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Over the last two decades, the rise of ecommerce has revolutionised commerce. Any business that wants to be successful selling products and services online depends on its ecommerce platform. The decision facing many new companies today is whether to select an on-premise or a cloud-based ecommerce platform. Established companies that already have on-premise platforms must decide whether to move to the cloud at all. 

It’s a choice that not only dictates capital and operating budgets, but will also determine a company’s ability to grow and respond to market opportunities.

Let’s look at how on-premise and cloud ecommerce solutions stack up in terms of costs, scalability, and time to value.

Total Cost of Ownership

On-premise ecommerce solutions are installed locally on a company's hardware systems and managed by the IT staff. They typically involve large upfront investments to purchase the infrastructure—such as servers and facilities—needed to manage and maintain the software, as well as software licenses. Ongoing costs include hardware maintenance, data storage, security, backups, power and cooling, and software upgrades.

In addition, companies may incur costs associated with Payment Card Industry Data Security Standard (PCI DSS) compliance and meeting other regulatory standards to safeguard credit card and personal data. Companies may have to hire and train additional IT staff, too.

In contrast, cloud ecommerce software is provided as a service (thus the term software-as-a-service, or SaaS). The vendor hosts and manages the software and customers’ associated data in the Internet "cloud,” maintains the IT infrastructure, and is responsible for data security, distributing upgrades and bug fixes, and developing new features and enhancements. For the customer, initial costs are typically much lower because you simply implement the software to your requirements; users access it through a web browser interface over the Internet. Payment is a predictable, pay-as-you-go subscription model.

Ultimately, a cloud ecommerce solution allows your IT staff to focus on driving strategic initiatives and innovation, rather than spending their time on maintaining and managing on-premise systems.

Upgrades and Enhancements

On-premise systems work reliably enough—until the provider releases an update. At that point, IT must redeploy the software across the servers. The problem is that any customisations or integrations are tied to the existing software deployment, and they’ll be wiped out during an upgrade. Your IT team will have to re-implement them—or simply start re-customising from scratch. This can take a lot of resources in terms of time and IT staff, which is why many companies don’t upgrade at all and instead run out-of-date technology.

In contrast, cloud ecommerce providers are continually enhancing their solutions, so you can be sure you're always using the latest, most advanced version. Many cloud solution providers, like NetSuite, offer a multitenant architecture where a single instance of the application serves all customers, who receive the benefits of the vendor’s software development, including continuous and immediate access to the latest product upgrades. Previously implemented customisations automatically carry forward when the solution is updated.

Growth and Agility

The difficulty of system upgrades is just one of the ways in which an on-premise ecommerce solution can limit the growth of your business. Because it’s so hard to customise and extend them, traditional on-premise solutions can hamper your efforts to pursue the new market opportunities that would increase revenue.

Cloud ecommerce software offers clear advantages when you consider the speed with which you can deploy it and the time it takes to start realising value from it. Because your business doesn't have to worry about whether the IT infrastructure can support new initiatives, you can more quickly respond to market opportunities by quickly deploying additional sites for different business models (B2B and B2C), brands and countries, all on the same platform.

Cloud-based ecommerce software platforms are also easier to scale, giving you the flexibility to handle more customers as your business grows. If there’s a spike in your business—in response to seasonal demand or unexpected viral success, for example—cloud ecommerce software automatically adjusts and dynamically provisions additional resources to handle the surge. With an on-site ecommerce solution, you would need to provision additional hardware and purchase additional licenses.

What’s Right for Your Ecommerce Business?

Your business is unique, so take the time to consider how different ecommerce software deployment options will affect your company.

To learn more about SuiteCommerce and deploying a cloud-based ecommerce solution, visit us at