It has never been easier to buy enterprise software. A quick Google search can help you build a shortlist of powerful, yet lightweight tools for most use cases, which have all been vetted by reputable third parties and are used by your biggest competitors. For many buying committees, this means tech stacks should be easy to build. Find the highest-rated solutions, get the implementation done as quickly as possible, and suddenly you have an ecommerce tech stack that would make any CTO jealous. Right?
Of course, it’s not at all that simple. What does “best-in-class” mean? While research, consultants, and think-tanks help guide our software buying strategy, it’s up to CTOs to understand how to use that information to build an ecommerce stack that supports the business’ goals today—and more importantly, years into the future.
We’ve spoken to countless CTOs over the years, many of whom have built tech stacks for the world’s biggest retailers. In that time, we’ve realized that choosing the right software for an enterprise-level business is a twofold problem. We're often called upon to support software purchasing decisions and build business cases for them. Here’s our framework for doing so effectively and ultimately building the ecommerce tech stack that you need.
Redefining best-in-class software
Consulting firms such as Gartner and Forrester have developed robust methodologies for evaluating software vendors across an endless list of categories. We are big believers in their work. Shopify was named a leader in the 2023 Gartner Magic Quadrant for Digital Commerce, in large part because of our commitment to innovation.
But all too often, technology buying teams take reports like this one and head directly for the Leaders category. From there, they’ll be tempted to put the two three to four in an Excel spreadsheet, where they compare feature sets and search for the option that most closely matches what they’re currently using.
This is not a bad exercise per se, but surprisingly, it’s one of the only exercises that takes place before an enterprise-level retailer chooses a piece of software. While your spreadsheet analysis will lead you to best-in-class tools, it might also be packed with features you don’t need. Even worse, you could end up with an overly complex (and expensive) tech stack.
While best-in-class software is always desirable, it’s far more critical to choose the tooling that’s best for your organization. In many cases, that means using software that perhaps isn’t as popular as the other options you’re evaluating.
When we talk to CTOs, we walk through a basic but effective framework for choosing “best for you” software. But before we explore that in more depth, let’s take a step back and discuss some of the other factors that typically sway a purchasing decision.
How external factors impact the enterprise software buying process
For decades, technology leaders have been asked to keep the lights on. Our peers want us to give them the tools that enable them to do their jobs and then get out of their way as quickly as possible. While there’s a growing call for technology leaders to be more deeply embedded in the business, many of our peers have very strong (and correct) convictions about software overridden by executive teams that are laser-focused on solving the business’s most pressing and current needs. They’re also resistant to any ideas that are contrary to that objective, especially if it contradicts how competitors are choosing best-of-breed technologies.
The reality is that while CTOs and CIOs should be the ultimate decision maker when it comes to building an enterprise tech stack, most software is purchased by larger, cross-functional teams. Gartner found that 39% of software decisions are made by teams of four or more. Additionally, 30% of software purchases are made by the CEO or president of the company. And even when a CTO pushes back with alternative solutions that he or she feels will benefit the company, it’s common to just choose the option that puts the majority of executives at ease. Without a strong business case for going a different direction, CTOs could be making a “career-limiting move” by opting for a different set of tools.
That begs one question: how do you build a strong business case for choosing software that’s right for your business, even if it’s not the “best of the best”? The CTOs in our networks who have done this successfully focus on short- and long-term business objectives when they evaluate any piece of software.
How business objectives should influence enterprise software selection
CTOs and CIOs have been chasing the proverbial seat at the executive table for as long as technology has been a function within companies. All of us agree that the key to achieving it is by embedding yourself in the business—and that’s especially true when you’re deciding whether or not to purchase a piece of software.
To help build a business case for the tools you need to support the business’s current and future goals, you need to sit down with your key stakeholders and fellow executives and actually understand what those goals are. Here are a few questions we like to ask when we're working with a client to build an ecommerce tech stack.
What are your strategic objectives?
Instead of the feature comparison we shared earlier, we've found that it’s more helpful to map out your strategic objectives and understand how any piece of enterprise software can (or cannot) help you achieve those goals.
For instance, perhaps you’re evaluating POS hardware and software because the business has set the objective of dramatically expanding its physical retail footprint over the next two years. Now let’s say that you’re evaluating Square versus Shopify POS. While Square is best known for their POS solutions, a deeper look to understand if it will properly integrate with the rest of your tech stack, especially as your business grows and pivots. In this example, a growing list of retailers have chosen Shopify POS because of how seamlessly it integrates with the entire platform and fuels omnichannel buying experiences.
Here’s just one example from All4cycling, which has increased conversions by 40% thanks to Shopify POS’ buy in store, ship to customer technology.
Shopify offers scalability and the capabilities to serve customers in the best way. Before everything was difficult, now everything has become simple.
—Luca Nardello, Founder and CEO, All4cycling
Do you expect to hit enterprise-level revenues in the next year?
This is a particularly important question for companies that are on the verge of achieving enterprise-level revenues, but haven’t quite done so yet. As we’ve seen on several occasions, the technologies you select have a huge impact on your company’s future growth and profitability.
Take Bombas for example. After their first appearance on national television, they quickly realized their storefront couldn’t handle the sudden influx of traffic. When their episode ran a second time, they accrued $15,000 of lost revenue in just a few minutes, thanks to a combination of broken product images and failed checkout attempts. As a temporary solution, Bombas started paying thousands of dollars each month in server maintenance fees to prevent future crashes.
In search of a more reliable and cost-effective solution, they turned to Shopify. Not only did their first Black Friday Cyber Monday on the platform go off without a hitch, but Shopify easily handled several more re-airings of their television appearance. Bombas’s migration to Shopify ultimately saved the company $108,000 in platform costs in year one, while generating $17.2 million in sales.
“Whether we’re doing 500 or 5,000 orders a day, Shopify automatically scales with us, without us having to do anything extra. Stability is key, and it’s better to be up all of the time, and that’s the peace of mind Shopify brings us.”
—David Heath, Cofounder, Bombas
How does technology selection impact the people who will actually use it?
Even when you feel confident that you’ve chosen the tools that will help you achieve your goals, you can win your executive peers’ trust by understanding how the proposed solution may impact users across the organization. Once a CTO or CIO makes a technology decision, their role shifts to implementation and support mode. However, this is not the case for perhaps a customer service representative or a marketing specialist, who will have no choice but to use the application, even if it turns out to be not the right one for their role.
As part of the evaluation process, it’s crucial that you get more leaders across the business involved. Think about who needs to be involved throughout the technology lifecycle. For example, if you’re getting ready to purchase a new ERP, in addition to your COO and CFO, your head of ecommerce or head of retail may want to join some of the sales calls or demos and provide feedback. If you’re searching for a new live chat application for the support team, your head of customer support can provide valuable feedback to help you select the right tool.
What are some enterprise software must-haves?
We know—we just wrote a couple thousand words about how every company has a different set of technology requirements. What works for one enterprise organization likely won’t work at all for another. Still, there are a few key things we believe all CTOs should kick the tires on whenever they’re considering a software purchase, starting with that platform’s integration ecosystem.
Integration ecosystem
Whether you’re an established enterprise ecommerce retailer or aspire to be one, we'd venture a guess that you can’t afford to maintain the status quo. You and your executive peers likely have moonshot goals, the types of initiatives that seem outrageous until you accomplish them. And while many vendors promise that they can support your current and future business growth, there’s nothing wrong with asking difficult questions about how they can or plan to do so.
One area we're particularly critical of is any vendor’s ability to extend and grow their current functionality—be it through their own product roadmap or via their integration ecosystem. How quickly and easily will we be able to extend the platform’s existing capabilities? If the current ecosystem is limited, or if the vendor’s commitment to expanding it in the near future is lukewarm, that’s something you shouldn’t ignore. In other words, remember to purchase for today and tomorrow.
Perhaps we're spoiled, but this is something we look at closely because Shopify’s rich integration ecosystem (not to mention Shopify’s track record of strong platform evolution) helps enterprises to bring in your preferred third-party provider and integrate it into your stack in a seamless way. Additionally, a recent IDC report found that Shopify is particularly attractive to buyers looking for a commerce platform with a proven track record in DTC and a vast third-party ecosystem.
Speed to innovate
We should expand a bit on our previous point. We mentioned that it’s concerning if a vendor doesn’t have a vast third-party ecosystem or isn’t committed to building upon it. The latter portion of that statement is just as important as the former. As your company grows, it needs tools that can grow alongside it. When you build a tech stack that exclusively supports your current goals, you’re putting yourself in a position to rebuild the entire stack in just a few years’ time.
Everyone at Shopify is fully committed to innovating faster than anyone else in the space. As you may have seen in our last few Editions, we are constantly thinking of ways to improve the experience for retailers at all levels, especially for our customers at the enterprise level. More importantly, we ship innovative features rapidly. Nobody innovates as quickly as Shopify, which Gartner recently confirmed in its 2023 Gartner Magic Quadrant.
While Shopify may seem like the exception to this rule, it’s only fair to your organization to hold every vendor to this standard. If their roadmap doesn’t give you confidence that the platform will grow with your company, move on to the next alternative or your company may regret the technology selection you’re recommending..
Total cost of ownership
Many software companies have really good marketing teams that promise straightforward and cost-effective implementations. But as we’ve all experienced at one point or another, a straightforward implementation of any tool is just the tip of the cost iceberg. Integrating a single tool or software package into an existing stack can require a months-long timeline, extensive headcount dedicated to the project, and costly training sessions to ensure that end-users know how the heck the product works.
Don’t be afraid to ask direct questions to each vendor about what it takes to implement and maintain their solution. How many developers do you need to resource to ensure a smooth implementation? What data will need to be migrated? What is the typical timeframe for a straightforward rollout? What are some of the speedbumps we should expect along the way? The answers to these questions (and others) are essential for understanding how much time and resources you’ll need to dedicate just to make a single piece of software work for your ecommerce tech stack.
In terms of ecommerce platforms, a leading independent consulting firm found that Shopify’s total cost of ownership (TCO) is on average 33% better than that of its competitors, and up to 36% better. This was determined based on several criteria that are essential for determining TCO for any platform. As our CRO Bobby Morrison shared, some of these criteria include:
- Platform fees and ecommerce stack costs
- Operational, platform servicing, and support costs
- Implementation and setup costs
- Opportunity costs of lost conversions
Bobby also wrote that while one platform may offer low fees, it may also require you to bring in several costly external applications that drive up your total monthly costs. Bobby may not be a CTO himself but he is talking our language and is reminding us of a key point: look beyond the software price tag into all the aspects of what will make you and your team successful.
Want to learn more about how Shopify’s TCO can accelerate your business? Check out our calculator here.
Building a best-in-class tech stack
Building a tech stack is serious business. Get it right and you’ll not only set your organization up for long term success, but you’ll also strengthen the trust that your fellow executives have on you. Get it wrong, and you could spend an untold amount of time evaluating and reevaluating every decision you made along the way.
