SaaS or Open-Source? Which is Best for a Growing Business?

There are so many ecommerce platforms available in the market today that it can be challenging to get started. When trying to find the ideal platform for your business — determining what type best suits your organization will significantly narrow down your options. This post discusses the two software models that most platforms fall into, Software-as-a-Service (SaaS) and open source.

Software-as-a-Service or open source platforms. Which are better for a growing business?

Software-as-a-service (SaaS) platforms
Open-source ecommerce architecture

Software-as-a-Service (SaaS)

SaaS models are an extremely popular route in developing ecommerce sites. At the core, these are pre-built, configurable tools that allow you to choose from a massive list of features and functionality. You can turn them on or off and access the use of this platform model by paying an annual fee and a percentage of sales revenue on all transactions.

Example: BigCommerce*, Shopify, WooCommerce, Volusion, Squarespace

* BigCommerce can be used as a commerce-led architecture; however, unlike the other platforms listed, 90% of BigCommerce platform data is exposed to APIs!

The SaaS model offers precisely what many companies need in terms of ecommerce. You get:

A prescribed and provided future development path
New features released on a planned schedule
Security updates on a planned schedule
Decommissioning schedule of in-use modules
An external development team that is self-sufficient
Plenty of feature-rich tools, widgets and extensions to pick from, right off the shelf
A component in a suite of web tools that will be required to marry products, content and database tools together
A powerful and hands-off hosting environment

Best suited for

What type of customer is best suited for a predetermined roadmap and technical path from a SaaS provider? This model fits customers that don't want to be too closely involved in the features or functions of their site and don't have many (or any) unique products and or external integrations. This is a set-it-and-forget-it model that works well for many businesses.

SaaS tends to be most popular for businesses in the startup and expansion phases of growth (typically the first three years). Companies in these stages are generally cost-conscious, have a lower budget for IT and are focused on stabilizing the business. A SaaS ecommerce model makes a lot of sense since cost and implementation are straightforward, and the service provider fully manages the underlying platform.

Open source platforms

So, what's the alternative to SaaS? Are you assuming it's a large in-house development team working around the clock on a self-hosted home-brew masterpiece? That was a common occurrence in the early 2000s, and many organizations are still dragging along, but there's something else out there: Open-source ecommerce.

What's open source? It's license-free, owner-free code bundled into modules, written by a community of developers distributed worldwide and donated to a central hub for use by any person. It provides community-built tools and components, neatly organized in a group pile that programs can grab, install and modify in any fashion, for free. It's marked by free redistribution and license-free implementation.

Example: Drupal Commerce

What type of customers and ecommerce stores use this methodology of development? Any business that:

Needs to make their own development roadmap due to unique products or large/multiple integrations
Doesn't want to pay annual rental fees and share their profits per sale
Knows the importance of owning their customer data and hosting
Wants to innovate their customer experience to gain a competitive advantage

With open source, you get:

A completely open development path and roadmap – you list the features and integrations you want to release to your site, and your internal development team or partner agency uses open source modules as a base to customize and build these tools
New features and integrations only needed by your company released on your planned schedule
Security updates on a planned schedule specific to your site (no waiting for platform-based updates), your hosting provider and your business cycle
The community provides free security patches and updates — you're notified of them automatically in the backend of your site
The opportunity to invest in the initial planning, design, build, and launch of your site
100% ownership of your sales — no revenue share model
Choice in your hosting provider; keep it in-house or use managed hosting for 24/7 emergency support and PCI compliance
100% ownership of your investment, site and all of your code
The ability for In-house developers and external developers to work on your site
A choice between pre-made features/integrations and custom functionality
A single source of data to update products, content, stock, and inventory, and complete shipping and fulfillment

Best suited for

What type of customer is best suited for a highly flexible and customizable open source ecommerce platform? Open source is uniquely designed for custom integrations, automation, and data sharing instantly with any number of other software components within a business commerce architecture. This model fits customers who either want or have a specific need to control their development path fully.

Open source is more popular with established and mature businesses. These businesses tend to have a higher technology budget and are at a point where investing in the efficiency of their ecommerce operation for scaling is a high priority. Many of these businesses may have started with a SaaS platform. Still, platform limitations and functionality requirements have surfaced, which can only be solved by replatforming a more flexible software model.

While you don't typically see new businesses adopting open source right away, some businesses may still start with an open source platform if they require non-standard customer experiences, integrations with new and legacy systems, or other unique requirements not served by the "most common use case" SaaS model.

Which should you choose?

Each platform model has merit. While many companies value being in charge, they don't realize the time and investment required to make this a reality. If your company doesn't put a premium value on the web as a revenue stream but knows that you "have to have an ecommerce site, it's expected," SaaS is the first avenue to explore. On the other hand, if the web is your leading portal to customers' pocketbooks, think about the value in driving the site's outcomes and customer experience, feature by feature; open source may be best for you.

Ultimately, you can choose the platform model that works best for your company now and then change your mind later on. But wait, isn't it expensive to change later? It can be, but this is where I introduce the concept of your "commerce architecture."

Your ecommerce platform is just one software component within the ecosystem of software used to run your business — your ERP's, CRM's, OMS's, PIM's, marketing suites, analytics and reporting, etc. Your ecommerce platform and all of these other components together make up your commerce architecture. What allows an ecommerce business to scale and become successful truly is how well all of these systems work together, talking to one another and passing data between them efficiently. As a business grows, its commerce architecture becomes more and more important. Any of the software you use may potentially have limitations that will require that it be swapped out with something different in the future. This isn't a bad thing. In fact, by focusing on your architecture and making these necessary changes as it makes sense to do so, you're enabling your business to continue to grow and scale efficiently to higher levels. This swapping of software may one day include your ecommerce platform. But remember, this is all for the betterment of your commerce architecture, which should really be your focus.

That's a lot to think about, I know. How can you make this platform decision now? Well, there are a few different ways. The more you know about your business's technical goals and your overall commerce architecture, the easier the decision is to make. If you need help, contacting a digital commerce consultancy like Acro Commerce will guarantee that you're on the right track. This is our expertise, and we're more than happy to offer guidance.

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