Understanding the Reasons Behind Delayed Replatforming
In the fast-paced world of E-Commerce, businesses are continually seeking the best strategies to stay ahead of the competition. However, a noticeable trend has emerged where companies are increasingly hesitant to replatform, even when dissatisfied with their current E-Commerce solution. In this blog post, we'll explore the reasons behind this intriguing shift and shed light on the factors that contribute to delayed replatforming decisions as well as recommend which actions can be taken to accomplish the shift to a more suitable solution and manage this change in the best way possible.
1. Growing Replacement Cycles: A Double-Edged Sword
The traditional replacement cycles for E-Commerce platforms have undergone a significant transformation. Previously, businesses would replatform every four to six years, but this timeline has effectively doubled in recent times, stretching to eight to twelve years. The primary driving force behind this shift is the maturing market and a currently weak retail economy. As E-Commerce now constitutes a more significant portion of retail sales (40-60% or more), businesses are cautious about disrupting their operations and incurring substantial risks.
How to manage E-Commerce migration without disrupting the business?
This argument can be offset if an enterprise decides to replatform to a MACH (Microservices-based, API-first, Cloud-native and Headless) commerce platform as the replatforming can be done gradually, using a “strangler pattern” and without disrupting the business. You can read more about the migration process here.
2. Intangible Business Benefits of Replatforming
The decision to replatform hinges on the perceived benefits it offers for business growth. Surprisingly, when surveyed, only 14% of E-Commerce leaders believed that a new commerce platform could drive growth. Many businesses may favor investing in other areas with clearer ROI, such as personalization, mobile optimization, and site-layout/redesign. Delaying replatforming may make business sense in the short term, but it can hinder agility and innovation in the long run.
How to measure the impact of replatforming?
Starting from the cost perspective, you can calculate the costs of maintaining and upgrading your current monolithic solution and compare the estimated TCO for a new solution vs your status quo. This can provide you with the insights on possible savings.
When it comes to the top line of the business, you can research which business use cases can the new solution support that are not provided by your current solution and calculate how much more profit you could be making by, for example, launching different pricing, promotions, or improving processes in which you are losing revenue at the moment.
3. High Switching Costs and Legacy Platforms
Legacy e-commerce platforms, heavily customized and integrated into enterprise systems, present a significant obstacle to replatforming. While these platforms served as development environments in the past, they now pose challenges due to the complexity of switching or replicating integrations. Businesses are increasingly extending the life of legacy solutions by making them headless and API-exposed, but this approach comes at a high cost, impeding innovation and agility.
How to reduce the cost and time of replatforming?
The cost is significant but has to always be compared to the cost of doing nothing, which means supporting the current legacy solution and going through expensive and sometimes not even feasible to complete upgrades.
When it comes to the time of replatforming, hiring an experienced in replatforming agency can greatly increase the time-to-market. We have seen our partners completing full E-Commerce replatforming in as little as 12 weeks.
4. Resistance to Change and Existing Business Processes
Business processes often evolve around existing platforms, including their limitations. Transitioning to a new platform can lead to significant changes, requiring different skill sets and specialized vendors. Organizations may resist change due to the fear of disrupting established processes. Training and change management become crucial aspects of replatforming, but they are sometimes overlooked, leading to potential failures.
5. Conservative Tech Investment in a Challenging Economy
The retail economy in the US and Europe has faced challenges, with a shrinking retail market and consumers diverting spending to services like travel and dining out. This conservative economic climate encourages businesses to delay significant tech investments, including replatforming. However, this delay can eventually prove to be a tax on innovation and agility, limiting a company's ability to keep up with competitors and adapt to evolving customer expectations.
Conclusion
While the E-Commerce market has witnessed a shift towards specialist "point-solutions," the choice to delay replatforming is not without its trade-offs. Businesses must strike a balance between maintaining legacy systems and investing in a more agile and innovative tech stack. Incremental evolution, complemented by partnerships with specialist vendors, can pave the way for a smoother transition when the time is right for replatforming. As businesses mature and grow, embracing composable capabilities and API-first solutions will be essential to unlock their e-commerce potential in an ever-evolving market.
This blog post is inspired by an analysis provided by Brian Walker in his Cocktails & Commerce Newsletter in July 2023.
