In the long line of decisions that have to be made in order for an online retail business to succeed, which ecommerce platform to opt for is right up there in terms of importance.

There’s also a decision that needs to be made around how you host this platform.

One route is the on-premise option. This sees a business host and manage their ecommerce platform on-premise using internal resources.

Another is software-as-a-service, also referred to as SaaS. This is where an external party delivers hosting and backend management on the retailer’s behalf. These service providers can take much of the burden off the retailer.

Both may strike you as having their benefits, but a decision like this requires careful consideration and research as to what’s best for your business.

We’ve outlined what the benefits of each approach are, how they compare and what might serve your business best.

Cost

Any savvy business decision-maker is going to look at cost as a major factor. There are always limits and considerations where money is concerned, and nobody wants to pay over the odds for anything.

When it comes to an on-premise ecommerce platform, costs would include things like licensing, infrastructure, development, support and the hiring of technical staff.

The big cost factor for on-premise is maintenance. Forrester has estimated that 80% of spending around on-premise is on maintenance, meaning only a fifth is spent on new projects and plans.

One major benefit of SaaS is that less expenditure is likely.

There are value-based fees, which will increase as you grow, and there are costs around development, design and app integration for example. But over a period of four years, Forbes has found SaaS can cost a business up to 50% less than on-premise alternatives.

This handy calculator from BigCommerce can help you get to grips with what costs you might be looking at.

Integration

From an integration standpoint, with an on-premise ecommerce platform, app integration will need to be handled either internally or within the development/design contract.

If internally is the go-to, a systems integrator will be required. If you don’t have one on your books, you need to hire one.

Historically speaking, on-premise systems have been viewed as generally easier to integrate. But modern SaaS platforms are now providing the APIs needed for easy integration. There’s obviously development time involved here too.

Customisation and Scalability

On-premise platforms do allow for high levels of customisation – provided the right team of people are working on it within your business.

And as your business grows, the licensing structure for on-premise platforms tend to be a fairly easy thing to grow with it. But getting hold of the servers required and the resources to accompany this growth is less straightforward.

With SaaS, in the customisation stakes, again it’s a case of at one time them being behind, but today the technology available allows for requisite customisation in most instances.

Scalability is a major advantage of the SaaS approach. SaaS ecommerce platforms are designed to cover any major peaks or rises you have, with ample resources available to cover all bases.

Security and Updates

Given how much personal data goes through a typical ecommerce website, ensuring top levels of security is an absolute must.

With on-premise, guaranteeing that the right levels of security are reached and any updates are made falls on your shoulders.

With SaaS however, the security and updates responsibility fall on the provider. That takes a huge weight off your shoulders.

Time to Market

With an SaaS build, the first stage is design and development. That means time to market can be drastically reduced.

An on-premise build requires a higher level of planning and preparation, with a potential need to bring in new resources to help achieve your aims. Time to market can therefore be markedly longer than an SaaS build.

Decisions, Decisions

Many of the barriers that at one point held SaaS back as a viable option for businesses are now no longer as inhibitive as they once were.

Areas such as customisation and integration offer more of a level playing field today, while lower costs, better scalability, fewer security worries and a shorter time to market are hugely advantageous.

This all means that for many businesses looking at their ecommerce platform options, the scale is starting to tip towards SaaS.