As the clock struck midnight at the ball, Cinderella ran away from Prince Charming, leaving behind a glass slipper as the only clue to her existence for the love-struck prince. The story goes that Prince Charming was so infatuated with Cinderella that he searched throughout the entire kingdom for this one beautiful girl whose foot contoured perfectly into the slipper, but no girl fit exactly into the shoe.
Prince Charming refused to marry any girl other than the one who fit the slipper, while Cinderella was initially blocked from trying on the slipper because of her evil stepmother. It was a frustrating mess for the kingdom who had been left with an incapacitated prince who cared more for the girl than for running the kingdom. Clearly, the prince needed better help finding the girl who fit the slipper just like Cinderella.
There is a similar problem in the e-payments world today. Midmarket companies have become the fastest movers in pushing for new technology, but they also face the daunting challenges in the sense that they do not have the financial resources or manpower of the larger mega companies. It is hardest for them to get that Cinderella fit—software that is completely compatible with their systems—because no services are ever built with smaller-sized businesses specifically in mind. The big money is often in serving the mega companies of an industry. Because of this, these midsized companies have only considered two options to find their answer for e-payments: they can buy, or they can build.
However, neither of these options delivers the right fit for these small and midsized companies. First, buying the software is problematic. Software is optimized only for the largest companies; and customization comes at a hefty price, and a lower overall priority for the vendor typically. Also, smaller companies often do not need all the bells and whistles that come with the prepackaged product, but are forced to accept them anyway. In addition, the pricing structure is usually a “take it or leave it” scenario, creating an all or nothing deal for the service.
Considering these hurdles, some companies might think that building their own software would be easier, but that comes with its own set of challenges. A small or midsized company is limited in workforce and monetary resources already. Also, e-payments are not likely a core competency of the company, and at best would be a distraction and opportunity cost debate among the team. E-payments then becomes a drain on the engineering resources who have to spend time developing it in the name of efficiency, and therefore, have less time to spend working on the only thing that is going to make the company money—their actual core products. All of this challenges the ROI associated with such a build program.
Because neither of these two options seems particularly well-suited for these small and midsized companies, a third option became necessary—Software- or Platform-as-a-Service (SaaS, PaaS) solutions entered the scene as a “meet in the middle” approach and a way to shift capex to opex. The convergence of cloud computing and cloud-based software solutions brings together the best of buying and building e-payment systems. With on-demand and per unit pricing schemes, companies can pick their price point by choosing to access only specific, useful parts of the software, and only when they need it.
An extensive survey by PYMNTS.com in 2014 showed only 30% of companies thought they had an IT department large enough to support a new e-payments infrastructure. However, since cloud-based software promises scalable solutions that can implement seamlessly into already existing workflows, these companies still had a path forward. Even though it took searching all of the kingdom to find the right fit, the new cloud-based solutions for e-payments solves the Cinderella complex. These companies now have access to a solution that can fit their exact e-payments specifications, and can gain the same benefits as their much larger competitors.