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Pricing Enterprise E-commerce Services

Tuesday, July 6th, 2010

Enterprise-e-Commerce

The enterprise e-commerce space is broadly varied, and the boundaries constantly shifting. Features and capabilities only available to huge players just 10 years ago are now more affordable and available to SMBs around the world.

Sometimes just using the term ‘enterprise e-commerce,’ however, can be difficult or misleading. Is enterprise e-commerce the right term to use for a company with 10,000 SKUs, doing a few million dollars a year in online sales? In the event that they manage their suppliers, inventory, warehouse, and fulfillment using an integrated system, for example, I would say yes — this counts as ‘enterprise e-commerce.’ Although clearly no Amazon or Zappos, these companies and their systems take it far beyond the simple eBay auction or basic storefront.

At HotWax Media, we provide enterprise e-commerce consulting services. Our core services are based around Apache OFBiz, but we regularly find ourselves integrating with 3rd party systems like NetSuite, Endicia, and many others. One day it could be SAP with multiple users, and the next day it could be QuickBooks piloted by the business owner herself. The very nature of an enterprise e-commerce system suggests that the consulting services can be quite different from one client to the next, and we have certainly found this to be true. We can find ourselves building systems that are similar in fundamental intent for companies whose revenues are separated by two orders of magnitude.

So the question comes up, what is the right way to go about pricing these services? Constructive Cost Model? (http://en.wikipedia.org/wiki/COCOMO) Probably not. Simple menu of services with some attention to psychology? (http://bit.ly/NLo3V) That’s better because it is more easily understood by the client, but it is not always easy to do on our end.

In fact, when doing unique service projects, you might say that with a fixed price, someone always loses. (http://bit.ly/9E0bbP) Either the vendor pads the cost to cover any surprises, and he wins, or the vendor fails to anticipate (and build in money to cover) the surprises, and he loses. The only thing for certain is that those surprises will come up, and someone will have to pay for them.

The next option is straight hourly work. This should be great for the vendor, but can lead to problems of its own in terms of project and cost management. When vendors are working on a straight hourly arrangement, they have less incentive to plan. While the idea of paying the vendor for his time is fair and honest, hourly projects (that lack planning) can end up costing more than the customer originally planned, and the projects can look expensive in hindsight. When the project is complete, lacking adequate planning, the tendency is to look back and say “All they wanted was X and it cost them Y!?” The problem is that the curvy, flexible path made possible by the hourly arrangement is overlooked in that simple analysis. By the way, this happens all the time with contractors, attorneys, and everyone else who offers services for an hourly rate; it’s not just software developers.

So this brings me to my method of choice for pricing projects: fixed team project planning and pricing. This approach can allow for the best of both worlds. In practice this ends up looking a lot like phased pricing, except that the cost does not vary month to month (except by mutual agreement). Rather, the dedicated team comes at a predictable expense and works off of a well formed project plan. (The creation of the plan is paid work as well, and can be more or less detailed depending on the size of the project and the client’s preference.) Then, the flexibility that real life requires comes in the form of more or less work being completed in each month (or phase).

So we can say, “We have a list of 10 items. We can be very confident that we will complete 5 of them, somewhat confident that we will complete 7 of them, and only slightly confident that we will complete all 10 of them.” At the end of each month, we reassess our plan and make adjustments based team velocity and client priority, leveraging the things we have learned while working on the implementation.

In conclusion: we do a lot of deals each year, and our approach to pricing varies a bit job to job. But whenever possible, we like this fixed team approach. It gives the client and provider both a fair deal, and encourages all parties to plan responsibly. We encourage you to try it out; if you would like us to help you with your enterprise e-commerce project using our fixed team approach, give us a call today!

Mike Bates is CEO at HotWax Media and will join other HotWax Media employees and advisors in periodically posting thoughts here related to OFBiz, eCommerce, ERP, and related topics.
Mike Bates - OFBiz Expert

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Posted in Apache OFBiz, Apache OFBiz Development, Enterprise eCommerce, OFBiz, OFBiz eCommerce | 4 Comments »

Prototype Tutorial – Auto FAQs with Prototype JS

Friday, June 25th, 2010

Enterprise eCommerce - Auto FAQ Prototype

Here at HotWax Media, we build a lot of enterprise eCommerce websites. One common element in most eCommerce websites is a place to list Facts and Questions about the site, its products and its policies (FAQs). I don’t know about you, but I hate coding FAQ pages. The redundant process of having to write out the summary table at the top with the list of questions, and then re-write those same questions all over again below with the answers to the questions just drives me nuts. Not to mention that this redundant writing and re-writing of code almost always gets messed up a few months down the road when your very well meaning client attempts to add some new questions and answers to the list and unintentionally breaks the Table of Contents by not adding the proper ID/anchor relationship to each link.

Time to stop the insanity. Today I am going to show you how a quick Prototype JS script can automatically generate your FAQ summary links for you by parsing the DOM for the appropriate links. Let’s get started.

First off, we need our list of questions, in standard Definition List format:

?View Code HTML
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<dl id="faqs">
<dt><a class="question">What is this?</a></dt>
<dd>This is standard definition list markup</dd>
<dt><a class="question">What is the purpose of this example?</a></dt>
<dd>To show you how easy it is to generate your FAQ link summary with a little bit of javascript</dd>
<dt><a class="question">Who should I contact for all of my enterprise eCommerce needs?</a></dt>
<dd>HotWax Media, of course.</dd>
</dl>

In the above list, each question lives inside an anchor tag with a class name of “question”. There is also an unordered list above the questions with an ID of “questions”. This is important for the next step. Now, as they say on MTV Cribs, “This is where the magic happens”.

?View Code JAVASCRIPT
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document.observe('dom:loaded', function(){
    $$('a.question').each(function(ele){
        var id = ele.innerHTML.unescapeHTML().gsub(/[^\w- ]/, '').gsub(/[\s-]+/, '-').toLowerCase();
        ele.writeAttribute({id: id});
        var link = new Element('a', {href: '#'+id})
            .update(ele.innerHTML)
            .observe('click', function(event){
                event.stop();
                Effect.ScrollTo(ele);
            });
        $('questions').insert(new Element('li').insert(link));
    });
});

Let’s break down the code above. First, using the $$ shortcut method in Prototype, we loop through each “question”, read the innerHTML of the tag, strip out the whitespace between each word, and replace the spaces with dashes. This string for each link is given a variable name of “id”.

Then we assign this variable back to the link and write it in to the link as an ID attribute.

Next, we create a new link element for each “question”, giving each href the “id” variable, prepended by a # sign.

Finally, we go to our unordered list and create a list item for each new link, and then insert that link inside of it.

Now, when the page is rendered, our questions markup will look like this:

?View Code HTML
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<ul id="questions">
	<li><a href="#what-is-this">What is this?</a></li>
	<li><a href="#what-is-the-purpose-of-this-example">What is the purpose of this example?</a></li>
	<li><a href="#who-should-i-contact-for-all-of-my-ofbiz-needs">Who should I contact for all of my OFBiz needs?</a></li>
</ul>
<dl id="faqs">
<dt><a id="what-is-this" class="question">What is this?</a></dt>
<dd>This is standard definition list markup</dd>
<dt><a id="what-is-the-purpose-of-this-example" class="question">What is the purpose of this example?</a></dt>
<dd>To show you how easy it is to generate your FAQ link summary with a little bit of javascript</dd>
<dt><a id="who-should-i-contact-for-all-of-my-ofbiz-needs" class="question">Who should I contact for all of my OFBiz needs?</a></dt>
<dd>HotWax Media, of course.</dd>
</dl>

Now, we just add a little CSS to style our FAQs, and we are all done.

?View Code CSS
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/***********************************************
FAQs
***********************************************/
#questions {margin:0}
#questions li {padding:0 0 5px;}
#questions li a {color:#333}
#questions li a:hover {color:#000}
 
#faqs dt {margin:30px 0 0;}
#faqs dt a {color:#333; font-size:15px}
#faqs dd {border-bottom:1px solid #ddd; margin:0; padding:0 30px 30px 0; position:relative;}
#faqs dd span {position:absolute; bottom:0; right:0; color:#ccc;}
#faqs dd span a {font-weight:normal; font-size:11px;}

That’s it folks. Combine this with the Scriptaculous Effect.ScrollTo function to eliminate the jerky page jump and you a have beautiful, seamless user experience that anyone can appreciate. Checkout out the finished product in action.

- Ryan

Ryan Foster is a designer and OFBiz developer for HotWax Media.

Ryan Foster - OfBiz Developer

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Posted in HotWax Media, OFBiz Development, Prototype Tutorials | No Comments »

eCommerce Software Market Musing

Friday, May 28th, 2010

eCommerce Software Market
B2C Partners estimates the size of the total US market for online retail software last year to be $415 million. (http://bit.ly/NSzsg)) That seems too small to me.

B2C Partners uses the following method for arriving at their estimate:
$ 166 billion online revenue (2008)
A. x 3% of revenue for development & technology
B. x 50% of dev/tech for site improvement (v. support)
C. x 50% of eCommerce platforms third party (v. in-house)
D. x 33.3% of Year 1 costs on software (v. services to deploy)

(I have added the A. – D. line labels for ease of reference.)

Let’s start with A. — the percentage of revenue spent on software development and technology. According to B2C Partner’s very respectable sources (SORO Report 2007, Forrester Research and Shop.org) the range is actually 3% – 5%, and I suppose using 5% would have a large impact. In fact, it pushes that $415 million dollar market size up to over $690 million, which I like better.

Moving on to B., apart from the difficulty that sometimes comes with distinguishing between improvements and support, I do not see any big problems there.

When we get to C. and D., however, things start to get interesting. At HotWax Media we have an enterprise software services business that specializes in Apache OFBiz, which is a suite of open source enterprise e-commerce and ERP applications. As we have worked with a variety of businesses on many different types of projects over the years, we have found that some customers think of Apache OFBiz as a 3rd party platform, while others think of OFBiz as the root of their own in-house platform. Both concepts can work out great, and it generally depends on the client’s internal technology staffing as to whether the client’s behaviors are more inline with a traditional 3rd party platform project, or more what we would expect with a traditional in-house platform project. We regularly see projects that blur the line.

As OFBiz implementation experts, I suspect that this would have the effect of making the market relatively larger from our perspective (given that we could theoretically count revenue from the 50% who implement a 3rd party platform as well as the other 50% who use an “in-house” system). Great, we’ll take that extra $2 billion dollars in market opportunity!

Then there is the question of line D., which divides the software spend by 1/3 to differentiate between the cost of licensing versus services to deploy. Apache OFBiz is free and open source, so our service engagement customers do not need to think about it this way (nor do they need to sacrifice 1/3 of their year 1 budget on licensing fees). So for HotWax Media’s enterprise software implementation services business, we can really leave line D. out of the equation, since there are no licensing fees.

So when we add in the extra $2 billion to cover the 3rd party versus in-house distinction, and we refrain from pulling out the 33.3% to represent licensing fees, using the 5% of revenue number mentioned above, our enterprise e-commerce and ERP online retail software services market size is actually well north of $4 billion. (And that’s just in retail.) Quite a big difference from $415 million estimate with which we began.

I see a 3-part moral of the story:

1. a system has an advantage if it offers the client the options of in-house development or 3rd party reliance;

2. software that does not require a licensing fee can present a huge opportunity for increased returns on project investment; and

3. vendors that are well positioned to deliver implementation services on open source enterprise systems have a lot of budget to go out and win if they can make the case effectively to online retail business owners and corporate CIOs!

Author’s note: I realize that over the course of the post I have transitioned from “online retail software” market size to “online retail software services” market size, but I hope the transition was instructive in some ways, especially as it relates to the potential value in using open source software to reduce or eliminate licensing fees.

Mike Bates is CEO at HotWax Media and will join other HotWax Media employees and advisors in periodically posting thoughts here related to OFBiz, eCommerce, ERP, and related topics.
Mike Bates - OFBiz Expert

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Posted in Apache OFBiz, Enterprise eCommerce, HotWax Media | No Comments »

OFBiz Tutorial – Order Entry and Ship Groups

Friday, April 16th, 2010

A robust enterprise eCommerce system needs to handle manual order entries that are sometimes complex. In this OFBiz Tutorial we will go over how this works in OFBiz.

Example:

An order clerk has to place a sales order on behalf of a customer (order received by fax, by mail, by phone etc..); the order contains several items and the customer asks that the order is shipped with two (or more) shipments with different delivery dates and/or to different postal addresses and/or with different shipment methods or shipping instructions; the customer clearly specify the items to be assigned to each shipment.

How can you do this in OFBiz?

The order clerk can easily place an order like this by defining multiple ship groups: ship groups represent a way to group into different sets the items of an order and each ship group has its own shipping options, delivery dates, shipment address. Ship groups are created during order checkout.

For example, let’s suppose that the order clerk has to place an order for 10 units of the product with id WG-1111 and 5 units of the product with id GZ-1000.

The customer needs immediately 5 units of WG-1111 and prefers to pay for the quickest shipment method available, while all the 5 units of GZ-1000 and the remaining 5 units of WG-1111 (together with some promotional items) can wait and so they will be shipped using a cheaper and slower shipping method later.

Let’s do this step by step.

The first part is easy because it is exactly like placing a standard order:

go to the order entry screen and enter the customer id

sg1

add to the cart 10 units of WG-1111 and 5 units of GZ-1000 (don’t worry about the ship groups now, you will do this at checkout); if you are running the standard OFBiz demo you will also get some promotional items

sg2

now we are ready for the checkout and we click on the “Finalize Order” button;

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the first checkout screen let us select the shipment address and this is where we add the second ship group that we need by clicking on the “New Ship Group” button:

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the page will reload with two ship group sections; set the shipment address for each of them and click on the “Continue” button

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in the next screen you will have the ability to move the items from one ship group to the other; initially all the items will be in the first ship group and the second one will be empty

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using the drop down boxes and the quantity field near each item you can move the items to the second ship group

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now click on the “Continue” button, the next screen will let you set the shipment method and options for each ship group; just make sure you select the proper method for each group;

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The next steps are exactly the same as a standard order, so complete the checkout and confirm the order.

The exercise is now complete!

If you visit the order detail screen you will notice that there are now two boxes for the shipment information (one for each group):

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You can now fulfill the order as usual and the only difference is that you will create two different shipments (one for each ship group): when the shipment is created from the ship group, OFBiz will create a shipment containing the items assigned to that ship group only.

- Jacopo

Jacopo Cappellato is VP of Technology at HotWax Media and has been involved with the OFBiz project since 2003. He is an OFBiz Project Committer and a member of both the OFBiz Project Management Committee and the Apache Software Foundation.Jacopo Cappellato - OFBiz Developer - OFBiz Expert

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Posted in Apache OFBiz, Apache OFBiz Development, HotWax Media, OFBiz Development, OFBiz Tutorials | 2 Comments »

Enterprise E-Commerce and ERP: Common Questions Series Part 2

Thursday, April 8th, 2010

enterprise-ecommerce

For HotWax Media an Apache OFBiz development firm, 2010 is delivering a great batch of new open source e-commerce and ERP projects. Whether from existing clients looking to invest in system enhancements or new clients ready to invest after a cautious 2009, HotWax Media is seeing a good deal of activity in the form of active projects and a healthy sales pipeline.

Along with a boost in free cash flow, this activity continues to generate great input from clients, which fits in nicely with my ongoing series discussing common questions related to open source e-commerce and ERP projects.

Enterprise eCommerce and ERP projects can have a lot of moving pieces. As businesses grow, old systems can limit potential. It can be painful for businesses to identify these limitations and understand the impact they are having on current profitability and future growth. At HotWax Media, it is our mission help our clients understand these problems, and then to make the problems go away.

Let’s dive into the next round of common questions and talk about answers. The answers here are meant to be relatively short and sweet. If you are looking for additional detail or are more interested in learning how HotWax Media can help you optimize your e-commerce and ERP for your business, contact us without delay!

The first questions pertains to both existing and new businesses who want to take a measured approach:

1. Can we do this in phases?

Yes. HotWax Media implements e-commerce and ERP systems using Apache OFBiz. OFBiz consists of a complete set of individual ERP applications, including a robust e-commerce system. The data model in OFBiz, furthermore, allows HotWax Media to account for just about anything that is going on in a given legacy system, and integrate where needed in order to facilitate a phased approach.

For example, if your business is running on NetSuite, but you want a better e-commerce solution, phase 1 of your project can consist of an affordable, powerful B2C e-commerce site upgrade that is completely integrated with your NetSuite back end. In subsequent phases, you can replace NetSuite completely — at your own pace, in discrete, manageable steps.

The second question usually comes from clients who have been burned in the past by irresponsible promises from proprietary software vendors:

2. Can we customize the system (without blowing our budget)?

Yes. As I mentioned above, HotWax Media implements ERP systems using Apache OFBiz. OFBiz is meant to be customized. As part of a standard OFBiz ERP implementation, HotWax Media works with clients to understand the nuances of their business requirements and workflows, and then implements a system that accommodates those specific needs.

It amazes me to hear from clients, as I have repeatedly, that they paid for an expensive proprietary ERP system only to learn later that it could not do what they needed it to do. And by the way, they do not own the system, and they are on the hook to pay recurring licensing fees in order to keep using it. Never mind the principle of it all — strategically, that sucks.

The nature of open source software in general, and of Apache OFBiz specifically, is to be transparent and customizable. My general statement to clients is, “If we can define a consistent set of requirements together, we can absolutely make OFBiz meet those requirements.”

The final question applies to everyone:

3. How many different companies will we need to work with in order to implement our system?

One. HotWax Media. We offer a complete set of e-commerce and ERP implementation services, ranging from business analysis through graphic design and UI to development and testing. We provide the project management and collaboration tools to accommodate all aspects of the project, and we will even handle hardware, infrastructure and hosting in partnership with our colleagues at Contegix.

Keeping your project under one roof improves quality and saves money. It’s that simple.

Feel free to let us know if you have other common questions you would like to see addressed in this series, or contact us today to learn more about how HotWax Media can help you build and grow your e-commerce business.

View my previous post where I covered other commonly asked questioned about Enterprise E-Commerce and ERP deployment or expansion.

- Mike

Mike Bates is CEO at HotWax Media and will join other HotWax Media employees and advisors in periodically posting thoughts here related to OFBiz, eCommerce, ERP, and related topics.
OFBiz Expert

Tags: , , , , , , ,
Posted in Apache OFBiz, Apache OFBiz Development, Enterprise eCommerce, HotWax Media, OFBiz, OFBiz Development, OFBiz eCommerce | No Comments »

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