Building an E-commerce Web Site

Transcription

1 CHAPTER 4 Building an E-commerce Web Site LEARNING OBJECTIVES After reading this chapter, you will be able to: Explain the process that should be followed in building an e-commerce Web site. Describe the major issues surrounding the decision to outsource site development and/or hosting. Identify and understand the major considerations involved in choosing Web server and e-commerce merchant server software. Understand the issues involved in choosing the most appropriate hardware for an e-commerce site. Identify additional tools that can improve Web site performance.

2 Right-Sizing a Web Site Let s say you ve decided to create a Web site for your successful garden equipment company. You ve been in business for five years, have established a regional brand for high-quality gardening tools, and have about 12,000 retail customers and 21 wholesale dealers who purchase from you. Based on a marketing report you commissioned, you expect that in the first year your Web site will have about 1,400 visitors a day. The average visitor will look at eight pages, producing about 4 million page views a year. About 10% will purchase something, and the rest will browse to explore prices and products. However, in peak times (during the months of April, May, June, and December), you expect peak loads of 3,000 customers a day, concentrated during the hours of 9 A.M. to 5 P.M., producing about 375 visitors per hour or 6 per second. During this time, your Web site will have to serve up about 40 screens per second, with most of the content being read from a database of product and price information. Pages must be served up within 2 seconds of a customer click during peak times or customers may lose patience and go elsewhere. Before you can proceed, there are some questions you will need answered. How many Web servers will your site require? How many CPUs should each server have? How powerful does the site s database server need to be? What kind of connection speed do you need to the Internet? Until recently, finding the answers to questions such as these was often done on a trial-and-error basis. However, hardware and software vendors such as IBM, Microsoft, and Hewlett-Packard have developed a number of simulation tools that can help you find the right answers. IBM s simulator is called the On Demand Performance Advisor (OPERA) (formerly known as the High Volume Web Sites Simulator). OPERA enables users to estimate the performance and capacity of a Web server based on workload patterns, performance objectives, and specific hardware and software. OPERA has a very easy-to-use interface that includes pre-built workload patterns for various e-commerce applications, such as 199

3 200 CHAPTER 4 Building an E-commerce Web Site SOURCES: Online Tools Give Home-Based Firms Office-Style Services, by Gwendolyn Bounds, Wall Street Journal, September 11, 2007; Keeping Costs Low For Online Business, by Kelly Spors, New York Times, April 24, 2007; Guide to E-commerce Technology, Edition, Internet Retailer, 2007; Sonoma: Web Service for Estimating Capacity and Performance of Service-Oriented Architecture (SOA) Workloads, by Eugene Hung, Qi He, Jinzy Zhu, IBM Working Paper, October 9, 2006; HiPODs Model: An ebay Case Study, by Noshir C. Wadia, Jayashree Subrahmonia, and Umesh Talwalkar, IBM Conference on Performance Engineering and Best Practices, June 21, 2004; More about High Volume Web Sites, by High-Volume Web Sites Team, IBM Redbook, March 8, 2004; HVWS Simulator: An ebay Case Study, High Performance On Demand Solutions Team and ebay, February 27, shopping, banking, brokerage, auction, portal, B2B, and reservation systems, that can be modified as necessary based on the user s own data or assumptions. It can provide what-if analyses for various performance parameters such as throughput, response time, resource utilization, number of concurrent users, and page view rate. It also provides special algorithms to address increases in Web traffic during peak usage periods. The simulator includes built-in performance characteristics for various types of hardware (such IBM, Sun, and HP servers), software, and infrastructure models. OPERA uses an analytic model to generate reports that allow users to assess the adequacy of proposed hardware and software configurations, forecast performance, and graphically identify bottlenecks that might develop. IBM also offers Sonoma, a Web service based on OPERA, that can be used to estimate the performance and capacity of service-oriented architecture (SOA) workloads. Users of the simulator have included Charles Schwab, Aetna, Fidelity, Visa, Bank of America, Walmart.com, and ebay, among others. ebay first turned to the simulator when it was attempting to cope with dramatic increases in customer demand. In its early years, ebay needed to serve up only about 1 million pages per hour, but as its customer base grew, and the number of page views per hour significantly increased, its original Web site hardware and software became insufficient, creating customer resistance. After running a simulation of its current and likely future workload, ebay decided to rebuild its auction system around IBM s WebSphere application that integrates a variety of software tools into an integrated Web site design. Later, ebay returned to OPERA to examine the performance of its Sell Your Item application on its new three-tier Web server architecture. The simulation enabled ebay to determine both the number of servers (36) and the optimal CPU (the IBM x335, which provided a 30% performance increase due to a higher-speed CPU, increased amount of RAM, and faster bus speed) required to meet current workloads and future growth targets. But let s say you re not ebay or Fidelity, and are just creating the proverbial one-person-in-a-garage-just-getting-started kind of Web site. For instance, Dave Novak created Steamshowers4Less.com using a MacBook Pro computer in a spare bedroom. He now sells over $1 million a year in bath fixtures. For really small sites, micro-businesses with just a few people, there are many less costly alternatives to sizing issues. One solution is to build a Web site using pre-built templates offered by Yahoo Merchant Solutions, Amazon, ebay, Design.NetworkSolutions.com, or hundreds of other online sites. Fees range from a few hundred dollars to several thousand. These firms host your Web site and they worry about capacity and scale issues as your firm grows. For instance, Yahoo Merchant Solutions offers three different packages Starter, Standard, and Professional. As the business grows, you can move up to a more comprehensive package. Another solution is to hire a local professional designer (for about $1,000 $5,000) and have them build you an e-commerce installation that runs off a single computer and broadband connection. If you need more computing power, buy a newer PC with more speed and storage. Get a faster Web connection. Still another solution is to do everything yourself (design the Web site, procure and build the Web servers, and connect to the Internet) at first until you start attracting customers. However, in both of these do-it-yourself solutions, you will have to worry about how to keep up with growth.

4 Building an E-commerce Web Site: A Systematic Approach 201 In Chapter 3, you learned about the infrastructure of the Internet and the Web, e-commerce s technological foundation. Now it s time to focus on the next step: building an e-commerce site. In this chapter, you will examine the important factors that a manager needs to consider when building an e-commerce site. The focus will be on the managerial and business decisions you must make before you begin to build Web pages and Web sites, and which you will continually need to make during the life of your Web site. While building a sophisticated e-commerce site isn t easy, today the tools for building Web sites are much less expensive and far more powerful than they were during the early days of e-commerce. You do not have to be Amazon or ebay to create a successful Web site. In this chapter, we focus on both small and medium-sized businesses that want to build a Web site, and much larger corporate entities that serve thousands of customers a day, or even an hour. As you will see, although the scale may be very different, the principles and considerations are basically the same. 4.1 BUILDING AN E-COMMERCE WEB SITE: A SYSTEMATIC APPROACH Building a successful e-commerce site requires a keen understanding of business, technology, and social issues, as well as a systematic approach. E-commerce is just too important to be left totally to technologists and programmers. The two most important management challenges in building a successful e-commerce site are (1) developing a clear understanding of your business objectives and (2) knowing how to choose the right technology to achieve those objectives. The first challenge requires you to build a plan for developing your firm s site. The second challenge requires you to understand some of the basic elements of e-commerce infrastructure. Let the business drive the technology. Even if you decide to outsource the entire e-commerce site development and operation to a service provider, you will still need to have a site development plan and some understanding of the basic e-commerce infrastructure issues such as cost, capability, and constraints. Without a plan and a knowledge base, you will not be able to make sound management decisions about e-commerce within your firm (Laudon and Laudon, 2009). PIECES OF THE SITE-BUILDING PUZZLE Let s assume you are a manager for a medium-sized, industrial parts firm of around 10,000 employees worldwide, operating in 10 countries in Europe, Asia, and North America. Senior management has given you a budget of $1 million to build an e-commerce site within one year. The purpose of this site will be to sell and service the firm s 20,000 customers, who are mostly small machine and metal fabricating shops around the world. Where do you start?

5 202 CHAPTER 4 Building an E-commerce Web Site First, you must be aware of the main areas where you will need to make decisions (see Figure 4.1). On the organizational and human resources fronts, you will have to bring together a team of individuals who possess the skill sets needed to build and manage a successful e-commerce site. This team will make the key decisions about technology, site design, and the social and information policies that will be applied at your site. The entire site development effort must be closely managed if you hope to avoid the disasters that have occurred at some firms. You will also need to make decisions about your site s hardware, software, and telecommunications infrastructure. While you will have technical advisors help you make these decisions, ultimately the operation of the site is your responsibility. The demands of your customers should drive your choices of technology. Your customers will want technology that enables them to find what they want easily, view the product, purchase the product, and then receive the product from your warehouses quickly. You will also have to carefully consider your site s design. Once you have identified the key decision areas, you will need to think about a plan for the project. PLANNING: THE SYSTEMS DEVELOPMENT LIFE CYCLE Your second step in building an e-commerce site will be creating a plan document. In order to tackle a complex problem such as building an e-commerce site, you will have to proceed systematically through a series of steps. One methodology for developing an e-commerce site plan is the systems development life cycle (see Figure 4.2). FIGURE 4.1 PIECES OF THE E-COMMERCE SITE-BUILDING PUZZLE Building an e-commerce Web site requires that you systematically consider the many factors that go into the process.

6 Building an E-commerce Web Site: A Systematic Approach 203 FIGURE 4.2 WEB SITE SYSTEMS DEVELOPMENT LIFE CYCLE The systems development life cycle (SDLC) is a methodology for understanding the business objectives of any system and designing an appropriate solution. Adopting a life cycle methodology does not guarantee success, but it is far better than having no plan at all. The SDLC method also helps in creating documents that communicate to senior management the objectives of the site, important milestones, and the uses of resources. The five major steps involved in the systems development life cycle for an e-commerce site are: Systems Analysis/Planning Systems Design Building the System Testing Implementation systems development life cycle (SDLC) a methodology for understanding the business objectives of any system and designing an appropriate solution SYSTEMS ANALYSIS/PLANNING: IDENTIFY BUSINESS OBJECTIVES, SYSTEM FUNCTIONALITY, AND INFORMATION REQUIREMENTS The systems analysis/planning step of the SDLC tries to answer the question, What do we want the e-commerce site to do for our business? The key lesson to be learned here is to let the business decisions drive the technology, not the reverse. This will ensure that your technology platform is aligned with your business. We will assume here that you have identified a business strategy and chosen a business model to achieve your strategic objectives (see Chapter 2). But how do you translate your strategies, business models, and ideas into a working e-commerce site?

7 204 CHAPTER 4 Building an E-commerce Web Site business objectives a list of capabilities you want your site to have system functionalities a list of the types of information systems capabilities you will need to achieve your business objectives information requirements the information elements that the system must produce in order to achieve the business objectives One way to start is to identify the specific business objectives for your site, and then develop a list of system functionalities and information requirements. Business objectives are simply a list of capabilities you want your site to have. System functionalities are a list of the types of information systems capabilities you will need to achieve your business objectives. The information requirements for a system are the information elements that the system must produce in order to achieve the business objectives. You will need to provide these lists to system developers and programmers so they know what you as the manager expect them to do. Table 4.1 describes some basic business objectives, system functionalities, and information requirements for a typical e-commerce site. As shown in the table, there are nine basic business objectives that an e-commerce site must deliver. These objectives must be translated into a description of system functionalities and ultimately into a set of precise information requirements. The specific information requirements for a system typically are defined in much greater detail than Table 4.1 indicates. To a large extent, the business objectives of an e-commerce site are not that different from those of an ordinary retail store. The real difference lies in the system functionalities and information requirements. In an e-commerce site, TABLE 4.1 SYSTEM ANALYSIS: BUSINESS OBJECTIVES, SYSTEM FUNCTIONALITY, AND INFORMATION REQUIREMENTS FOR A TYPICAL E-COMMERCE SITE BUSINESS SYSTEM INFORMATION OBJECTIVE FUNCTIONALITY REQUIREMENTS Display goods Digital catalog Dynamic text and graphics catalog Provide product information (content) Product database Product description, stocking numbers, inventory levels Personalize/customize product Customer on-site tracking Site log for every customer visit; data mining capability to identify common customer paths and appropriate responses Execute a transaction Shopping cart/payment system Secure credit card clearing; multiple payment options Accumulate customer information Customer database Name, address, phone, and for all customers; online customer registration Provide after-sale customer support Sales database Customer ID, product, date, payment, shipment date Coordinate marketing/advertising Ad server, server, , Site behavior log of prospects and customers campaign manager, ad banner linked to and banner ad campaigns manager Understand marketing effectiveness Site tracking and reporting system Number of unique visitors, pages visited, products purchased, identified by marketing campaign Provide production and supplier links Inventory management system Product and inventory levels, supplier ID and contact, order quantity data by product

8 Building an E-commerce Web Site: A Systematic Approach 205 the business objectives must be provided entirely in digital form without buildings or salespeople, twenty-four hours a day, seven days a week. SYSTEM DESIGN: HARDWARE AND SOFTWARE PLATFORMS Once you have identified the business objectives and system functionalities, and have developed a list of precise information requirements, you can begin to consider just how all this functionality will be delivered. You must come up with a system design specification a description of the main components in the system and their relationship to one another. The system design itself can be broken down into two components: a logical design and a physical design. A logical design includes a data flow diagram that describes the flow of information at your e-commerce site, the processing functions that must be performed, and the databases that will be used. The logical design also includes a description of the security and emergency backup procedures that will be instituted, and the controls that will be used in the system. A physical design translates the logical design into physical components. For instance, the physical design details the specific model of server to be purchased, the software to be used, the size of the telecommunications link that will be required, the way the system will be backed up and protected from outsiders, and so on. Figure 4.3(a) presents a data flow diagram for a simple high-level logical design for a very basic Web site that delivers catalog pages in HTML in response to HTTP requests from the client s browser, while Figure 4.3(b) shows the corresponding physical design. Each of the main processes can be broken down into lower-level designs that are much more precise in identifying exactly how the information flows and what equipment is involved. BUILDING THE SYSTEM: IN-HOUSE VERSUS OUTSOURCING Now that you have a clear idea of both the logical and physical design for your site, you can begin considering how to actually build the site. There are many choices here and much depends on how much money you are willing to spend. Choices range from outsourcing everything (including the actual systems analysis and design) to building everything yourself (in-house). Outsourcing means that you will hire an outside vendor to provide the services involved in building the site that you cannot perform with in-house personnel. You also have a second decision to make: Will you host (operate) the site on your firm s own servers or will you outsource the hosting to a Web host provider? These decisions are independent of each other, but they are usually considered at the same time. There are some vendors who will design, build, and host your site, while others will either build or host (but not both). Figure 4.4 on page 207 illustrates the alternatives. system design specification description of the main components in a system and their relationship to one another logical design describes the flow of information at your e-commerce site, the processing functions that must be performed, the databases that will be used, the security and emergency backup procedures that will be instituted, and the controls that will be used in the system physical design translates the logical design into physical components outsourcing hiring an outside vendor to provide the services you cannot perform with in-house personnel Build Your Own versus Outsourcing Let s take the building decision first. If you elect to build your own site, there are a range of options. Unless you are fairly skilled, you should use a pre-built template to create the Web site. For example, Yahoo Merchant Solutions, Amazon Stores, and ebay

9 206 CHAPTER 4 Building an E-commerce Web Site FIGURE 4.3 A LOGICAL AND PHYSICAL DESIGN FOR A SIMPLE WEB SITE (a) Simple Data Flow Diagram. This data flow diagram describes the flow of information requests and responses for a simple Web site. (b) Simple Physical Design. A physical design describes the hardware and software needed to realize the logical design.

10 Building an E-commerce Web Site: A Systematic Approach 207 FIGURE 4.4 CHOICES IN BUILDING AND HOSTING You have a number of alternatives to consider when building and hosting an e-commerce site. all provide templates that merely require you to input text, graphics, and other data, as well as the infrastructure to run the Web site once it has been created. This is the least costly and simplest solution but you will be limited to the look and feel and functionality provided by the template and infrastructure. If you have some experience with computers, you might decide to build the site yourself from scratch. There is a broad variety of tools, ranging from those that help you build everything truly from scratch, such as Adobe Dreamweaver and Microsoft Expression, to top-of-the-line prepackaged site-building tools that can create sophisticated sites customized to your needs. Figure 4.5 illustrates the spectrum of tools available. We will look more closely at the variety of e-commerce software available in Section 4.2. FIGURE 4.5 THE SPECTRUM OF TOOLS FOR BUILDING YOUR OWN E-COMMERCE SITE

11 208 CHAPTER 4 Building an E-commerce Web Site The decision to build a Web site on your own has a number of risks. Given the complexity of features such as shopping carts, credit card authentication and processing, inventory management, and order processing, the costs involved are high, as are the risks of doing a poor job. You will be reinventing what other specialized firms have already built, and your staff may face a long, difficult learning curve, delaying your entry to market. Your efforts could fail. On the positive side, you may be better able to build a site that does exactly what you want, and more important, develop the in-house knowledge to allow you to change the site rapidly if necessary due to a changing business environment. If you choose more expensive site-building packages, you will be purchasing state-of-the art software that is well tested. You could get to market sooner. However, to make a sound decision, you will have to evaluate many different packages and this can take a long time. You may have to modify the packages to fit your business needs and perhaps hire additional outside vendors to do the modifications. Costs rise rapidly as modifications mount. A $4,000 package can easily become a $40,000 to $60,000 development project (see Figure 4.6). If you choose the template route, you will be limited to the functionality already built into the templates, and you will not be able to add to the functionality or change it. In the past, bricks-and-mortar retailers in need of an e-commerce site typically designed the site themselves (because they already had the skilled staff in place and had extensive investments in information technology capital such as databases and telecommunications). However, as Web applications have become more sophisticated, larger retailers today rely heavily on vendors to provide sophisticated Web site capabilities, while also maintaining a substantial internal staff. Small startups may build their own sites from scratch using in-house technical personnel in an effort to FIGURE 4.6 COSTS OF CUSTOMIZING E-COMMERCE PACKAGES While sophisticated site development packages appear to reduce costs and increase speed to market, as the modifications required to fit the package to your business needs rise, costs also rise exponentially.

12 Building an E-commerce Web Site: A Systematic Approach 209 keep costs low. Medium-size startups will often purchase a sophisticated package and then modify it to suit their needs. Very small mom-and-pop firms seeking simple storefronts will use templates. For e-commerce sites, the costs of building has dropped dramatically in the last five years, resulting in lower capital requirements for all players (see Insight on Business: Curly Hair and Tattoos: Getting Started on the Cheap). Host Your Own versus Outsourcing Now let s look at the hosting decision. Most businesses choose to outsource hosting and pay a company to host their Web site, which means that the hosting company is responsible for ensuring the site is live, or accessible, twenty-four hours a day. By agreeing to a monthly fee, the business need not concern itself with many of the technical aspects of setting up a Web server and maintaining it, telecommunications links, nor with staffing needs. You can also choose to co-locate. With a co-location agreement, your firm purchases or leases a Web server (and has total control over its operation) but locates the server in a vendor s physical facility. The vendor maintains the facility, communications lines, and the machinery. Co-location has expanded with the spread of virtualization where one server has multiple processors (4 16) and can operate multiple Web sites at once with multiple operating systems. In this case, you do not buy the server but rent its capabilities on a monthly basis, usually at one-quarter of the cost of owning the server itself. See Table 4.2 for a list of some of the major hosting/co-location providers. There is an extraordinary range of prices for co-hosting, ranging from $4.95 a month, to several hundred thousands of dollars per month depending on the size of the Web site, bandwidth, storage, and support requirements. Hosting and co-location have become a commodity and a utility: costs are driven by very large providers (such as IBM and Qwest) who can achieve large economies of scale by establishing huge server farms located strategically around the country and the globe. What this means is that the cost of pure hosting has fallen as fast as the fall in server prices, dropping about 50% every year! Telecommunications costs have also fallen. As a result, most hosting services seek to differentiate themselves from the commodity hosting business by offering extensive site design, marketing, optimization and other services. Small, local ISPs also can be used as hosts, but service reliability is an issue. Will the small ISP be able to provide uninterrupted service, 24x7x365? Will they have service staff available when you need it? co-location when a firm purchases or leases a Web server (and has total control over its operation) but locates the server in a vendor s physical facility. The vendor maintains the facility, communications lines, and the machinery TABLE 4.2 GoDaddy.com Oneandone.com IBM Global Services MOSSO KEY PLAYERS: HOSTING/CO-LOCATION SERVICES Qwest Communications NTT/Verio Rackspace ServerBeach

13 210 CHAPTER 4 Building an E-commerce Web Site INSIGHT ON BUSINESS CURLY HAIR AND TATTOOS: GETTING STARTED ON THE CHEAP With so many big companies with national brand names dominating the e-commerce scene, and with the top 100 retail firms collecting over 90% of the revenues, you may wonder if there s a chance for the little guy anymore, the complete amateurs. The answer is yes: there s still at least about $20 billion left in potential online retail sales to go for, with additional money to be made from advertising revenues. As it turns out, being big does not make you nimble. NaturallyCurly.com is a good example of a low entry cost, niche-oriented portal site. Two reporters, Gretchen Heber and Michelle Breyer, started the site with $500 in Both had naturally curly hair. We had long diatribes complaining about our curly hair on very muggy days, says Heber. Or they d talk about how good it looked on other days. Based on a hunch that other people also needed help coping with curly hair issues, they launched NaturallyCurly.com. They spent $200 on the domain name, and bought some curly hair products to review on the site. The site was built with a simple Web server and the help of a 14- year-old Web page designer. The idea was to act as a content site with community feedback. They added a bulletin board for users to send in their comments. There were no competitors at first, and even without advertising on Google, they started showing up in Google searches for curly hair near or at the top of the search results list. (continued)

14 Building an E-commerce Web Site: A Systematic Approach 211 In 2000, after a year of operation, they got an from Procter & Gamble, the world s largest personal care products company, asking if they would accept advertising for $2,000 a month for two years. From there, the site grew by adding additional advertising from leading hair care products companies such as Aveda, Paul Mitchell, and Redken, among others. Today the site has close to 200,000 monthly visitors and revenue in excess of $1 million from advertising and sales of products on curlmart.com, its online boutique for curly hair products.. In May 2007, the firm received an investment of $600,000 from a venture capital firm that will be used to hire a marketing person and support staff, improve its Web technology, and expand its shipping and handling operations. Ms. Breyer said the company is still not profitable because they have poured money back into the firm, but it s good enough that both quit their jobs in Internet incubators firms that provide technology, money, and space to small ventures in return for a part of the company are another source of small, niche-oriented e-commerce sites that are largely advertisingsupported. In a development reminiscent of the early years of e-commerce, when incubators such as IdeaLab and CMGI provided backing for dozens of retail-oriented e-commerce sites, a company called RIVR Media Interactive will produce 15 online-only video Web sites. RIVR produces television programming for cable channels such as A&E and Nickelodeon. Leveraging this video background, RIVR launched its first advertising-supported site, Needled.com. The site offers video clips, photos, multimedia histories, artists, and contact information to the needled crowd those who have tattoos. As it turns out, 67 million Americans have some kind of tattoo, and 34% of 18-to-34-year-olds have tattoos. The site runs video ads for all things young motorcycles, video games, beverages, and cars. Needled.com was started as a blog by Marisa DeMattia, and purchased by RIVR for an undisclosed sum. Other RIVR sites include Widgetgames.com, aimed at the casual gamer and SyncLive.com, which allows users to broadcast live concerts from venues across the country and the world. The lesson here is that building startup Web sites is much less expensive and much easier these days than in the past. SOURCES: About Us, NaturallyCurly.com, 2008; " Curl Tamers," Jewish Woman, Summer 2008; "RIVR Media Interactive Creating Syndicated Internet Network Geared toward Male Demographic", PR Newswire, June 25, 2008;"Turning Curls into Dollar Signs," Business Opportunities Weblog, March 2008; Bad Hair Days Lead Pair to Web Incubator and Venture Capital, by Bob Tedeschi, New York Times, May 21, 2007; Naturally Curly Raises $600,000 in Funding, by Kristen Nicole, Mashable.com, May 20, 2007; The Perils of Spending Hard-Raised Money, by Maureen Farrell, Forbes.com, May 3, There are several disadvantages to outsourcing hosting. If you choose a vendor, make sure the vendor has the capability to grow with you. You need to know what kinds of security provisions are in place for backup copies of your site, internal monitoring of activity, and security track record. Is there a public record of a security breach at the vendor? Most Fortune 500 firms do their own hosting so they can control the Web environment. On the other hand, there are risks to hosting your own site if you are a small business. Your costs will be higher than if you had used a large outsourcing firm because you don t have the market power to obtain low-cost hardware and telecommunications. You will have to purchase hardware and software, have a physical facility, lease communications lines, hire a staff, and build security and backup capabilities yourself.

15 212 CHAPTER 4 Building an E-commerce Web Site unit testing involves testing the site s program modules one at a time system testing involves testing the site as a whole, in a way the typical user will use the site acceptance testing verifies that the business objectives of the system as originally conceived are in fact working TESTING THE SYSTEM Once the system has been built and programmed, you will have to engage in a testing process. Depending on the size of the system, this could be fairly difficult and lengthy. Testing is required whether the system is outsourced or built in-house. A complex e-commerce site can have thousands of pathways through the site, each of which must be documented and then tested. Unit testing involves testing the site s program modules one at a time. System testing involves testing the site as a whole, in the same way a typical user would when using the site. Because there is no truly typical user, system testing requires that every conceivable path be tested. Final acceptance testing requires that the firm s key personnel and managers in marketing, production, sales, and general management actually use the system as installed on a test Internet or intranet server. This acceptance test verifies that the business objectives of the system as originally conceived are in fact working. It is important to note that testing is generally under-budgeted. As much as 50% of the software effort can be consumed by testing and rebuilding (usually depending on the quality of initial design). IMPLEMENTATION AND MAINTENANCE Most people unfamiliar with systems erroneously think that once an information system is installed, the process is over. In fact, while the beginning of the process is over, the operational life of a system is just beginning. Systems break down for a variety of reasons most of them unpredictable. Therefore, they need continual checking, testing, and repair. Systems maintenance is vital, but sometimes not budgeted for. In general, the annual system maintenance cost will roughly parallel the development cost. A $40,000 e-commerce site will likely require a $40,000 annual expenditure to maintain. Very large e-commerce sites experience some economies of scale, so that, for example, a $1 million site will likely require a maintenance budget of $500,000 to $700,000. Why does it cost so much to maintain an e-commerce site? Unlike payroll systems, for example, e-commerce sites are always in a process of change, improvement, and correction. Studies of traditional systems maintenance have found 20% of the time is devoted to debugging code and responding to emergency situations (a new server was installed by your ISP, and all your hypertext links were lost and CGI scripts disabled the site is down!) (Lientz and Swanson, 1980; Banker and Kemerer, 1989). Another 20% of the time is concerned with changes in reports, data files, and links to backend databases. The remaining 60% of maintenance time is devoted to general administration (making product and price changes in the catalog) and making changes and enhancements to the system. E-commerce sites are never finished: they are always in the process of being built and rebuilt. They are dynamic much more so than payroll systems. The long-term success of an e-commerce site will depend on a dedicated team of employees (the Web team) whose sole job is to monitor and adapt the site to changing market conditions. The Web team must be multi-skilled; it will typically include programmers, designers, and business managers drawn from marketing, production, and sales support. One of the first tasks of the Web team is to

16 Building an E-commerce Web Site: A Systematic Approach 213 listen to customers feedback on the site and respond to that feedback as necessary. A second task is to develop a systematic monitoring and testing plan to be followed weekly to ensure all the links are operating, prices are correct, and pages are updated. A large business may have thousands of Web pages, many of them linked, that require systematic monitoring. Other important tasks of the Web team include benchmarking (a process in which the site is compared with those of competitors in terms of response speed, quality of layout, and design) and keeping the site current on pricing and promotions. The Web is a competitive environment where you can very rapidly frustrate and lose customers with a dysfunctional site. FACTORS IN OPTIMIZING WEB SITE PERFORMANCE The purpose of a Web site is to deliver content to customers and to complete transactions. The faster and more reliably these two objectives are met, the more effective the Web site is from a commerce perspective. If you are a manager or marketing executive, you will want the Web site operating in a way that fulfills customers expectations. You ll have to make sure the Web site is optimized to achieve this business objective. The optimization of Web site performance is more complicated than it seems and involves at least three factors: page content, page generation, and page delivery (see Figure 4.7). In this chapter, we describe the software and hardware choices you will need to make in building an e-commerce site; these are also important factors in Web site optimization. benchmarking a process in which the site is compared with those of competitors in terms of response speed, quality of layout, and design FIGURE 4.7 FACTORS IN WEB SITE OPTIMIZATION Web site optimization requires that you consider three factors: page content, page generation, and page delivery.

17 214 CHAPTER 4 Building an E-commerce Web Site Using efficient styles and techniques for page design and content can reduce response times by two to five seconds. Simple steps include reducing unnecessary HTML comments and white space, using more efficient graphics, and avoiding unnecessary links to other pages in the site. Page generation speed can be enhanced by segregating computer servers to perform dedicated functions (such as static page generation, application logic, media servers, and database servers), and using various devices from vendors to speed up these servers. Using a single server or multiple servers to perform multiple tasks reduces throughput by over 50%. Page delivery can be speeded up by using edge-caching services such as Akamai, or specialized content delivery networks such as RealNetworks, or by increasing local bandwidth. We will discuss some of these factors throughout the chapter, but a full discussion of Web site optimization is beyond the scope of this text. WEB SITE BUDGETS How much you spend on a Web site depends on what you want it to do. Simple Web sites can be built and hosted with a first-year cost of $5,000 or less. The Web sites of large firms that offer high levels of interactivity and linkage to corporate systems can cost several hundred thousand to millions of dollars a year to create and operate. For instance, in September 2006, Bluefly, which sells women s and men s designer clothes online, embarked on the process of developing an improved version of its Web site based on software from Art Technology Group (ATG). It hopes to launch the new site by early To date, it has capitalized over $3.6 million in connection with the redevelopment of the Web site. (Bluefly, Inc., 2008). While how much you spend to build a Web site depends on how much you can afford, and, of course, the size of the opportunity, Figure 4.8 provides some idea of the relative size of various Web site costs. In general, the cost of hardware, software and telecommunications for building and operating a Web site has fallen FIGURE 4.8 COMPONENTS OF A WEB SITE BUDGET

18 Choosing Software 215 dramatically (by over 50%) since 2000, making it possible for very small entrepreneurs to build fairly sophisticated sites. At the same time, while technology has lowered the costs of system development, the costs of system maintenance and content creation have risen to make up more than half of typical Web site budgets. Providing content and smooth 24x7 operations are both labor intensive. 4.2 CHOOSING SOFTWARE Much of what you are able to do at an e-commerce site is a function of the software. As a business manager in charge of building the site, you will need to know some basic information about e-commerce software. The more sophisticated the software and the more ways you can sell goods and services, the more effective your business will be. This section describes the software needed to operate a contemporary e-commerce site. Section 4.3 discusses the hardware you will need to handle the demands of the software. SIMPLE VERSUS MULTI-TIERED WEB SITE ARCHITECTURE Prior to the development of e-commerce, Web sites simply delivered Web pages to users who were making requests through their browsers for HTML pages with content of various sorts. Web site software was appropriately quite simple it consisted of a server computer running basic Web server software. We might call this arrangement a single-tier system architecture. System architecture refers to the arrangement of software, machinery, and tasks in an information system needed to achieve a specific functionality (much like a home s architecture refers to the arrangement of building materials to achieve a particular functionality). The SteamShowers4Less and NaturallyCurly sites both started this way there were no monetary transactions. Tens of thousands of dot-com sites still perform this way. Orders can always be called in by telephone and not taken online. However, the development of e-commerce required a great deal more interactive functionality, such as the ability to respond to user input (name and address forms), take customer orders for goods and services, clear credit card transactions on the fly, consult price and product databases, and even adjust advertising on the screen based on user characteristics. This kind of extended functionality required the development of Web application servers and a multi-tiered system architecture to handle the processing loads. Web application servers, described more fully later in this section, are specialized software programs that perform a wide variety of transaction processing required by e-commerce. In addition to having specialized application servers, e-commerce sites must be able to pull information from and add information to pre-existing corporate databases. These older databases that predate the e-commerce era are called backend or legacy databases. Corporations have made massive investments in these systems to store their information on customers, products, employees, and vendors. These backend systems constitute an additional layer in a multi-tiered site. system architecture the arrangement of software, machinery, and tasks in an information system needed to achieve a specific functionality

19 216 CHAPTER 4 Building an E-commerce Web Site two-tier architecture e-commerce system architecture in which a Web server responds to requests for Web pages and a database server provides backend data storage multi-tier architecture e-commerce system architecture in which the Web server is linked to a middle-tier layer that typically includes a series of application servers that perform specific tasks as well as to a backend layer of existing corporate systems Figure 4.9 illustrates a simple two-tier and more complex multi-tier e-commerce system architecture. In two-tier architecture, a Web server responds to requests for Web pages and a database server provides backend data storage. In a multi-tier architecture, in contrast, the Web server is linked to a middle-tier layer that typically includes a series of application servers that perform specific tasks, as well as to a backend layer of existing corporate systems containing product, customer, and pricing information. A multi-tiered site typically employs several or more physical computers, each running some of the software applications and sharing the workload across many physical computers. FIGURE 4.9 TWO-TIER AND MULTI-TIER E-COMMERCE ARCHITECTURES In a two-tier architecture, a Web server responds to requests for Web pages and a database server provides backend data storage. In a multi-tier architecture, a Web server is linked to a middle-tier layer that typically includes a series of application servers that perform specific tasks, as well as to a backend layer of existing corporate systems.

20 Choosing Software 217 The remainder of this section describes basic Web server software functionality and the various types of Web application servers. WEB SERVER SOFTWARE All e-commerce sites require basic Web server software to answer requests from customers for HTML and XML pages. The leading Web server software choices are shown in Figure When you choose Web server software, you will also be choosing an operating system for your site s computers. Looking at all servers on the Web, the leading Web server software, with 50% of the market, is Apache, which works with Linux and Unix operating systems. Unix is the original programming language of the Internet and Web, and Linux is a derivative of Unix designed for the personal computer. Apache was developed by a worldwide community of Internet innovators. Apache is free and can be downloaded from many sites on the Web; it also comes installed on most IBM Web servers. Literally thousands of programmers have worked on Apache over the years; thus, it is extremely stable. There are thousands of utility software programs written for Apache that can provide all the functionality required for a contemporary e-commerce site. In order to use Apache, you will need staff that is knowledgeable in Unix or Linux. Microsoft Internet Information Services (IIS) is the second major Web server software available, with about 35% of the market. IIS is based on the Windows operating system and is compatible with a wide selection of Microsoft utility and support programs. These numbers are different among the Fortune 1000 firms (55% of which use Microsoft IIS), and different again if you include blogs which are served up by Microsoft and Google at their own proprietary sites. FIGURE 4.10 KEY PLAYERS IN WEB SERVER SOFTWARE This diagram illustrates the relative market share of the most popular Web server software. SOURCE: Based on data from E-Soft, Inc, 2008.

21 218 CHAPTER 4 Building an E-commerce Web Site TABLE 4.3 BASIC FUNCTIONALITY PROVIDED BY WEB SERVERS FUNCTIONALITY Processing of HTTP requests Security services (Secure Sockets Layer) File Transfer Protocol Search engine Data capture Site management tools DESCRIPTION Receive and respond to client requests for HTML pages Verify username and password; process certificates and private/public key information required for credit card processing and other secure information Permits transfer of very large files from server to server Indexing of site content; keyword search capability Log file of all visits, time, duration, and referral source Ability to send, receive, and store messages Calculate and display key site statistics, such as unique visitors, page requests, and origin of requests; check links on pages There are also at least 100 other smaller providers of Web server software, most of them based on the Unix or Sun Solaris operating systems. Note that the choice of Web server has little effect on users of your system. The pages they see will look the same regardless of the development environment. There are many advantages to the Microsoft suite of development tools they are integrated, powerful, and easy to use. The Unix operating system, on the other hand, is exceptionally reliable and stable, and there is a worldwide open software community that develops and tests Unix-based Web server software. Table 4.3 shows the basic functionality provided by all Web servers. site management tools verify that links on pages are still valid and also identify orphan files Site Management Tools In Chapter 3, we described most of the basic functionality of the Web servers listed in Table 4.3. Another functionality not described previously is site management tools. Site management tools are essential if you want to keep your site working, and if you want to understand how well it is working. Site management tools verify that links on pages are still valid and also identify orphan files, or files on the site that are not linked to any pages. By surveying the links on a Web site, a site management tool can quickly report on potential problems and errors that users may encounter. Your customers will not be impressed if they encounter a 404 Error: Page Does Not Exist on your Web site. Links to URLs that have moved or been deleted are called dead links; these can cause error messages for users trying to access that link. Regularly checking that all links on a site are operational helps prevent irritation and frustration in users who may decide to take their business elsewhere to a better functioning site. Even more importantly, site management tools can help you understand consumer behavior on your Web site. Site management software and services, such as

22 Choosing Software 219 those provided by WebTrends, can be purchased in order to more effectively monitor customer purchases and marketing campaign effectiveness, as well as keep track of standard hit counts and page visit information. Figure 4.11 contains several screenshots that illustrate the different types of functionality provided by WebTrends software. Dynamic Page Generation Tools One of the most important innovations in Web site operation has been the development of dynamic page generation tools. Prior to the development of e-commerce, Web sites primarily delivered unchanging static content in the form of HTML pages. While this capability might be sufficient to display pictures of products, consider all the elements of a typical e-commerce site today by reviewing Table 4.1, or visit what you believe is an excellent e-commerce site. The content of successful e-commerce sites is always changing, often day by day. There are new products and promotions, changing prices, news events, and stories of successful users. E-commerce sites must intensively interact with users who not only request pages but also request product, price, availability, and inventory information. One of the most dynamic sites is ebay the auction site. There, the content is changing minute by minute. E-commerce sites are just like real markets they are dynamic. News sites, where stories change constantly, are also dynamic. The dynamic and complex nature of e-commerce sites requires a number of specialized software applications in addition to static HTML pages. Perhaps one of the most important is dynamic page generation software. With dynamic page generation, the contents of a Web page are stored as objects in a database, rather than being hard-coded in HTML. When the user requests a Web page, the contents for that page are then fetched from the database. The objects are retrieved from the database using CGI (Common Gateway Interface), ASP (Active Server Pages), JSP (Java Server Pages), or other server-side programs. CGI, ASP, and JSP are described in the last section of this chapter. This technique is much more efficient than working directly in HTML code. It is much easier to change the contents of a database than it is to change the coding of an HTML page. A standard data access method called Open Database Connectivity (ODBC) makes it possible to access any data from any application regardless of what database is used. ODBC is supported by most of the large database suppliers such as Oracle, Sybase, and IBM. ODBC makes it possible for HTML pages to be linked to backend corporate databases regardless of who manufactured the database. Web sites must be able to pull information from, and add information to, these databases. For example, when a customer clicks on a picture of a pair of boots, the site can access the product catalog database stored in a DB2 database, and access the inventory database stored in an Oracle database to confirm that the boots are still in stock and to report the current price. Dynamic page generation gives e-commerce several significant capabilities that generate cost and profitability advantages over traditional commerce. Dynamic page generation lowers menu costs (the costs incurred by merchants for changing product descriptions and prices). Dynamic page generation also permits easy online market segmentation the ability to sell the same product to different dynamic page generation the contents of a Web page are stored as objects in a database, rather than being hard-coded in HTML. When the user requests a Web page, the contents for that page are then fetched from the database