To fully understand the business value of composable commerce, we need to understand the TCO (total costs of ownership) and ROI (return on investment) equation. In this article, we’ll delve deeper into how a composable approach increases revenue-generating opportunities that accelerate time-to-value and ROI.
While TCO entails the investment that businesses make into new technologies, people or initiatives, the ROI is the result after these investments bear fruit: A growth in sales, an expansion in margins and other KPI improvements, showcasing how wisely organizations spend money.
Historically, technology investments have been accepted as necessary expenditures, albeit with a high degree of reluctance: Usually, business leaders feel that the return on investment is slow or, at times, completely nonexistent. This hesitation is partly justified, as technologies of yesteryear, built as massive monolithic applications, not only consume vast amounts of money for licensing but also for upgrades, updates and additional integrations. At the end of the day, investing in new tech became too high a risk, with hefty price tags that couldn’t be easily reduced due to vendor lock-in.
The good news is that composable architectures, especially in digital commerce, are flipping this outdated landscape on its head. Because of its component-based approach, composable commerce enables companies to have unparalleled flexibility to create tech stacks that empower outstanding shopping experiences.
As an easier architecture to create and manage than legacy tech, composable commerce has arisen as the smartest technology investment to manage risk, as well as optimize value creation and ROI.
The value of agility
It may sound like a cliché but there’s no doubt that managing constant change is at the top of every company’s agenda. Unleashing the value of agility is, more than ever, a matter of survival: After all, if businesses don’t have the ability to adapt swiftly to changing markets, evolving customer expectations and unforeseen situations, how can they survive — let alone thrive?
Technology is a big part of being an agile company. And, to date, scores of companies have relied on monolithic commerce technology that is the opposite of agile simply because they had no other choice. For instance, if you want to update one tiny feature, you have to update the entire platform. This makes experimentation and innovation more of a hassle to manage than an exciting process.
In contrast, a composable architecture lets you use flexible components that are independent and interchangeable. You can add, replace or drop components at any time, so it’s possible to update a feature without touching your entire tech stack. That gives you more flexibility to iterate and experiment with new ideas without worrying about breaking infrastructure. It’s also much easier to react to dynamic and unpredictable market conditions with bite-sized components than huge monolithic applications that require huge effort to change and update.
A case in point is Cimpress, a print, merchandise and packaging company. Since pivoting to composable commerce, Cimpress launched two massive projects in the span of four to five weeks so that the company could launch face masks during the COVID-19 pandemic at speed. Similarly, the fashion retailer Express went from releasing updates every two to three months to multiple times a week, enabling the company to keep up with market demands.
With inherent agility and flexibility powered by composability, companies can iterate and experiment frequently and without fear. For instance, implementing omnichannel and mobile-first journeys becomes a much easier task to accomplish, empowering companies to enhance revenue-generating opportunities at speed.
The value of productivity
Still today, many businesses see technology as a blocker, not an enabler: Developers spend most of their time on problem-solving, system maintenance and upgrades. Time for innovation and bringing new ideas to life is limited, which affects not only team motivation but the bottom line.
The API-centric, versionless and tech-agnostic architecture of composability enables businesses to boost developer productivity big time: Not only can developers work in the language they prefer, but they can also accelerate releases, customize functions and experiment without limits. In contrast with legacy platforms that require certified developers, composable commerce lowers the barrier and offers modern tools that attract and retain talent. The result is clear: By giving developers the tools to become more productive, you can innovate more and, in turn, achieve great results.
The team at flaconi, a beauty retailer, has experienced this advantage first-hand with developers who enjoy working with cutting-edge APIs that enable them to achieve more, faster. CHRONEXT, a luxury watch retailer, increased developers’ productivity by 80%, while Koala, an Australian lifestyle brand, can now manage constant changes with an overhaul in IT culture based on composability.
At the same time, boosting productivity involves more than your tech team. A composable approach means not only that developers have access to well-designed APIs but also business users can also be active participants in accelerating ROI through innovation. This is possible when composable solutions provide no-code tools, such as the Merchant Center as the business tooling for commercetools Composable Commerce and Studio for commercetools Frontend, to manage promotions, update product information and edit web pages without writing code.
The value of incremental innovation
A key benefit of composable commerce is the ability to implement enhancements to existing products, services or processes gradually, as opposed to radical transformations of entire technology systems. This incremental innovation approach enables your business to address pain points before they become larger issues or simply update features to accommodate new customer needs.
Industry leaders are increasingly recognizing the transformative potential of incremental innovation in delivering tangible business value. By embracing this strategic approach, organizations can rapidly respond to shifting customer expectations and market dynamics, while minimizing risk and maximizing resource efficiency. Incremental innovation has become a vital component of sustainable growth and competitive advantage in today's fast-paced digital commerce landscape.
Customer Value Director, commercetools
The ability to innovate incrementally means that your company can establish a constant stream of releases, accelerate time-to-value and capture first results faster. Essentially, you’re looking at small investments and then seeing an almost immediate return for it.
Moreover, the influence of composability on ROI extends beyond immediate changes. It becomes clear that it's the lasting effects of composability, including the introduction of new touchpoints, increased speed and enhanced agility, that significantly impact ROI. For instance, the ability to empower content, product and search teams to implement features without relying on development support directly stems from composability, and this heightened agility can directly translate into a substantial ROI.
The value of composable is yours to take
By moving away from monolithic applications into modular, reusable building blocks powered by composable commerce, your business can achieve quicker results and enhance its adaptability to evolving business demands. Such agility empowers you to maintain a competitive edge, seize growth prospects on the fly and swiftly capitalize on innovative business models that drive expansion and competitiveness.
commercetools Composable Commerce for B2B and B2C, alongside a growing portfolio of commerce solutions for frontend, checkout and more, helps you capitalize the value of this paradigm-shifting technology without breaking the bank. By improving your ability to tap into revenue streams while reducing costs, your business is poised for sustained growth.