Magento or SaaS? What should you choose?

Michiel Bestebroer -

We are approached daily by (e)retailers with questions. About if they have to do the migration themselves? The costs of their current platform are too high and adaptability is too limited. Should they continue on the path they have taken, which they increasingly notice is a bumpy road? So what next step should they choose? I am talking about owners of Magento webshops, who are increasingly hesitating and considering new alternatives. Alternatives such as SaaS e-commerce platforms, which we now call “the new reality”.

The SaaS phenomenon

A phenomenon that has emerged that has changed the software industry at a speed is: SaaS (software as a service). SaaS has proven itself, and friend and foe agree that SaaS is a strong model that will largely replace the old software world. Magento, on the other hand, has not adapted to this development. I see Magento as an example of an old world software platform. Not because the software is old, but because the model behind it is outdated. Which e-commerce solution should (e)retailers choose? Are there any reasons to invest (again) in Magento? Or is it more sensible to opt for a SaaS platform? Or are there other options?

Magento's model

It has been almost 10 years since the first version of Magento came out. In the years that followed, Magento proved to meet a huge demand in (mainly) the middle segment. Except for custom-built webshops, there were no serious alternatives and the growth of e-commerce was turbulent. Magento's market share even climbed to about 30% in 2015. These are without a doubt impressive numbers. However, I see huge problems in Magento's model. So big, in fact, that Magento can get into trouble faster than we think.

Have a webshop built (or finished)

In the Magento model, every company with e-commerce ambitions must have their own webshop built or completed. Although there is a starting point via open source, you will not achieve much with it. Specifications are drawn up, which are translated into a webshop solution by a selected web builder. This involves a serious investment and a process that can take between 6 and 12 months. The length of that process is partly dictated by bugs and problems that the webshop owner must solve together with the web developer.

After delivery, you will have to pay for all further development themselves. The quality of the end product (the webshop) is in many cases mediocre, with positive exceptions. And a very difficult point: when a new Magento version is released, you have to migrate. Such a migration is almost impossible to do correct. With the release of Magento 2, this is the order of the day. Webshops that have been around for 3-5 years inevitably run into this. The intended “freedom” that open source should offer, for example through the possibility to transfer source code to another builder, appears to hardly exist in practice. After all, it is difficult, and usually impossible for a new builder to take over the work of another. Source code is copyrighted for a reason: the builder's “thinking” is woven into it, and everyone thinks differently. In many cases, the choice is then made to rebuild everything. An expensive hobby and ineffective.

The point with Magento is not whether or not you can build a good webshop with it. The point is that the underlying business and technical model is not correct, and that the architecture is not future-proof. There are now better models, such as SaaS.

The model of SaaS platforms

SaaS e-commerce platforms, such as NextChapter's, are set up completely different. The old world drawbacks, as outlined for Magento, no longer exist in SaaS. Our CTO Rogier Bestebroer recently described the essence of a SaaS e-commerce platform in a blog:

“In the SaaS model, functionalities are developed centrally and the customer base that uses it is large. This means that every function is tested by the entire customer base. Precisely because the customer base is large, a lot of attention is paid to security and performance and the best and latest techniques are always used. Bugs no longer exist and if they do, they are immediately fixed and automatically released, often within the hour. Without additional costs, because these are covered within the license. Our customers can fully focus on their business and marketing.”

SaaS: quality and innovation

Webshops that use other systems (such as ERP, stock, loyalty, checkout, etc.) can link their systems to the SaaS platform. Many integrations are already standard within SaaS platforms and other connections can be made via the API layer. This creates a super powerful model: the platform is the robust basis, and the flexibility for a total solution is still unlimited.

In a SaaS platform it mainly revolves around 2 things: quality and innovation
The quality must be continuously guaranteed, otherwise the platform has no right to exist. This places high demands on the developers, who have to make more or less perfect software. To illustrate: our own NextChapter platform is error-free. The new reality!

Innovation is the driving force behind a good SaaS platform. Because of the central model, there is an enormous focus on further development. Where we used to work in our internet agency to put out fires, we are now building innovations. And our customers are no longer involved in guiding bug fix processes, but with entrepreneurship. Determining and adjusting the strategy, marketing and running of a successful webshop. Meanwhile, the SaaS platform takes care of new releases, updates, maintenance, upscaling, etc., without the customers noticing. And hosanna – migrations no longer exist!

The total cost of ownership (TCO) with a SaaS platform is much lower than with a Magento solution. The platform is cheaper, the time-to-market is shorter, the organization saves a lot of effort and the quality of the final solution is high.

Will SaaS platforms replace Magento?

SaaS is becoming the new reality worldwide, and in the entire software industry. SaaS e-commerce platforms have matured rapidly in recent years and have rapidly developed into a full-fledged counterpart to Magento and DIY solutions. If you pay attention, you will see that SaaS e-commerce platforms are springing up like mushrooms. Not only in the US, but certainly also in Europe and even within the Netherlands. At the same time, no new open source providers are added. This observation makes something very clear: the landscape of e-commerce solutions is changing rapidly. Is Magento still relevant? For companies that work with it, certainly. But for companies that are faced with a new choice, I would say that you should not start again. Everyone can choose for themselves, luckily. But I would be very curious about the arguments for not opting for a SaaS platform, but for a Magento solution.

High TCO

Which (e)retailer is still interested in webshop construction processes, versions and migrations that are associated with a high TCO? There may be concerns about source code ownership or the multitenant databases. Concerns, which often have more to do with emotion than with reason, because ownership of source code is irrelevant (but continuity is very important) and the multi-tenant databases must be extremely well secured, which is a selection criterion when choosing a good SaaS platform.

Are there any other good alternatives? For (e)retailers with "conventional" e-commerce wishes, my position would be that there are no other good alternatives than a mature SaaS platform. Of course there are cases in which a custom solution is unavoidable – there will always be a market for this and high-quality web builders can specialize in this.

Our roots

Before Rogier and I came up with NextChapter, we were a traditional webshop builder ourselves. For years we worked according to the methods we now call the old world. We are very proud of that period and have learned everything we apply now. But we recognized that the old models were not future-proof. I can't imagine going back to that period. We are now making customers happy with our SaaS platform. We are far, but never ready. Innovations are always necessary. And the massive focus we have now is the best thing that's happened to us in years.

The future!

I am very curious about the further developments around Magento, SaaS platforms and possible other alternatives. What Magento has achieved in 10 years is a major achievement within the international eCommerce industry. But the clock is ticking. How long will this last? Our plans for the future are well advanced. NextChapter has to become one of the best omnichannel commerce platforms in Europe. Our train is running at full speed and everyone is welcome to board. Would you like to talk to us? Do you want to brainstorm on this topic? Let's talk.