Bkw_small_headshot by Brian Walker

Open source eCommerce solutions are increasingly on the radar of eBusiness professionals interested in, and in need of, eCommerce platform technology. There are many drivers behind this interest — from the obvious ones of lower costs, to the desire for independence from vendors and increased resource flexibility. While in the past open source eCommerce solutions were often seen as appropriate for very small businesses, I know many industry observers will agree that in the last year, the buzz around open source eCommerce solutions like those from Magento, Apache OFBiz, and OXID eShop has really picked up steam.

We here at Forrester have looked into the realities of implementing these solutions in the context of a larger small-to-medium (SMB) or lower mid-market range eCommerce business to see how well open source eCommerce platforms are living up to their billing. We identified five core views on open source solutions that are commonly held by eBusiness professionals (which we have dubbed “promises”):

Promise No. 1: Open source software is less costly.
Promise No. 2: The same important core eCommerce features that I need are there.
Promise No. 3: I have more flexibility with open source.
Promise No. 4: I can leverage a community to drive innovation.
Promise No. 5: It will be easier to access resources and do so at a lower cost.

So what did we find after talking with many retailers, developers, and solution vendors? Here are two of those ‘promises’ explored:

Promise No. 1: Open source software is less costly

One of the fundamental attractions of open source software (OSS) is the presumed avoidance of expensive licensing, maintenance, or revenue share deals with vendors. Typically, this upfront and recurring capital expense is the focus when comparing open source and commercial applications. Often the professional services and maintenance costs are secondary.
Truth: You will avoid recurring and scaling software licensing and maintenance fees. Once the product is up and running and the base requirements are met, the costs will be in incremental professional services on an as-needed basis. Licensing, maintenance, or revenue share fees found in commercial products are eliminated. This is particularly compelling for the less mature business expecting to grow into its solution over time.

"The license cost is free. The software stack is a traditional AMP stack — so that was free. The box that it's running on is $5,000. It's not a beefy box, and it supports it just fine." (Project manager, small online retailer)

Myth: I can expect a lower total cost of ownership (TCO). The costs of open source projects are going to be compared with those of commercial applications, where the licensing and maintenance costs are identified upfront and there are predictable professional services costs to launch and integrate. The costs of the open source solution will of course lie in professional services fees or in the allocation of internal resources. Many find that the integration and custom development costs exceed expectations.

"The biggest component is capitalized cost of development. We wish we could get a quicker ramp-up than we did. Two good people took four weeks longer to really ramp up on it, and we've since done refactoring twice in 10 months." (Chief technology officer, small online retailer)
"From a return on investment (ROI) and TCO perspective, I honestly think it is a wash by the time you pay for the custom development needed to get you where you need to be. And you have the downside of the custom development. [The product] is too young. This may change in the future." (Project manager, Web design and development agency)
"The real downside is that it is expensive to host. I thought my cost would come down — it was, in fact, pretty comparable or even more than we would have spent on [a commercial product]. It's such a resource-intensive package; I would love to spend less on hosting costs." (eCommerce manager, small online retailer)

Promise No. 2: The same important core eCommerce features that I need are there.

A quick scan of sites using open source eCommerce platforms and a review of the available online information can lead one to expect that the features present in the leading open source solutions are the same as those found in many commercial applications.
Truth: Open source can provide an effective foundation, enabling focus on differentiation. Although open source eCommerce applications are immature, compared with many commercial applications, OSS can enable businesses to focus on differentiating features over time by providing them with core and commodity needs — such as basic promotions, site templates, as well as basic search, browse, and cart features. This differentiation has led to business results and to great customer experiences, even though this flexibility and extendibility can come at a cost (as can be seen in the aforementioned higher TCO).

"Having worked with a lot of platforms, I believe that it's not going to be right for everybody. You expect to pay for advanced functionality, and [it] has been able to get that base functionality out there for developers to work with. I'm very results-oriented — it's all that I really need. Our next challenges are driving more traffic and raising conversion rates." (eCommerce manager, small online retailer)
"We have been playing with it. Lately we have been splicing [it] with Flash, as an example of the flexibility, and we are finding that there are no limits." (Project manager, Web design and development agency)

Myth: Open source products contain all the basics. The products are evolving rapidly: Apache OFBiz, though currently geared toward enterprise resource planning (ERP), is ramping up the eCommerce capability, and Magento is little older than a year. Many commercial products have been maturing for years. Many of the core business tooling and site features — such as content management, search, and customer relationship management (CRM) — that midsize and enterprise online retailers and businesses expect may not be there (yet).

"I do not think [it] is the best eCommerce product, but it is a good development platform. In terms of elements that we were told were on the road map, our team went ahead and did them." (Vice president, eCommerce midsize multichannel retailer)
"The framework and the architecture are exactly what we need. There is flexibility to meet unique client requirements, while maintaining the core. But realistically the finished product is not quite to the scale of the midmarket. Some of it is there, but not at the level necessary. So we have had to build workarounds to meet the client needs." (Project manager, Web design and development agency.)

For our clients, I encourage you to read the full report here. In the report we have a set of criteria you should use to determine whether or not an open source solution is right for you — and, of course, also explore the other ‘promises’ as well in depth. And, as always, I also invite clients to contact us with further questions through inquiry.

While the open source eCommerce platforms may not be quite there yet, Forrester anticipates growing interest in eCommerce open source solutions in both North America and Europe based on discussions with retail and wholesale businesses exploring eCommerce platform solutions. This increasing trend is one that Forrester will continue to watch and evaluate.

We can only expect that the trend will intensify, based on further maturation in the products; evolution of enterprise services and support packages; as well as proven implementations at increased scale. Increased numbers of skilled and experienced resources and training programs will also help businesses take advantage of these open source applications. Commercial eCommerce applications, especially those focused on mid-market firms, will come under increasing pressure to provide value above and beyond that offered by open source solutions.

Thanks very much, Brian