Gartner: Custom Development A Waste For Most Sites - InformationWeek

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5/11/2009
12:31 PM
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Gartner: Custom Development A Waste For Most Sites

Research firm says e-commerce operators are better off using boxed software and devoting savings to SEO and other marketing efforts.

IT staff for e-commerce companies can cut costs by up to 25% without hindering customers' online experiences, according to a recent Gartner research report.

Gartner has identified several ways to save on IT costs (registration and purchase required) and released estimated savings for e-commerce budgets, large and small.

Online businesses can save up to 35% on maintenance and license fees this year by using off-the-shelf products instead of custom-developed packages for search, product merchandising and management, and shopping cart management, Gartner found. While large companies with IT budgets of more than $1 million will see the most savings, smaller companies with IT budgets of less than $1 million can save up to 25% in the first year of using standard products, according to the report.

"Except for market leaders, such as Amazon and eBay, custom development is likely to be a waste of effort and money because it supports functions that do not enable a differentiated online customer experience," Gartner research VP Gene Alvarez said in a statement released Monday. "For example, a developer who supports a commodity function, such as shopping cart management, would be better to develop rich Internet shopping capabilities or improve site design for search engine optimization so that the site can rank higher in a Google-based search."

IT organizations developing rich Internet application Web 2.0 sales tools can scale back and focus on tools that lead to higher conversion rates, saving 5% to 10% this year, according to the report.

IT organizations should negotiate as much as possible when trying to buy e-commerce software or renew agreements for savings up to 50% on license fees this year, Gartner estimates. The report states that vendors will cling to prices during 2009 in an attempt to preserve margins, but they will offer substantial discounts to counteract longer sales cycles and more intense competition.

Finally, the report recommends eliminating redundant jobs and combining online and brick-and-mortar roles for personnel savings up to 15% in the first year and 5% in subsequent years.


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