Magento Webinar. July 18, 2013

Transcription

1 Magento Webinar July 18, 2013

2 Measuring the Business Impact of Your ecommerce Platform Introduction Market Overview Peter Sheldon, Forrester Principal Analyst The Total Economic Impact of the Magento Enterprise ecommerce Platform Michael Speyer, Forrester Principal Consultant Q&A Closing 2

3 Introduction: Many variables as you look at re-platforming, upgrading, or expanding your e-commerce platform Licensing Hosting and Infrastructure Initial Implementation Time to Market Maintenance and Upgrades Anticipated Revenue Lift and ROI Market Overview ecommerce and technology trends to consider as you review your plans and investments. Forrester Total Economic Impact A framework you can apply to assessing the cost, revenue and ROI of your ecommerce technology investments and the impact they will have on your business. 3

4 Introduction: Guest Speakers Peter Sheldon Forrester Principal Analyst Serving ebusiness & Channel Strategy Professionals Michael Speyer Forrester Principal Consultant Serving Sales Enablement Professionals 4

5 Measuring the Business Impact of Your ecommerce Platform Market Overview Total Economic Impact Study: Purpose and Methodology Key findings from the customer interviews Financial Model 2013 Forrester Research, Inc. Reproduction Prohibited 5

6 In case you missed it, ecommerce is on a tear 6

7 By 2017, 10% of total US retail spend will be online, hitting $370 billion 2013 Forrester Research, Inc. Reproduction Prohibited 7

8 These stories have become common place on retailer earning calls 2013 Forrester Research, Inc. Reproduction Prohibited 8

9 Two thirds of firms will increase spending on ecommerce technology in 2013 Source: Forrester Research, May 2013 Global ebusiness & Channel Strategy Professional Online Survey 9

10 Worryingly however, many retailers are running the show with legacy or homegrown ecommerce solutions

11 Almost a quarter of ecommerce sites are powered by home-grown technology Source: Forrester Research, May 2013 Global ebusiness & Channel Strategy Professional Online Survey 11

12 Omni-channel, mobile and content mgmt are top priorities for retailers in 2014 Source: Forrester Research, May 2013 Global ebusiness & Channel Strategy Professional Online Survey 12

13 The online channel today influences 40% of offline retail spend Source: Forrester Research, May 2013 Global ebusiness & Channel Strategy Professional Online Survey 13

14 The right ownership model for platform ownership often depends on online revenue 2013 Forrester Research, Inc. Reproduction Prohibited 14

15 There are pros and cons to consider evaluating ownership models 2013 Forrester Research, Inc. Reproduction Prohibited 15

16 Measuring the Business Impact of Your ecommerce Platform Market Overview Total Economic Impact Study: Purpose and Methodology Key findings from the customer interviews Financial model 2013 Forrester Research, Inc. Reproduction Prohibited 16

17 The Forrester TEI methodology is an established ROI framework focused on impact beyond costs. Framework and Components Options created Are there new opportunities created for the future? Cost People Process Technology Benefits Quantified value Defined metrics Flexibility (Options) Costs (Impact on Budget) Benefits (Impact on Business) RISK Total Economic Impact Source: August 4, 2008, The Total Economic Impact Methodology: A Foundation For Sound Technology Investments Forrester report Uncertainty Impact of assumptions Approach And Methodology Perform due diligence Conduct customer interviews Construct financial model Write case study 17

18 Measuring the Business Impact of Your ecommerce Platform Market Overview Total Economic Impact Study: Purpose and Methodology Key findings from the customer interviews Financial Model 2013 Forrester Research, Inc. Reproduction Prohibited 18

19 Interviewed five merchants with online revenues ranging from $10 million to $100 million A retailer of equipment, tools, and supplies. An online-only novelty fashion accessories retailer serving the US and EU markets. An online retailer of high-end furniture and home accessories products. A fashion jewelry and accessories merchant that offers collections curated and designed by in-house stylists. A retailer of luxury apparel, gifts, and accessories Forrester Research, Inc. Reproduction Prohibited 19

20 Magento Enterprise Edition adoption driven by shortcomings of current solutions Revenue loss and downtime triggered by high traffic Inability to support sophisticated online marketing activities Unfavorable economics associated with adding new functionality and updates to existing platforms 20

21 The composite organization used for the TEI analysis TEI analysis based on a composite of the interviewed companies. Characteristics of the composite organization are: Operates both brick-and-mortar stores and an ecommerce website and had $40 million in online sales. Challenges with its pre-magento ecommerce platform are: Inability to scale to handle large spikes in traffic, resulting in instability and downtime. Lack of features and flexibility necessary to support more sophisticated and frequent digital marketing efforts. Inability to quickly make changes to site content Forrester Research, Inc. Reproduction Prohibited 21

22 New ecommerce platform requirements and attributes Scalability To meet growing online traffic volumes Flexibility To easily and rapidly create custom landing pages, perform catalog updates and other management tasks Easy integration With back-office systems and external marketing services providers Rapid deployment To begin growing their online businesses 22

23 Qualitative benefits of Magento Enterprise Edition experienced by the interviewed merchants Increased scalability and stability to support increases in average daily orders from 2,000 per day to 10,000 per day Flexibility to enable a broad range of functional requirements Integration with 3 rd party marketing providers Enablement of custom business processes Rapid time-to-market Deployment times of 6-9 months. Variations due to project scope, resources used, scope changes. Increased levels of marketing activities Allowed the merchants to support more diverse and frequent marketing tactics Major contributor to the overall revenue uplift 2013 Forrester Research, Inc. Reproduction Prohibited 23

24 Measuring the Business Impact of Your ecommerce Platform Market Overview Total Economic Impact Study: Purpose and Methodology Key findings from the customer interviews Financial Model 2013 Forrester Research, Inc. Reproduction Prohibited 24

25 The financial model Accounts for all costs and benefits reported by the interviewed customer 3-year forward looking analysis Uses a 10% discount rate for Present Value and Net Present Value calculations All costs and benefits are adjusted for variance, uncertainty and risk as described in the TEI methodology 25

26 Costs included in the financial analysis License fees $98,206 for three production servers and one nonproduction server Professional services $324,000 for initial deployment $537,150 for ongoing support Internal labor $476,732 for initial deployment, ongoing maintenance, upgrades to back-end systems Hosting services $337,632 for bandwidth, server hosting, load balancing, content delivery network (CDN), and a firewall 26

27 Benefits included in the financial analysis ecommerce uplift attributable to the Magento platform $3,960, % of total revenue uplift is attributed directly to the Magento platform $147,719 for prior platform software license maintenance Costs avoided $350,533 for prior platform maintenance and upgrades $135,001 for software development when using prebuilt extensions from Magento Connect 27

28 Risks and drivers of variance in costs and benefits Incremental revenues will vary with each merchant s ability to effectively utilize Magento Enterprise Edition s features, its marketing effectiveness, and other activities that stimulate purchasing activity. The percentage of total revenue uplift attributable to the Magento platform also affect the final return on investment (ROI) value. Costs avoided for licensing and maintenance fees associated with the prior platform will vary with the type of platform used and the scale of the prior implementation. Magento licensing fees will vary with the number of servers and the level of support purchased. 28

29 Three Year Risk Adjusted Cash Flow Initial Year 1 Year 2 Year 3 Total PV Costs ($420,960) ($537,802) ($544,282) ($551,086) ($2,054,130) ($1,773,730) Benefits $1,413,400 $1,801,760 $2,422,672 $5,637,832 $4,594,156 Net Benefits ($420,960) $875,598 $1,257,478 $1,871,586 $3,583,702 $2,820,426 ROI 159% Payback Period 5.8 months $4,000,000 $3,500,000 $3,000,000 $2,500,000 $2,000,000 $1,500,000 $1,000,000 $500,000 $0 $500,000 $1,000,000 $2,422,672 $1,801,760 $1,413,400 Initial Year 1 Year 2 Year 3 ($420,960) ($537,802) ($544,282) ($551,086) Costs Benefits Payback 29

30 Thank you Peter Sheldon Michael Speyer 30

31 Measuring the Business Impact of Your ecommerce Platform Q&A 31

32 Magento Enterprise Edition ecommerce Platform and Ecosystem Solution Partners Hosting Partners Industry Partners 32

33 Magento Enterprise Edition ecommerce Platform and Ecosystem Thank you! Download the full TEI study magento.com/tei Talk to a Magento Sales Manager magento.com/product/enterprise-contact Or call