The Advantages of Outsourcing an Infrastructure to an ECISP

written by: John Davidson; article published: year 2006, month 08;


In: Root » Internet » Affiliates and Ecommerce » The Advantages of Outsourcing an Infrastructure to an ECISP

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Thanks to the new ECISP architecture, many companies can for the first time sustainably conduct e-commerce while selling less than $594 million annually online. With dramatically lower up-front costs, predictable ongoing fees, and guaranteed operational reliability, the ECISP architecture equips offline companies with the confidence that their online business will succeed.

Better Return on Investment

The ECISP architecture enables profitable e-commerce at one tenth the revenues of those required by traditional buy/build approaches. Based on industry averages for transaction values and operating costs, branded apparel manufacturers and multicategory retailers could achieve profitability at between $22 million and $24 million in online sales, if operating on an Escalate e-commerce platform. Even multicategory pure-plays could hit profitability at $32 million in sales. These compare to the $84 million to $2.3 billion breakeven estimates for the traditional architecture discussed earlier. Best of all, companies earn a far higher return on investment when using an ECISP due to the low setup costs.

Focus and Decision-Making Improvement

With the ability to focus on profit drivers, the ECISP architecture enables companies to outsource less important “context” technology functions (customization, integration, maintenance) while owning “core” business functions (branding, merchandising, service). Companies typically require at most one IT employee to interface with their ECISP provider. In fact, most companies require just 8 to 12 employees to run their entire online business, as compared to staffing averages for those who build/own (76 for store-based retailers and 90 for pure-plays). With an ECISP, employees focus on core business functions, including marketing, merchandising, and content management—not the technology.

Third-Party Service Relationships and Management of Integration Reduction

When using an ECISP, companies may require as few as one additional e-commerce relationship, that with a Web design firm. The ECISP translates the design work into a functioning Web storefront, thereby simplifying even that relationship. Some companies will also choose to hire a third-party consulting firm to perform implementation on the ECISP architecture.

Having preintegrated all other third-party applications and services, the ECISP ensures ongoing quality of performance, freeing the client to focus on running the business. For example, should a client desire to outsource customer service, the ECISP recommends one or more providers based on the client’s specific requirements, from the service providers that have already been integrated. The ECISP handles ongoing service provider integration, data transmission, billing, and quality monitoring. The client focuses on the real business drivers: service policies and representative training.

Solution Dynamics

Finally, the dynamic solution here is the continuous upgrading and addition of new functionality. By managing a single, multitenant architecture, ECISPs can continuously enhance applications, features, and functionality for all clients simultaneously. An analogy can be drawn to telephone companies (telcos). When a telco adds a new feature like call waiting, the telco can immediately make it available to any customer on their network. Similarly, as the ECISP adds a new feature like digital gift certificates, every client can receive it on their site. And, because ECISPs must continuously innovate on behalf of their broad network of clients, each individual company can expect frequent platform improvements that keep them ahead of their competition.

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