Outsourcing, let me count the ways

By David Strom


(this article was published originally on EarthWeb's Intranet Journal site in January 2000.)


An outsourcing vendor can deliver just about any part of your information technology plan these days. While it is nice to have lots of choices, it is sometimes hard to pick and choose the appropriate vendor and decide which pieces you want to have in-house and which you can safely outsource. Let's examine some of the more popular categories and services.


This is the fourth installment in a series on new Web technologies. We began with a look at various Web management tools and techniques. Last time we described payment systems for eCommerce. In this article let's assume you already have a working Web site and want to examine a variety of outsourcing services and products as well as what kinds of services can be used to augment Web storefronts hosted elsewhere.


Before you make any outsourcing decisions, first take a candid assessment of your existing people and their skill sets. Ask yourself the following questions:


n         Do you have a data center staffed by people comfortable with maintaining your Web server and applications? If not, then you might consider off-site Web hosting.

n         Do you have sufficient perl or Vbscript or other Web-based programming expertise? If not, then you should consider one of the storefront services.

n         Do you have want to accept real-time payment processing on your storefront? If so, then consider the specialty services including address verification and fraud prevention vendors.

n         Do you have a solid database administrator, along with people familiar with Oracle or SQL Server or some other client-server database? And do you maintain your present product catalog on a database server and have the skills to manipulate this data on to your Web site? If not, then consider one of the outsourced catalog management companies.

n         Do you have the skills and time to track your Internet connection and uptime issues? If not, then consider one of the many site performance services.

n         Do you want to enhance your site with additional customer support and relationship management features? Then consider using one of these service companies as well.

n         Are you looking to migrate away from proprietary email such as Lotus Notes and Microsoft Exchange and implement Internet-based email for your enterprise? Then consider email outsourcing partners as well.


Let's take a look in more detail at the kinds of services each of these providers offers along with a few recommended vendors.


Web Hosting


In the beginning, say in the early 1990s, there were just ordinary Internet Service Providers. They provided a dial-up phone number, an email account or two, and very little else. Some of the more forward-thinking ISPs also offered packages to host your own web site on their equipment for an extra charge, and others included support for Internet newsgroups and other Internet applications such as real-time chat. Then things started to get confusing, with ISPs struggling to differentiate themselves and adding various eCommerce services on top of basic web hosting. These ISPs offered shopping carts, integrated payment processing, and catalog hosting to fill out a complete eCommerce picture, calling themselves Commerce Service Providers in the process.


Nowadays just about every ISP worth its weight in T-1 lines offers some kind of eCommerce hosting package: some like Concentric Network Corp. have so many plans that it is hard just to wade through the various combinations of features, site metrics (such as disk storage, page requests per month, and email accounts) and operating systems (they offer NT, Unix and Linux plans). The trick is in understanding what else besides the straight Web server is included. For example, some plans offer shopping carts, payment processing, and catalog management for the complete storefront.


One of the better storefront technologies is Open Market Inc.'s ShopSite technology, which uses simple web forms as a front end to its more sophisticated services and back-end databases. ShopSite is available from a wide variety of ISPs running on both NT and Unix systems.


Other good choices for site hosting with a variety of eCommerce features include IBM's Home Page Creator and Earthlink Network Inc.'s Total Commerce plans. IBM's offerings range from $25 to $200 a month plus initial fees up to $150 and the first month free. IBM offers transaction processing through one of two providers, Automated Transaction Services Inc. or First Data Merchant Services Corp.


Hosted Catalogs


The advantages of using your ISP is that you have a single bill and source of solutions. They can offer built-in support for your entire storefront catalog and produce a turnkey operation. But these points can be a disadvantage if you don't particularly care for the solutions offered. The shopping cart may not support the number of items in your catalog, or the payment processing may not work with your merchant bank. Under these circumstances, you might want to investigate Evergreen Internet Inc.'s Ecential service, designed for serious processing and hosting, catalog and inventory management, often for six-figure fees Evergreen supports higher-end storefronts and charges about ten percent of your total sales for fees.


Storefront Service Providers


Setting up an eCommerce site isn't for everyone, as I described in the previous article on payment technologies. The hardest decision you'll have to face is whether or not to run your Web storefront in or out of house. As I mentioned in the checklist above, the key factor is how much existing Web-oriented scripting and programming talent you have on staff: any Web storefront will require a great deal of perl or Vbscripting to get the various pieces working together.


If you don't have these skills or if you aren't comfortable with the level of your existing staff, then consider one of the storefront service providers. You also might consider these providers if you have an existing web site and don't want to add eCommerce to this site but run something separately. There are dozens to choose from, including from such reputable vendors as Yahoo Inc., Amazon.com, Intel Corp.'s iCat, along with smaller companies. Typical monthly fees are less than $100 for small catalogs of less than 50 items. These operators will set up and host your store's pages, organize your catalog, and send you email when a customer makes a purchase but that is about as far as they go. Yahoo has a very easy to use system and also a very simple pricing structure that is based on the size of the catalog and no extra processing fees. Some, such as Amazon's zShops, will include payment processing for extra cost. Here is Amazon's fee schedule, which can add up to almost ten percent of the purchase price!


Many of the providers offer 30-day free trials, and the time invested in setting up a simple test storefront can take a few hours to a day's time. A good place to start evaluating any of these storefront providers is the reports they produce on your visitors. Can you track orders and easily import this information into your existing customer systems? Do the reports show those visitors who didn't make any purchases? Can you produce time-series reports or reports by most popular items ordered?


These providers are good for first-time eCommerce store owners to gain experience in setting up their catalogs and understanding the many different pieces needed to operate a storefront. They can also expose the weak areas in your own staffing and skill needs before you get into a larger eCommerce project down the road.


Address Verification/Fraud Prevention


Once you have your storefront operating, the next step is making sure your orders are from legitimate customers and you can take steps to prevent fraud. Credit card issuers classify Internet transactions as "card not present transactions" (like postal mail orders and telephone orders). This means you as the merchant are liable for all fraudulent transactions. A good starting place to understand the implications of fraud can be found on Yahoo's site.


There are several ways to fight fraud. If you make use of the PC-based point-of-sale systems mentioned in the previous article, they already come with some simple address verification systems (AVS) and credit card number-checking routines built in. Some of the service providers mentioned above, such as iCat, also offer AVS/fraud protection if you use their payment provider ClearCommerce Corp.


But if your store becomes popular and you need more industrial-strength systems, then consider either using ClearCommerce directly for your payment processing or another provider such as Cybersource Corp. or Plug & Pay Technologies Inc. All of these vendors offer a series of services, including fraud screening, tax processing, fulfillment, and credit card payment processing. Their fraud screens use various automated routines to determine in real-time whether a pending transaction could be a cause for concern and is then flagged for a human operator to intervene. Plug & Pay is less expensive than the others but offers fewer features.


Customer Support/Relationship Management


Putting up a web site is more than just databases and catalogs. It is understanding what is important to your visitors and providing your existing customers with the right kinds of information when they need it and in a logical place on your site. A number of vendors have produced enhancements that enable better customer support, including automating lists of frequently asked questions, personalization and navigation issues, and links to your call-centers.


Lists of frequently asked questions (FAQs) are usually static, dreary affairs that don't often receive much attention from web site managers. But they can be a real asset to a corporation's web site, reflecting a dynamic user community with interactive suggestions and responses. One company specializing in this area is Right Now Technologies Inc., which will host your own FAQs and maintain the link. Their service includes a feedback mechanism whereby each visitor is asked whether or not the question answered his or her query, and then factors this information into the next time a visitor comes with a similar question. To see an example of this kind of service, go to Ben and Jerry's site and ask what about your favorite ice cream flavor. Their service starts at $20,000 for two years, and includes software updates and the initial upload of questions to populate the site.


Trivida Corp.'s Personalization Service detects and stores visitor behavior patterns and suggests places on your site to predict what that person is looking for. This is useful when you have a complex site with many different navigational branches, and need a way to simplify its structure without eliminating much of the site content. There are many vendors who will sell you personalization software that you run on your own network. However, these products are complex and require many months of consulting time to setup. Trivida has a better solution and will host the personalization services on their site. All you need to do to add these personalization features is include a series of special HTML tags within your existing web pages. These tags alert the services back at Trivida's site and set up the appropriate recommended links in real-time. The service costs start at $2000 per month and there are additional charges depending on the number of links and visitors to your site, but the first three months of the service are free.


Another example of site enhancements is the ability to connect to a live call center operator from a web page. Cisco Systems/Webline Communications is one of many companies offering such services, which start at $1500 per operator and can include integration into your email customer response systems as well. To get an idea of how to use this system, go to LandsEnd's site and ask for help with your shopping needs.


Email Outsourcing


Another place to consider outsourced services has to do with enterprise email. Email is becoming more and more a critical resource and corporations are finding out that maintaining a reliable system can be a challenge or expensive. If you are presently using a non-Internet system such as Notes or Exchange and are having problems keeping your servers online or the mail flowing, then you might want to consider using one of these services from companies such as Critical Path Inc. and USA.net. This is exactly what United Airlines and the LA Times did, scrapping proprietary systems that were troublesome to maintain and going with these vendors to deliver email to a wide proportion of their end users. Typically, they charge a monthly fee per mailbox, such as $5, with discounts for hundreds or thousands of users. And if your communications needs go beyond just mailboxes for individuals to discussion groups and maintaining customer mailing lists, then consider services such as YahooGroups.com. You upload your address list and they maintain it, keep track of your mailings, and can set up discussion groups that anyone with a web browser can participate in.


Site Performance Services


Once you have your site up on somebody else's network and data center, the next thing you'd like to know is how often is the site available to the Internet and how many visitors are coming by? A number of vendors provide the ability to keep track of your site and measure its performance.


Keynote Systems Inc. and Service Metrics (recently acquired by Exodus Communications Inc.) have for-fee service offerings exclusively, while Web Partner has both free and for-fee services. Mercury Interactive Corp. has both service offerings (called Topaz ActiveWatch) and software testing products available.


Both Keynote and Service Metrics claim similar methodologies. Each places a series of 100 or more "agents" or software monitors at various locations around the world, connected to particular Internet backbone and primary access providers. These agents send signals through these networks to a series of common web destinations, such as eCommerce, general consumer and portal sites, as well to custom destinations specified for a fee by the site's owner. The agents calculate packet delays, overall latency and other measurements to get to these sites, and then send this information back to a central repository. The company in its reports then summarizes this, which you access via a web browser or receive via periodic emails.


Active Watch uses the same scripts that the other Mercury products use: once a customer develops a script (to navigate to a particular page on a web site, execute a particular transaction, etc.), it can be used across the board in many different products and services.


Keynote's Perspective service costs range from $295 to $995 a month. This puts them out of the reach of the average sized web operator, and is on par with the access line charges for a typical business T-1 circuit. They also offer a stripped-down single-city Lifeline service for $695 per year, although this isn't really a very effective price point. Service Metrics has more reasonable fees than Keynote, ranging from $295 to $495 per month. ActiveWatch costs $750 per month.


There are two other offerings, one lower-cost and one higher-cost. Webpartner.com offers Secret Shopper Checkout that monitors the checkout page every 15 minutes of a specified storefront ($349/yr). They have a free service that monitors basic site availability and will email you weekly status reports that I've used over the past few years. Manage.com offers a complete eCommerce package, starting at several tens of thousands of dollars, with in-depth monitoring of various processes.


Again, before you get involved in any of these services, try to sign up for a free trial and examine the kinds of reports you get from each vendor, and make sure you understand the information they are sending you.




Over the course of these articles I have discussed many of the new web technologies that can help you manage your enterprise and applications. They represent a rich array of services and products that take the humble web browser into new and exciting areas and can be powerful tools in your information technology arsenal. And because most of these technologies are web-based, you can test their products out without having to install much in the way of software on your own networks and can access various demos and free trials around the Internet at all hours of the day and night. I wish you much success with any and all of these approaches.