Modern retail is dependent on technology to deliver the type of frictionless experience consumers demand and employees need. Over and above this, seamless integrations are the lifeblood of operational efficacy and efficiency in the race to win and retain market share.
Peter Ludi, Managing Executive at redPanda Solutions, a retail software solutions partner, highlights the increasing adoption of Software-as-a-Service (SaaS) in the retail industry. “In this context, it’s hardly surprising that SaaS is gaining traction,” he says. However, he cautions that successfully implementing SaaS involves more than merely selecting a solution and proceeding. Retailers must address several critical considerations to ensure the success of their SaaS adoption.
Niel Coetzee, Head of Engineering at redPanda Software, agrees. He notes that SaaS has traversed the various stages of Gartner’s hype cycle—starting with inflated expectations, moving through disillusionment, and now progressing towards the slope of enlightenment. Ultimately, the goal is to reach the plateau of productivity.
The Rise of SaaS in Retail
Coetzee explains the resurgence of SaaS, stating, “Retailers are turning to SaaS to overcome unique connectivity and infrastructure challenges.” He underscores the importance of distinguishing between true SaaS solutions and mislabeled options, such as open-source platforms rebranded under organizational names. Ludi concurs, emphasizing the focus on genuine SaaS offerings.
Coetzee adds that SaaS success is not about scaling high but scaling low. A true SaaS model offers an accessible entry point for smaller businesses with transparent, all-inclusive pricing. This eliminates the need for multiple additional fees, such as monitoring software and antivirus costs.
Benefits of SaaS
One of SaaS’s major advantages is its scalability as businesses grow. Ludi explains, “With SaaS, you can expand the solution through add-ons and configurations without needing to replace the product.” Automatic updates are another key benefit, allowing retailers to stay up to date effortlessly—unlike on-premises solutions, which require manual upgrades by IT teams.
Another vital advantage, although less immediately visible, is compliance. Ludi highlights how SaaS providers invest heavily in security and regulatory compliance, such as GDPR and POPIA, reducing the burden on businesses. Coetzee notes that retailers can benefit from these robust security measures as part of their SaaS investment.
Challenges and Risks of SaaS
Coetzee acknowledges that while SaaS offers numerous benefits, there are risks to consider. Firstly, some businesses may market products as SaaS that don’t meet the criteria. An expert partner can help retailers conduct due diligence to avoid such pitfalls and prevent vendor lock-in.
Another challenge lies in cost management. Coetzee warns that improper structuring can lead to escalating subscription costs over time, particularly for enterprise retailers with complex ecosystems. Collaborating with an agnostic partner ensures unbiased advice to mitigate hidden costs and optimize solutions.
Key Considerations for SaaS Adoption
1. Evaluate SaaS Suitability:
Ludi advises that retailers first assess their business strategy, budget, security needs, and other factors to determine if SaaS aligns with their objectives. This evaluation ensures a solution that meets their needs without disappointments.
2. Understand Vendor Dependency and Multi-Tenancy:
Retailers must recognize the risks of vendor lock-in, such as relinquishing control over data. Coetzee elaborates on the importance of choosing true multi-tenant SaaS solutions. He stresses conducting due diligence, especially regarding data handling and scalability, to avoid risks like monolithic systems that hinder flexibility and adaptability.
3. Mitigate Vendor Lock-In and Geopolitical Risks:
Ludi highlights the challenges of vendor lock-in, where price hikes can become problematic for businesses with extensive endpoints. He advises considering the location of data hosting to evaluate latency, reliability, and geopolitical implications.
4. Balance Customization and Standardization:
Both Ludi and Coetzee emphasize that true SaaS prioritizes standardization over extensive customization. However, with the right guidance, retailers can configure solutions to meet specific needs without compromising core SaaS benefits like scalability and ease of use.
Adopting SaaS in retail presents transformative potential but requires a strategic and well-considered approach. With the support of knowledgeable partners, retailers can maximize the advantages of SaaS while mitigating risks, ensuring both immediate and long-term success.
