“Retailers often fully focus on conversion when it comes to their e-commerce platform. But who monitors the IT performance of the online platform and underlying applications?”
Buying products in an online environment is an integral part of our daily lives. Many retailers have had to change their strategy in recent years and have invested a lot of money. Often the physical stores are now supported by a well-functioning e-commerce environment. In this, IT is no longer a supporting, but a driving force. A well-functioning e-commerce environment must at least be available and fast.
From visitor to buyer
Within e-commerce, the main goal is to convert visitors into buyers. A conversion is usually expressed as a percentage of the total number of visits. For example, an order or payment. But also signing up for an event or newsletter can be a conversion objective. Due to the growing demand of consumers, webshops and e-commerce companies are booming. The competition is enormous. Retailers, however, are not only struggling with the competition of other webshops, just as important is the growing expectation of the consumer. The perfect environment that the consumer is looking for in 2018, demands a lot from an e-commerce organization. The slightest delay in an online order process can already cause a dip in conversion.
A good online performance
Retailers are committed to meeting the expectations of a perfect online experience for consumers. The question that arises is: what actually is a good IT performance? And, what influence does this performance has on the profitability of a web environment? Various studies have shown that there is a strong correlation between the loading time of a page and the return on investment of the website. Google states that a loading time of 1 second is ideal. However, most websites are far from performing at this level. Significant conversion loss can already occur after 3 seconds of loading time, moreover, visitors more often leave the website unfulfilled with a longer loading time.
An easy answer to the question ‘what is a good performance?’ remains difficult to give. It can be said that significant conversion loss occurs with only 1 second of extra loading time. In our opinion this already should be enough reason to put the performance high on the agenda!
A chain of suppliers
Continuous innovation is needed to meet customer’s expectations and stay ahead of the growing competition. For an online platform, external suppliers are attracted to support parts of the application chains associated with turnover. Think of payment processes, logging in with DigiD, outsourcing the infrastructure and other web features. These suppliers only provide a part of a longer chain and therefore often only look at their own SLA and individual performance. How the individual component functions within the rest of the IT ecosystem is beyond their responsibility. For the retailer, this not only means that the business-critical chains are becoming increasingly complex, but also that power is shifting towards suppliers: after all, they determine whether or not the consumer is affected by a properly functioning chain. For the retailer, keeping a grip on and controlling the consumer’s experience is therefore a challenge.
The more complex the chain, the greater the risk of disruptions
The market is showing a growing demand for monitoring solutions for these revenue-related chains; a logical consequence of the growth within e-commerce. After all, a performance degradation of a few seconds can ensure that a consumer cuts off his buying process and purchases the product from the competitor. Performance degradations are often not detected or detected too late, which makes it impossible to act proactively. As soon as the retailer enters into a dialogue with the suppliers about the performance issues and the SLAs, a “blame game” between the different parties quickly emerges. After all, everyone only takes responsibility for an individual part of the chain. This takes a lot of time – so money – and in most cases only leads to patch-ups.
Take control and keep it that way
There are several ways to keep control. For example, specific agreements can be made with the supplier that are based on the chain rather than the individual component. An eXperience Level Agreement (XLA) can support this (Giarte). In an XLA agreements are made about how optimal customer satisfaction can be achieved. It distances itself from technical components and looks at the chain from the perspective of the end user. An XLA is more about value, and less about legal hedging of risks. XLA agreements are becoming increasingly common, even for large sourcing parties. Specialist parties can help to draw up such documents.
In order to then keep a grip on what has been agreed, this must of course be measured. Ideally, both the IT chain and the business process should be monitored from start to finish. By setting up end-to-end monitoring, all parts of the chain are monitored from the perspective of the end user. It is not the individual components that determine whether the green light is given, but the combination of parts in the chain – and therefore the end result – of these components. There are smart monitoring solutions that respond well to cloud and containerization so that full visibility of these chains is not compromised.
The big advantage of a combination of end-to-end monitoring on the IT and on the business process is that the information is suitable for both IT and the business and all associated suppliers. Everyone looks at one factual truth that prevents discussions. The retailer is in control and immediately has a powerful control tool in his hands. Whether it’s a responsibility to the business, an assignment to the IT department, or managing the outsource partner: there is objective evidence for the actions to be carried out. These insights enable the e-commerce party to turn threats arising from IT into opportunities. The conversion of chains associated with turnover is not only guaranteed but can even be significantly increased.
More information? Please contact one of our specialists.
Marco van Koelen
Sales & Marketing Executive