The Factory Tour: Part 2
Why, When & How to Leverage Composable Commerce for your Business
August 14, 2022
As commerce becomes more complicated with the rise of digital wallets, proliferation of payment methods, data privacy, and the need for brands to own their customers, the data pool is greater than ever.
This is the second article in our Factory Tour series. You can find the first article here.
As commerce becomes more complicated with the rise of digital wallets, proliferation of payment methods, data privacy, and the need for brands to own their customers, the data pool is greater than ever. “In the US in 2020, 57% of B2C e-commerce sales flowed through marketplaces.” Forrester. Taking back the customer’s relationship requires a modern approach to the commerce experience. Understanding the goals for the customer experience is a top priority, just like empowering business managers to think like digital experience fanatics because they can execute or pivot to meet the ever-changing demand in the digital commerce landscape.
Migrating to a newer technology can often seem exciting and a no-brainer to future proof the business but before jumping into a composable digital transformation, leaders should consider the current technical landscape, future business needs and goals, and overall impact to all the departments within the organization. For organizations whose digital presence is built on a monolithic solution, an in-depth technical analysis of the legacy technologies is warranted – composable isn’t right for everyone. Composable commerce is inherently a highly customized, flexible approach, where unlike traditional stacks, it is possible to leverage it as a total transformation or to improve key portions of the digital journey.
So what approach is right for your organization? There are many things that should be taken into consideration – we will cover four of those critical elements. The first step is to evaluate BOTH the business and the technical needs based on the targeted goals of the organization. Once the digital north star is developed, a review of the current technical landscape and a corresponding gap analysis must be completed before selecting a path forward. How to implement the new solutions can be just as critical as the solution itself as it will impact the current day to day as well as future scalability. The goals should be to see a positive return on investment as quickly as possible and establish the foundation for a positive future TCO (total cost of ownership). The last consideration is related to the people within the organization. A composable digital transformation will inevitably require enabling the business user, on multiple levels (organization, ways of working, etc). It is critical that these be considered as well as part of the long-term technical strategy.
Identifying Business Needs & Goals
The concept of composable commerce tends to be more easily understood and embraced by the technical teams. Business users, especially in fast paced commerce environments, typically do not understand what headless, composable or a hybrid is, or how it would benefit them and their long-term goals. When evaluating solutions for a digital transformation, the teams must come together and define a north star that will guide in prioritization, alignment, and success metrics.
For the business, change management and overall project visibility are key. There are many more moving parts in composable commerce, which therefore require more planning and thought-out change. Some aspects to explore with the business users include:
Reporting, Analytics, Insights – As there are more data pools, you will need to consider consistent reporting, analytics and insights and link these to your data lake. You may also need to implement some of the reports, that traditionally were offered out of the box with suite solutions, as some reports may need data from different architectural components.
Business Rules – Suites are opiniated and come with implicit business rules that you can re-use. With composable, the components are unopinionated and therefore these rules need to be explicitly defined, configured, and maintained. It becomes a solution moulded to your business.
People with Experience – There are very few people in the market with the composable commerce knowledge and skills, due to the relatively young age of the technologies. It is therefore best to elaborate a plan to enable the in-house engineers and business users to ramp up their skillset as early as possible in the lifecycle of the program. The development of the skillset can take multiple forms: online training, courses offered by the vendor, or a custom learning session from the selected solution integrator.
Additional Operational Cost - Some features that you need to deliver, come out of the box with suites. Composable ‘best of breed’s do not have all these features built-in, but it does allow you to extend the tools to enable features. This flexibility allows for a fully customized implementation, that completely aligns with the organization’s needs. In this case, the features need to be designed, built, deployed, and maintained, adding an operational cost. However, this additional cost is offset by the reduction of operation costs on server and systems management from a suite solution.
People and Processes – Migrating towards a composable landscape will inevitably impact a wide range of users. Ways of working, internal and external processes and the adoption of new user interfaces are only a few examples, and it is therefore important that the enablement, training, and transition of these users be carefully thought out and planned for.
The best way to deep dive into current pain points and future objectives is through a series of workshops. The main outcome of those workshops is to understand the current functional and technical state of the legacy platform, and how those translate to the targeted solution. This critical foundational activity will touch different areas of focus: customer accounts, products, order support, finance, customer journey, fulfilment, content, integration layer, underlying services (ERP), and so on.
/ Understand capabilities and functionality of current platform (focus areas)
/ Explore background, Key business processes
/ Explore supporting functionalities (e.g., Reporting, Analytics, Auditing etc.)
/ Identify current/future Systems of Record
/ Differences between locales - (for those in scope of Discovery)
/ Identify for high level requirements - what can be achieved?
/ Identifying out-of-the-box functionality (standard feature which can be configured) and 3rd party services to be integrated (e.g., CMS, DXP, PIM, etc.)
/ Identifying areas that will need custom solutions
Technical Landscape Evaluation
As far as technology is concerned, there are a few considerations to consider when starting to develop a plan and a roadmap towards a composable landscape.
Traditional commerce technology stacks will often use the terminology “out of the box” to describe the suite of solutions they have configured together to create their platform. This term can be misleading as no commerce technology can be stood up, much less optimized for a business, without being configured. This means that detailed requirements gathering is critical for a digital transformation regardless of the solution being implemented.
Part of the discovery process is to understand the current architectural state. Once documented, each solution being considered in the composable architecture should be evaluated by both the technical and business user teams. Solutions should be evaluated based on criteria such as – and not limited to - effectiveness, total cost of ownership, ease of use, need to customize and vendor innovation, as well as other key KPIs that are critical to the success and growth of the organization. This exercise will identify what to keep, what to replace or what might be able to be sunset entirely. The degree of digital maturity within the organization makes this unique to each transformation. With the current architecture state and end goal vision, we can come produce a strategic & tactical implementation roadmap.
Other considerations and alignments include:
Extensibility - Some features that you need to deliver, come out of the box with Suites. Composable ‘best of breed’s do not deliver all these features but do allow you to extend the tools to enable the features. That is great, but they need to be designed, built, deployed, and maintained, adding an operational cost.
Integration and Migration - Suites tend to have a single data repository and be integrated out of the box. Composable is like Lego bricks, the integrations must be designed, and assembled, and design effort must be focused on migration and go-live strategies.
Internal User Interfaces - Some composable ‘best of breed’s have focused on APIs over user interfaces, and additional work may be required to provide a right and complete one for the internal business users.
Transition Plan - Consider go-live day, and work backwards from that point. Unlock value over time and avoid large ‘cut over’ deployments. What are the motivating factors in using one approach versus another?
The goal of technical workshops when migrating to a composable approach is to gather functional requirements and to identify “ghosts”/technical debts in the legacy code to help inform the roadmap. Outlining the functional and technical requirements that are needed to build the overall solution is especially key for the foundation of the factory model.
/ Review application source code for services developed within the legacy platform
/ Create process diagrams of major code domains
/ Identify logic, branching, and integrations
/ Identify all dependent components, and build a dependency tree to allow for sequencing
/ Identify components that can be moved to Microservices early, so that they can be independent to support migration
There are two common types of implementations strategies: the all-in (aka big bang) and the gradual approach (aka strangler). When an organization transitions towards a composable architecture, it is typically doing so from a legacy monolith, and the selected strategy will determine the level of success of the digital transformation.
What is a big bang approach?
This approach is essentially “flipping the switch” meaning that you are turning off the user experience from the existing application and turning “on” the new solution. This method requires that all the key components from the legacy monolith – typically commerce, content, and customers - must all be built in the new composable architecture before going live. Making it the last waterfall the teams should experience!
Often, organizations work in silos. The big bang approach encourages a high level of collaboration since people must work together to be successful and everyone is accountable for their piece of the puzzle. Additionally, it ensures that the transition is a priority and that teams have clear roadmaps and accountability. This can also set-up the basis for more cross functional ways of working that will be required post go live. In some cases, this allows for a faster ROI from the new solution and allows the business to immediately reap the benefits related to the user experience and other KPIs.
On the flip side, if the approach is not planned carefully, it will have immediate repercussions to the business – internally and externally.
What is the strangler approach?
As you can imagine, this approach is the opposite of the big bang strategy. This approach entails a gradual transition towards a larger end goal by compartmentalizing all the business domains and gradually migrating each of them separately. Using this approach minimizes the risk to an organization’s operations to the best extent possible. If a quick turnaround is needed, it would be easier to pinpoint the issue, and address it. Moreover, a gradual migration makes it easier to track the direct benefits to the organization as more modules get migrated.
Some downsides to this gradual approach are evident in organizations that have a very siloed culture. To be successful, it requires accountability and a leader that is prioritizing the transformation, otherwise, everyone is waiting for the other the person to get to the work, therefore extending the overall timeline. Another challenge to the strangler approach is the added complexity of maintaining two systems for a short period of time.
Team Composition & Governance
In any digital transformation, the ways of working require a paradigm shift – business users’ interaction with the new technologies, shifting of the prioritization and implementation processes, cadence of meetings, vendor management and contractual agreements, analytics and reporting, and the list goes on.
Because this is a massive change, leaders must ensure that they are also shifting the organization’s culture. The past silos must be knocked down to allow for cross communication and collaboration where teams work towards a common vision and a common goal with a clear captain navigating the way forward.
The success of a digital transformation is not only the implementation of an elaborate technical architecture. Adapting the organization’s ways of working and aligning the team composition is equally important to support the technical transformation. With the way composable commerce can be orchestrated and to ensure that the organization is getting the most out of the solutions, the current teams’ structures and roles must be evaluated and adjusted to account for the new technologies. The typical silos - marketing, ecommerce, and technology should be reviewed through a new lens. Roles that focus on managing the technology as well as the business roles that focus on a commerce experience are essential in the new landscape. There are so many changes in technology - how you think, how you implement – it disrupts old habits, and some people will embrace the change, some will not, leading to possible attrition and culture challenges.
Internally buy-in from key stakeholders is also critical; these can include but are not limited to the VP of Technology, VP of Marketing, and the VP of Ecommerce. This level within an organization is essential during a digital transformation to educate, align and drive the initiative at the C-level but also to ensure that cross functional teams are aligned, prioritizing, and engaged positively in the change. Change is always challenging and it can be especially taxing on technical and digital experience teams that are charged with still managing the day to day while being asked to learn an entirely new skillset and tools that will alter what they know as their daily routine. Some people within the organization may be concerned about their jobs or future growth potential. Composable requires a mindset shift that for some can be difficult to accept, especially since technical employees typically specialize in a certain platform or type of technology; alignment of these key stakeholders helps to elevate concerns by exciting the teams, embracing a culture of change, and educating team members on how the exposure to a new technology is not only exciting but it is also a great internal and external resume builder.
Team composition is also essential in both the organization itself and the partner selected to stand-up the new architecture. In terms of governance, the right experts will be key in the success of this digital transformation, as they will drive the paradigm shift within the organization. When documenting and reviewing the change in roles across the organization, it may become necessary to revise the organizational structure to accommodate new roles, such as a technical vendor manager and / or someone with experience specifically in the SaaS contract negotiation.
This new approach to digital commerce is not only complex but many technical professionals have only been exposed to it in theory. In selecting an implementation partner, it is not only important to have both practical talent on the team but also have a partner that is willing to teach and educate within all levels of the organization. Just like the MACH Alliance (an industry body that advocates for open and best-of-breed enterprise technology ecosystems, and of which Valtech was a founding member), the primary goal is 'to educate and support the industry as a whole on what to look out for when (planning to) moving from legacy infrastructure and going composable, including when, where and how to start and select partners”, a transformation partner should embrace this philosophy, ensuring that they not only set-up the systems for success but the people that will be using and maintain them as well.
“2022 is the year to take ownership of customer experience at every point, deliver on customer expectations for the quality of the experience, and leverage modern architecture to get there.” Forrester
Undertaking a digital transformation impacts the entire organization. To be successful, it is imperative that the discovery, document, define and are all completed and through as well as alignment on the implementation approach. Leadership across the organization must engage in change management not only because of the change in process and systems but a cultural shift that occurs when moving off legacy tech and 'that’s the way we have always done it' mentality. Brands will need to stop focusing on commerce and focus on experience.
In our next and final article, we will cover in depth the Valtech SaaS factory approach and how it enables different brands to maintain their unique identity while centralizing an organization’s commerce solution – both decreasing technical complexity and total cost of ownership.
Read the next article in this series: From Composable Commerce Concept to Creation
About the Authors
Karen Light, Director of Digital Strategy, Valtech North America
Karen has 20+ years of experience in DTC and B2B retail leadership positions in a variety of roles including merchandising, product development, ecommerce and most recently spearheading the composable digital transformation strategy at SmileDirectClub. She has a strong focus on the digital customer experience and innovation, known for pushing the boundaries of “what if” that can be translated into a strategic plan based on data and value to the business.
Jerome Chan, Director of Ecommerce, Valtech North America
Jerome has 15+ years of experience in the commerce space with an in-depth understanding of the technical needs and challenges to successfully bring a project live. His focus was primarily driven by monolith applications when a few years ago, the attention shifted to a composable mindset. He thrives in collaborating with multiple stakeholders, leveraging his technical experience, and providing strategic approaches for any endeavors, big and small.