After years of hard work and careful design, the big moment has arrived — you are finally ready to go live with your online retail operation. However, just one look at potential competitors such as Amazon, eBay, Wal-Mart and Target and it’s readily apparent that these companies have likely spent millions creating and staffing their respective infrastructures. No wonder they rank among the most popular online shopping sites.
Businesses like Amazon and eBay at least had to learn to walk before they ran to the top of their market. They did so at a time when the choices in hardware for high-end e-commerce applications were slim at best.
Currently, prospective e-tailers have a wide variety of options for taking their businesses online. More choices, however, means that the decision-making process takes on even greater importance.
Hosted or On-Premises?
The first major decision for any company planning to establish an online presence is whether to go with a hosted e-commerce solution or whether to create their own on-premises data center. The decision to build a data center in-house, according to Vick Vaishnavi, director of product marketing at BladeLogic, depends on two criteria: economics and obligation.
“The criteria are more about economics than what is the right thing to do,” he told the E-Commerce Times. “It is more of an economic exercise.”
If a company has only one e-commerce application and “nothing major” it is trying to push, Vaishnavi recommends opting for a hosted solution. “The cost of building out a data center and maintaining it will be a lot more than the payback analysis or the [return on investment] will be in years if I’m doing everything myself.”
In addition, businesses with on-premise data centers sign up to all of the inherent obligations that accompany it: uptime, change configurations, change responsiveness and compliance assurance, to name a few. “All that becomes my headache, which means I have to hire the appropriate kind of people who can do that,” Vaishnavi said.
“The advantage I would get is that I am master of my own destiny,” Vaishnavi continued. “I can’t blame anyone for any failures, but the success are all my own.”
Companies also need to determine how risk-averse they are, Vaishnavi noted. If they have credit card information and are recording a lot of transactions, as well as working with federal agencies that require tighter security and greater levels of encryption, then they may want to invest in their own data center.
“If they do the economics and have a hosting provider who says it will charge them a fortune to do the same thing, then it might be cheaper for them to invest in their own data center if that is the line of business they are going to be in. It will pay back in two to three years, but at least they are assured of continued revenue.
“It is not a yes or no answer about whether you should build your own data center. It is really a function of economics and what your business strategy is and the business’ requirements over time.”
For many organizations the principle concern after costs is the level of integration between e-commerce applications, Carl Zaldivar, president and chief executive officer of BizAutomation.com, a provider of on-premise and hosted e-commerce solutions, said.
“[Businesses] will need a shopping cart, some sort of inventory to pull items from a catalog,” he told the E-Commerce Times. Along with all that, they will also need shipping, accounting, and transaction applications.
According to Zaldivar, the cost benefit of hosted versus in-house is that with a hosted solution, companies do not have to pay a lot up front. On the other hand, with an in-house setup businesses will not find themselves “on the treadmill forever” paying fees.
Instead, after the initial expenditure to build the data center, their costs will deal with expenses such as maintenance and energy.
Companies setting up a on-premise database have to choose which platform best meets their needs — Linux, Solaris, Windows or any flavor of unix, namely HPUX or AIX, BladeLogic’s Vaishnavi explained.
Typically, high-end e-commerce servers include rack mountable server appliances that come preloaded with e-commerce software and tools, including Web services such as IIS, Apache, iPlanet, Tomcat and application services including Weblogic and Websphere, as well as database services such as Oracle and Microsoft SQL, for conducting secure e-commerce transactions using secure socket layer (SSL).
“Vendors who supply these include HP, Dell, IBM and Sun [Microsystems],” he said.
At NetSuite, a provider of hosted business solutions, Mini Peiris, vice president of product management, said Oracle is the database application server of choice, the servers run the Linux operating system and the application layer is Apache. For businesses looking to go on-premise, scalability is also a major consideration.
“We designed [the data center] so that we could spread the load out across a lot of small boxes,” rather than using a mainframe and keeping all customers on one large system, she told the E-Commerce Times.
Smaller Can Be Better
“The reason for us to go with smaller servers and Linux was kind of simple,” she continued. “First off it helps us scale quicker, meaning that if we see a particular customer’s performance dropping off, then we are able to quickly split that database between two machines rather than the overhead it would take to bring on, if you take a mainframe approach, to bring that on. That gives us efficiencies of scalability there.
“The other reason is because we have a unique approach to upgrades,” she added. “Even though we are a hosted system, we don’t upgrade everyone overnight in one go. We actually phase it out. So, for a major release or upgrade, we will take as long as three to four months to gradually bring different portions of our customer base up to the new release. The reason we are able do that is part of that architecture because we have smaller isolated servers we are running people on.”