Magento provides flexible, scalable ecommerce solutions designed to aid businesses grow online and earn success. More than 150000 business customers, merchants and vendors choose Magento solutions which are built on open source technology, and enables businesses of all sizes to control and customize the content, look and feel, and functionality of their site online. In addition, Magento offers a range of resources, consulting services and support to help customers get the most from the Magento training, deployments, developer certification programs, etc. There is also a global community of developers and partners providing access to third party extensions and professional integration help.
Forrester Wave conducted a TEI (Total Economic Impact) Study to illustrate the quantifiable costs and benefits of implementing Magento Enterprise to a composite merchant. To present the impact of Magento, Forrester interviewed five merchants for this study. These merchants are known as composite merchants. They include the below mentioned minimal characteristics.
The composite merchant is a company with $40 million in online revenues. The company has used Magento Enterprise for at least 2 years and has a team of 2 IT professionals to look after and write code for the site. The TEI methodology enhances to develop a company’s technology decision making process and assist vendors in communicating the value proposition of their products and services to clients. We have taken this study as a reference to offer an easy overview of the economic impact of Magento Enterprise to online businesses.
Challenges Faced By Companies before Using Magento
Companies before using Magento used another application or platform to meet their ecommerce requirements. Their site was hosted and maintained in a completely different manner. This resulted in the companies facing the following challenges:
- Downtime and revenue loss triggered by high traffic volumes.
- Inability to support sophisticated online marketing activities.
- Unfavorable economics associated with adding new functionality and updates, and,
- Lack of readily available third-party development resources.
Quantifiable Financial Benefits of Using Magento
After using Magento Enterprise for their ecommerce site, composite merchant companies experienced several benefits. Many problems that happened when Magento was not used reduced. The benefits enjoyed by composite companies, and when implemented by any other company include:
- Incremental ecommerce revenues through traffic generated marketing activities.
- Software licensing fees avoided for previous ecommerce platforms.
- Costs avoided for prior ecommerce platform maintenance.
- Cost avoided for software development and maintenance.
Adjusted Cost Changes Incurred After Using Magento
Several cost changes were reflected after the implementation and use of Magento Enterprise. These were:
- Licensing fees for Magento Enterprise totaling $98,206.
- Server hosting and content delivery network expenses of $337,632.
- Professional service fees of $861,160.
- Internal labor costs for integration, maintenance, and upgrades of $476,732.
Qualitative Benefits of Using Magento Enterprise
Magento also gave companies the flexibility to experience some qualitative benefits that are highly valued and contributed to the overall success of the Magento deployments. These qualitative benefits include:
- Scalability and stability benefits to meet increased traffic volume.
- Flexibility ensured a broad range of functional requirements.
- Increased efficiency in order management,
- Rapid time to market without loss in time management, and
- Increased levels of marketing activities due to third party marketing service integration and support from reliable partner sources.
Costs Involved in Implementing & Maintaining Magento
Implementing and maintaining Magento incurs certain costs, but when compared to the annual costs maintained by a company for other platforms or solution, this cost is quite less. Let us see the various costs that a user has to incur:
- Licensing fees for the Magento Enterprise edition that is based on the number of server licenses required for Magento deployment,
- Web, network and server hosting costs, including bandwidth, load balancing, CDN, etc.
- Professional service fees that include any consulting fees paid to a System Integrator, certified Magento partner for ongoing support,
- Internal labor costs for maintenance and upgrades, and
- Plugins and extension purchased from Magento marketplace.
Using Magento Enterprise leads to benefits right from the onset of the platform implementation. With financial, costs and qualitative benefits Magento succeeds and promises to deliver the uplifted revenues for all sized online companies. The Forrester Wave TEI Study ensured that the benefits are proven for merchants to develop more confidence about the technology. Several companies have taken the plunge and welcomed Magento, the result for them were overwhelming. There is no denying the fact that Magento with its multi-benefits ensure that a brand receives success and enjoys all of what this open source platform has to offer to modern commerce.
Facts to Tweet
- The composite merchant experiences an average revenue uplift of 17.3%
- The percentage of total revenue uplift attributable to Magento platform affects the ROI value.
- Magento Enterprise licensing fees vary with the number of servers and level of support purchased.
- Magento Enterprise offers scalability, flexibility and stability.
- Magento 2 uses PHP 5.4 and 5.5, HTML 5, CSS 3 and jQuery.
Download the detailed Forrester Wave TEI report here: