The Evolution of Ecommerce Hosting
and the Impact of Cloud

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evolution of ecommerce hosting

For both B2C and B2B online stores, the performance and flexibility of the infrastructure can make the difference between success and failure. The nature of ecommerce hosting has changed dramatically over time, especially during the past several years. Once the only game in town, the days of large dedicated environments for ecommerce delivery have become numbered. 

A Brief History of Ecommerce

The evolution of ecommerce started in its initial form back in the 1970s with Electronic Data Interchange (EDI) and became a reality when Michael Aldrich invented “teleshopping” to let customers buy groceries by connecting a TV and phone line to place orders through a computer terminal.

When 1991 brought us the public internet, websites began connecting sellers and buyers in homes around the world. Pizza Hut claims to be the first brand to leverage ecommerce, stating it has been selling pizzas online since 1994. Amazon and eBay jumped into the fold a year later. 

Online shopping adoption rates have been exploding ever since and today we have a wide range of ecommerce vendors from online-only (pure-plays), to bricks and mortar retail, to giant online “aggregators” such as Amazon – all competing in an enormous global virtual shopping mall.

A more recent trend has been the widespread use of ecommerce by B2B companies. According to Forbes, “In 2017, total retail ecommerce sales are projected to reach $353.6 billion and estimated to hit $485.2 billion by 2021. B2B ecommerce will grow to become a $6.7 trillion market by 2020, more than doubling the predicted market worth of B2C e-commerce at $3.2 trillion.”

The Evolution of Ecommerce Hosting

Since the early 2000s, a number of prominent ecommerce platforms have come to lead the high-end of the market. The list includes names such as ATG (now Oracle Commerce), Hybris (now SAP Hybris), Magento, IBM WebSphere, and Intershop. Until recently, the software from these vendors was only sold in a licensed model and required dedicated hosting environments – either on-premise or by way of a Managed Services Provider (MSP).

Along with the traditional models of ecommerce delivery, Software-as-a-Service (SaaS) options have grown in popularity as well. For this discussion, we’ll be focused on platforms in the non-SaaS arena.

Today, whether it’s SaaS or an ecommerce platform in a licensed scenario, large-scale public clouds such as Amazon Web Services (AWS), the Google Cloud Platform (GCP), and Microsoft’s Azure are beginning to dominate how ecommerce is being served to online buyers.

Cloud Apprehension

In the early days of public cloud, few considered ecommerce a viable application to run there. Some initial issues included:

  • Fear of not having direct control over the environment
  • Worries about performance – particularly during peak periods
  • Security concerns from being in a shared environment
  • Previous investments in large in-house deployments
  • “Wait and see” attitude about cloud in general

Most of these reservations have now softened or gone away completely as ecommerce has increasingly moved the cloud over the past five years. Gartner cited 2016 as the “defining year” for cloud predicting nearly half of large enterprises would deploy at least some form of ecommerce delivery there by the end of 2017. This doesn’t include the large ecommerce SaaS customer base already using public cloud.

Cloud-Based Ecommerce Benefits

Most reading this will know about at least some benefits cloud provides. The more widely-publicized advantages include:

  • No upfront costs for technology
  • Lower overall IT costs and complexity
  • Easy to scale on a pay-per-use pricing model
  • Access to leading data center facilities and technologies
  • Easier maintenance with automatic back-end software updates
  • Reliability and built-in disaster recovery features
  • Global coverage and accessibility
  • Speed and performance value
  • Reduced environmental impact
  • High degree of physical security
  • Shorter time-to-market for application development and launch

These are all important factors for ecommerce merchants, but several characteristics top the list as we’ll see next.

Performance and Security

Technology has played a major role in propelling the evolution of ecommerce hosting (and all areas of IT) during the past decade. Much of this has come through advanced virtualization, improvements in hardware, the growing use of flash-based storage, and more sophisticated security and management software. This has provided new benefits and opportunities for companies running complex applications like ecommerce.

Performance, once a justified concern with the public cloud, is now proving itself a non-issue. With today’s technology, Content Delivery Networks (CDNs) and application optimization – online stores run extremely well in the cloud. A near-endless supply of system resources can be quickly allocated to an online store and then optimized for peak performance. Although outages do happen on occasion, (just as they do in-house,) they are very rare and often mitigated by a CDN or built-in redundancies.

IT security is a challenge for everyone, at all times – especially when financial information is involved. Once the strongest case against ecommerce in the cloud, security has turned a corner. Due to the stringent physical security in cloud data centers, coupled with security design, best-practice processes (PCI-DSS, ITIL, ISO 27001 as examples), and industry-leading security software – many IT experts are now touting cloud as being more secure than most in-house operations. According to Gartner, “Through 2020, public cloud Infrastructure-as-a-Service (IaaS) workloads will suffer at least 60% fewer security incidents than those in traditional data centers.”

Cost-Effectiveness and Scale

Undoubtedly, a key advantage of cloud has to do with cost-savings. This is a big driver for companies trying to preserve margins in a competitive online world. Compared to dedicated environments and all the resources and costs associated with them, the cloud can be a hands-down winner in terms of price and it can’t be matched for use in temporary situations such as development and testing.

It should be noted though, that like most IT initiatives, production ecommerce in the cloud must be well-planned, continually optimized and rigorously managed to realize the potential. Without this attention to detail, the cloud can be disappointing if pure cost-savings is the main objective.

If we could only pick one, perhaps the single most important reason ecommerce is moving to cloud is the ability to scale the infrastructure up or down with relative ease. Online retailers are subject to changes in shopping volumes (sometimes severely). Seasonality, holiday season shopping, and promotions are examples of events that demand significantly more IT infrastructure on a temporary basis.

In the past, ecommerce businesses were forced to over-provision expensive hardware and software licenses to handle the high workloads during peaks. Once things returned to normal, they were stuck paying for unused capacity. Today, the ability to cost-effectively scale up and down when needed is a powerful advantage of cloud. 

What About Cloud Expertise?

Managing large-scale ecommerce platforms in the public cloud is not the same as operating other applications. Due to its unique demands, getting the best performance and value from ecommerce in the cloud requires deep expertise in both the cloud infrastructure and how it interacts with the application. 

Doing it yourself will take internal skill-sets with the ecommerce-related applications and also the cloud platform. As mentioned earlier, while cloud can provide tremendous value and flexibility if deployed and managed properly –  but if not, the results usually fall short of expectations.

An alternative is to work with specialized MSP like Tenzing. One that already has certified technical teams for the major cloud platforms and expertise with leading ecommerce solutions. Please contact us for assistance or advice. Whatever option you choose, if you run an ecommerce business and have had reservations about cloud in the past, it may be time to take another look!

 

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Chris MacLean

VP of Technology at Tenzing
Chris has been leading infrastructure management teams for 15 years and is known for a ‘hands-on’ approach. Chris joined Tenzing in 2013 and is responsible for architecture, engineering, and development.