational and ownership costs

To reduce the technical and operational risks of supporting alegacy or home-grown platform

To reduce the opportunity risks of staying on a legacy or home-grown platform

To improve business agility

To support mobile and tablets users

To support our multichannel initiatives

To align the cost of ownership against our online revenues

5 (Very important factor) 4 (important factor)

“How important were the following during the development of your business case for a replacement eCommerce solution?”




Agenda





Recommendations

21


The cost of supporting eCommerce tech varies significantly across online retailers

22

0%

5%

10%

15%

20%

25%

30%

35%

$50M to $100M $100M to $250M $250M +

< 1% 1-2%

3-4% 4-5%

5-6% 7-8%

9-10% > 10%

“Using your best estimate, what percentage of your online revenue currently goes to supporting your eCommerce technology (software, hardware, maintenance, hosting,

redundancy, upgrades, etc.)?”




5%

56%

36%

3%

$100M to $250M

(online revenue)

1-5 5-10 10-25 25-50 50-75 75+

3%

29%

53%

15%

$50M to $100M

(online revenue)

23

Many rely on large technical resource teams to support their eCommerce site(s)

“How many technical resources (infrastructure, application development, networking, etc.) are dedicated to supporting your eCommerce business?”

1%

8%

24%

34%

13%

20%

$250M+

(online revenue)



A third of large online retailers employ over 50 technical resources to support their eCommerce sites(s)


0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

$50M to $100M $100M to $250M $250M +

< $100k

$100k-$150k

$150k-$200k

$200k-$250k

> $250k

24

“What is your average annual fully loaded cost for eCommerce technical resources”

The fully loaded cost for of these resources is considerable




The financial and opportunistic cost of upgrading on a regular basis is significant

25

“How frequently would you say you upgrade your licensed or open source eCommerce solution to the

latest version available from the vendor?”

1%

1%

3%

3%

10%

36%

44%

Don't know

We have never upgraded our…

Once every 3 years

Every 3 months

Every 6 months

Once every 2 years

Once per year

* (including requirements development , software development, QA and release activities)

v

“How long does it typically take to upgrade your eCommerce platform to the latest

version? *”

0%

2%

2%

5%

6%

10%

21%

53%

Don't know

Longer than 9 months

Less than 2 weeks

3 to 6 months

6 to 9 months

2 to 3 months

2 to 4 weeks

1 to 2 months



Fifty seven percent of online retailers upgrade their eCommerce platform at least once per year


On-premise eCommerce platform owners pay additional licensing costs as they grow

26

“Thinking about the contract you have in place with the vendor of your current licensed eCommerce solution, which of the following triggers would require you to purchase additional

licenses?”

39%

49%

54%

67%

76%

78%

Reaching a defined threshold of online revenue

Reaching a defined threshold of concurrent visitorvolume

Launching additional sites (e.g. brands or micro-sites)

Reaching a defined threshold of order volume

Adding more business users (e.g. users of theadministration tools)

Launching additional markets (e.g. new Europeansites)




Agenda





Recommendations

27

Today cloud-based eCommerce solutions vie head-to-head with

on-premise platforms


15%

26%

29%

29%

33%

35%

35%

37%

40%

44%

47%

49%

62%

66%

69%

Product recommendations

Live chat

Guided product navigation

CRM

Contact center support management solution

Order mgmt

Tax calculation

Customer ratings & reviews

Site product search

Rich media (rotating images, video etc)

PIM

Mobile commerce

WCM

Email marketing

Web analytics

Few online retailers are entirely new to cloud-based solutions

“Do you currently use third-party (vendor) products to provide any of the following eCommerce related functions on your site”




And thus confidence in moving everything to the cloud is increasing

30

“Which of the following types of eCommerce solution is/did your company considering/consider for inclusion in your selection process for a new eCommerce platform?”

41%

41%

49%

49%

56%

76%

Open-Source eCommerce solution, managed andsupported by a services provider or vendor

Cloud-based eCommerce solution

Licensed on-premise solution from a software vendor,managed in-house

Open-Source eCommerce solution managed in-house

Licensed on-premise solution from a software vendor,managed and supported by a services provider or…

Home-grown solution developed and managed in-house




22%

39%

44%

50%

56%

56%

61%

67%

72%

78%

Our TCO analysis did not favor cloud basedsolutions

The costs of cloud are higher than with on-premise or build-in-house

We perceive that cloud eCommerce solutionsare not mature enough for our business

We were worried that cloud solutions are notcustomizable

We were worried about security and privacyissues

We were worried about integration with otherapplications

The migration to cloud based applications will bea lengthy and complex process

The pricing of cloud solutions is complicated ordidn't fit our business model

We were worried about scalability

We were worried about long-term vendor lock-inwith cloud

31

“Thinking about cloud-based eCommerce platforms, why did you dismiss these during your selection process?”

Although concerns about cloud-based solutions continue to linger




Agenda





Recommendations

32


Few firms can acquire enterprise software without developing a business case and TCO model

33

13%

82%

22%

72%

No, we are able to procureenterprise software without

Yes, this is a mandatory part of ourformal procurement process

Investment business case

3-5 year total cost of ownershipanalysis

“Does your corporate sourcing/procurement group mandate either of the following for enterprise software purchases?”




“Which of the following best describes the reality of the investment business case for your platform versus the predictions of your model?”

Unsurprisingly, the ROI from eCommerce technology investments is clear

1%

1%

9%

22%

31%

34%

We have never measured the ROI versus theanalysis developed during selection

The ROI has been significantly lower than ouranalysis predicted

The ROI has been lower than our analysispredicted

The ROI has been higher than our analysispredicted

The ROI has been in line with our analysispredications

The ROI has been significantly higher than ouranalysis predicted

Base: 134 US eCommerce, marketing and IT technology leaders who developed a TCO model during their eCommerce solution evaluation



But the actual TCO is often higher than online retailers had projected

35

“Which of the following best describes the reality of owning and operating your platform versus the predictions of your total cost of ownership analysis?”

1%

1%

3%

17%

26%

50%

The actual cost of ownership has beensignificantly lower than our analysis predicted

We have never measured the real cost ofownership versus the analysis developed

during selection

The actual cost of ownership has been lowerthan our analysis predicted

The actual cost of ownership has beensignificantly higher than our analysis

predicted

The actual cost of ownership has been higherthan our analysis predicted

The actual cost of ownership has been in linewith our analysis predications




So what’s going wrong?


21%

23%

25%

26%

28%

37%

39%

25%

28%

29%

24%

26%

27%

40%

42%

42%

42%

42%

44%

47%

23%

27%

28%

38%

51%

52%

37%

56%

37%

35%

32%

39%

33%

35%

34%

32%

33%

36%

30%

37%

30%

31%

34%

37%

33%

30%

30%

29%

29%

38%

34%

27%

20%

16%

35%

35%

34%

15%

21%

32%

17%

19%

17%

36%

16%

16%

22%

22%

18%

17%

17%

18%

37%

38%

22%

17%

12%

19%

19%

3%

1%

3%

4%

6%

4%

6%

21%

19%

24%

1%

26%

6%

4%

3%

4%

3%

4%

3%

8%

4%

20%

5%

3%

2%

Scalability

Security

Capacity

Opportunity

Reliability and availability

Extensibility

Interoperability

Ongoing development

Platform upgrades

IT support and development headcount training

Annual power consumption

Annual platform monitoring and support

Annual hardware leases

Annual infrastructure and server upgrades

Annual ISP/bandwidth rental

Annual Hardware repairs and replacement

Annual data backups

Annual recurring/maintenance fees for eCommerce platform

Annual disaster recovery

Annual recurring/maintenance fees for OS's, RMDB's, app servers etc

Facility upgrades

Additional software license costs for deploying new commerce sites

Additional software licenses to support growth

Hardware acquisitions

Software licensing for eCommerce platform

Software licensing for OS's, RMDB's, app servers etc

We already use in ourTCO analysisCritical

Nice to have

Not important

Initial costs

ongoing

annual

infrastructure

and software

costs

operations,

training and

support costs

opportunity

costs and

risk

mitigation

costs




Agenda


Online retailers seek nimble, open & cost effective solutions



Recommendations

38

#1 Don’t get stuck in the CAPEX ditch

#2 Factor in the hidden costs

#3 Encourage cross-functional ownership of the TCO model

#4 Recognize that TCO is not always the be-all and end-all. Agility is key

PETER SHELDON

[email protected]

blogs.forrester.com/peter_sheldon

@peter_sheldon

Thank you


Maximizing Commerce Investment: How to Avoid Hidden Technology Costs and Accelerate Growth

Guest Speaker – Peter Sheldon, Forrester Research

November 30, 2012

@peter_sheldon


Digital Commerce: The New Way to Web

Powers world-class global ecommerce/ web businesses

Enables amazing branded consumer experiences

Links devices, channels and applications into a cohesive consumer experience

Empowers users to drive business growth

Is always on



Digital Commerce Options

Host and manage software

Manage upgrades

Tinker with infrastructure

Stitch and glue integrations

Build It Yourself

Launch new brands and channels

Create innovative consumer experiences

Synchronize devices, channels and apps

Go global

Plug into Demandware



Leading Brands Choose Our Model


Copyright 2012 Demandware, Inc. - Confidential5

Survey Objectives

Base: 156 eCommerce, marketing and IT technology leaders

Source: A commissioned study conducted by Forrester Consulting on behalf of Demandware, September 2012

Forrester Consulting conducted a study of 156 US and European marketing and technology leaders during the summer of 2012 to:

•Uncover most common challenges with ecommerce platforms

•Determine detailed line-item capital and expense costs to maintain ecommerce platforms

•Establish best practices for creating true total cost of ownership analysis

Making Leaders Successful Every DayMaximizing Commerce Investment: How to Avoid Hidden Technology Costs and Accelerate Growth

Peter Sheldon, Forrester Research

November 30, 2012

@peter_sheldon


Demographics

Forrester surveyed 156 US, UK, and German based eCommerce, marketing, and IT leaders responsible for eCommerce technology decisions at their firms.

Retail83%

Consumer Products

9%

Branded Manufacturer selling

direct5%

Brand Manufactu

ring3%

“To which industry would you say that your company belongs? ”

Information Technology

74%

eBusiness/eCommerc

e20%

Marketing6%

“Which of the following most closely describes the department you work in?”


Agenda





Recommendations

8

Across every industry sector, online channel share is growing.


By 2016, Forrester forecasts that online retail sales in the US will reach $327 billion

10Source: Forrester Research Online Retail Forecast, 2012 to 2016 (US)


Online generated over $1.5b revenue on Cyber Monday 2012

11Source: Forrester Research Online Holiday Retail Forecast, 2012 (US)


Investment growth in eCommerce technologies continues in 2012

12Source: May 2012 Global eBusiness & Channel Strategy Professional Online Survey


0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

$50M to $100M $100M to $250M $250M +

Home-grown solutiondeveloped andmanaged in-house

Licensed on-premisesolution from a softwarevendor

Open-SourceeCommerce solution

Cloud-basedeCommerce solution

13


Today home-grown and licensed solutions dominate

“Which of the following best describes the eCommerce solution your company currently uses for your B2C eCommerce channel?”

Today, cloud-based solutions are favored by smaller retailers ($50m - $100m online revenue)



eCommerce leaders are concerned that their existing

solutions won’t scale for tomorrow’s needs

Consumers demand integrated, cross-channel brand experiences

Online retailers have ambitious global expansion plans

Mobile is no longer just about mobile


Confidence in existing solutions to support tomorrows online growth is alarmingly low

18

18%

20%

17%

20%

16%

13%

13%

14%

43%

41%

31%

31%

31%

34%

31%

30%

27%

34%

38%

41%

44%

46%

47%

48%

Managing ongoing cost of ownership to maintainand grow the business

Speed to achieve new and fully integrated mobileexperiences

Multi-brand expansion requirements

Multi-channel requirements to satisfy consumers'needs

The scalability of the platform to attain corporategrowth plans

Adoption of new eCommerce features andrequirements

Global expansion requirements

Order management requirements for orderconsistency across channels

1 (no concern) 2 3 4 5 (Immediate concern/requires change)

“How would you describe the confidence level your organization has in the ability of your current eCommerce solution to support the future growth of your B2C channel over the next 5 years in respect to:”




Consequently, 25% of online retailers plan to re-platform in the next two years

19

1%

3%

3%

8%

12%

13%

29%

30%

Don't know

We have selected and implemented a new platformwithin the last 2 years

We have recently selected a new platform, but it isnot yet implemented

We have recently started a selection process for re-platforming

In the next year

We expect to engage in selection process for re-platforming within the next 2 years

We expect to engage in selection process for re-platforming in the next 2-4 years

We have no current plans to re-platform

“Which of the following best describes the timeline for replatforming your current eCommerce solution?”




As they do so, they seek to align TCO with revenues & improve business agility

20

40%

40%

41%

51%

56%

27%

44%

58%

45%

51%

51%

29%

36%

36%

29%

24%

54%

39%

27%

41%

37%

37%

To gain access to an ecosystem of value-add solutions that wecan leverage

To support our global initiatives

To reduce our reliance on in-house IT staff and developers

To increase the speed at which we can deploy new features andfunctionality

To lower overall operational and ownership costs

To reduce the technical and operational risks of supporting alegacy or home-grown platform

To reduce the opportunity risks of staying on a legacy or home-grown platform

To improve business agility

To support mobile and tablets users

To support our multichannel initiatives

To align the cost of ownership against our online revenues

5 (Very important factor) 4 (important factor)

“How important were the following during the development of your business case for a replacement eCommerce solution?”




Agenda





Recommendations

21


The cost of supporting eCommerce tech varies significantly across online retailers

22

0%

5%

10%

15%

20%

25%

30%

35%

$50M to $100M $100M to $250M $250M +

< 1% 1-2%

3-4% 4-5%

5-6% 7-8%

9-10% > 10%

“Using your best estimate, what percentage of your online revenue currently goes to supporting your eCommerce technology (software, hardware, maintenance, hosting,

redundancy, upgrades, etc.)?”




5%

56%

36%

3%

$100M to $250M

(online revenue)

1-5 5-10 10-25 25-50 50-75 75+

3%

29%

53%

15%

$50M to $100M

(online revenue)

23

Many rely on large technical resource teams to support their eCommerce site(s)

“How many technical resources (infrastructure, application development, networking, etc.) are dedicated to supporting your eCommerce business?”

1%

8%

24%

34%

13%

20%

$250M+

(online revenue)



A third of large online retailers employ over 50 technical resources to support their eCommerce sites(s)


0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

$50M to $100M $100M to $250M $250M +

< $100k

$100k-$150k

$150k-$200k

$200k-$250k

> $250k

24

“What is your average annual fully loaded cost for eCommerce technical resources”

The fully loaded cost for of these resources is considerable




The financial and opportunistic cost of upgrading on a regular basis is significant

25

“How frequently would you say you upgrade your licensed or open source eCommerce solution to the

latest version available from the vendor?”

1%

1%

3%

3%

10%

36%

44%

Don't know

We have never upgraded our…

Once every 3 years

Every 3 months

Every 6 months

Once every 2 years

Once per year

* (including requirements development , software development, QA and release activities)

v

“How long does it typically take to upgrade your eCommerce platform to the latest

version? *”

0%

2%

2%

5%

6%

10%

21%

53%

Don't know

Longer than 9 months

Less than 2 weeks

3 to 6 months

6 to 9 months

2 to 3 months

2 to 4 weeks

1 to 2 months



Fifty seven percent of online retailers upgrade their eCommerce platform at least once per year


On-premise eCommerce platform owners pay additional licensing costs as they grow

26

“Thinking about the contract you have in place with the vendor of your current licensed eCommerce solution, which of the following triggers would require you to purchase additional

licenses?”

39%

49%

54%

67%

76%

78%

Reaching a defined threshold of online revenue

Reaching a defined threshold of concurrent visitorvolume

Launching additional sites (e.g. brands or micro-sites)

Reaching a defined threshold of order volume

Adding more business users (e.g. users of theadministration tools)

Launching additional markets (e.g. new Europeansites)




Agenda





Recommendations

27

Today cloud-based eCommerce solutions vie head-to-head with

on-premise platforms


15%

26%

29%

29%

33%

35%

35%

37%

40%

44%

47%

49%

62%

66%

69%

Product recommendations

Live chat

Guided product navigation

CRM

Contact center support management solution

Order mgmt

Tax calculation

Customer ratings & reviews

Site product search

Rich media (rotating images, video etc)

PIM

Mobile commerce

WCM

Email marketing

Web analytics

Few online retailers are entirely new to cloud-based solutions

“Do you currently use third-party (vendor) products to provide any of the following eCommerce related functions on your site”




And thus confidence in moving everything to the cloud is increasing

30

“Which of the following types of eCommerce solution is/did your company considering/consider for inclusion in your selection process for a new eCommerce platform?”

41%

41%

49%

49%

56%

76%

Open-Source eCommerce solution, managed andsupported by a services provider or vendor

Cloud-based eCommerce solution

Licensed on-premise solution from a software vendor,managed in-house

Open-Source eCommerce solution managed in-house

Licensed on-premise solution from a software vendor,managed and supported by a services provider or…

Home-grown solution developed and managed in-house




22%

39%

44%

50%

56%

56%

61%

67%

72%

78%

Our TCO analysis did not favor cloud basedsolutions

The costs of cloud are higher than with on-premise or build-in-house

We perceive that cloud eCommerce solutionsare not mature enough for our business

We were worried that cloud solutions are notcustomizable

We were worried about security and privacyissues

We were worried about integration with otherapplications

The migration to cloud based applications will bea lengthy and complex process

The pricing of cloud solutions is complicated ordidn't fit our business model

We were worried about scalability

We were worried about long-term vendor lock-inwith cloud

31

“Thinking about cloud-based eCommerce platforms, why did you dismiss these during your selection process?”

Although concerns about cloud-based solutions continue to linger




Agenda





Recommendations

32


Few firms can acquire enterprise software without developing a business case and TCO model

33

13%

82%

22%

72%

No, we are able to procureenterprise software without

Yes, this is a mandatory part of ourformal procurement process

Investment business case

3-5 year total cost of ownershipanalysis

“Does your corporate sourcing/procurement group mandate either of the following for enterprise software purchases?”




“Which of the following best describes the reality of the investment business case for your platform versus the predictions of your model?”

Unsurprisingly, the ROI from eCommerce technology investments is clear

1%

1%

9%

22%

31%

34%

We have never measured the ROI versus theanalysis developed during selection

The ROI has been significantly lower than ouranalysis predicted

The ROI has been lower than our analysispredicted

The ROI has been higher than our analysispredicted

The ROI has been in line with our analysispredications

The ROI has been significantly higher than ouranalysis predicted




But the actual TCO is often higher than online retailers had projected

35

“Which of the following best describes the reality of owning and operating your platform versus the predictions of your total cost of ownership analysis?”

1%

1%

3%

17%

26%

50%

The actual cost of ownership has beensignificantly lower than our analysis predicted

We have never measured the real cost ofownership versus the analysis developed

during selection

The actual cost of ownership has been lowerthan our analysis predicted

The actual cost of ownership has beensignificantly higher than our analysis

predicted

The actual cost of ownership has been higherthan our analysis predicted

The actual cost of ownership has been in linewith our analysis predications




So what’s going wrong?


21%

23%

25%

26%

28%

37%

39%

25%

28%

29%

24%

26%

27%

40%

42%

42%

42%

42%

44%

47%

23%

27%

28%

38%

51%

52%

37%

56%

37%

35%

32%

39%

33%

35%

34%

32%

33%

36%

30%

37%

30%

31%

34%

37%

33%

30%

30%

29%

29%

38%

34%

27%

20%

16%

35%

35%

34%

15%

21%

32%

17%

19%

17%

36%

16%

16%

22%

22%

18%

17%

17%

18%

37%

38%

22%

17%

12%

19%

19%

3%

1%

3%

4%

6%

4%

6%

21%

19%

24%

1%

26%

6%

4%

3%

4%

3%

4%

3%

8%

4%

20%

5%

3%

2%

Scalability

Security

Capacity

Opportunity

Reliability and availability

Extensibility

Interoperability

Ongoing development

Platform upgrades

IT support and development headcount training

Annual power consumption

Annual platform monitoring and support

Annual hardware leases

Annual infrastructure and server upgrades

Annual ISP/bandwidth rental

Annual Hardware repairs and replacement

Annual data backups

Annual recurring/maintenance fees for eCommerce platform

Annual disaster recovery

Annual recurring/maintenance fees for OS's, RMDB's, app servers etc

Facility upgrades

Additional software license costs for deploying new commerce sites

Additional software licenses to support growth

Hardware acquisitions

Software licensing for eCommerce platform

Software licensing for OS's, RMDB's, app servers etc

We already use in ourTCO analysisCritical

Nice to have

Not important

Initial costs

ongoing

annual

infrastructure

and software

costs

operations,

training and

support costs

opportunity

costs and

risk

mitigation

costs




Agenda


Online retailers seek nimble, open & cost effective solutions



Recommendations

38

#1 Don’t get stuck in the CAPEX ditch

#2 Factor in the hidden costs

#3 Encourage cross-functional ownership of the TCO model

#4 Recognize that TCO is not always the be-all and end-all. Agility is key

PETER SHELDON

[email protected]

blogs.forrester.com/peter_sheldon

@peter_sheldon

Thank you

Documents

Demandware tco webinar final 12122012