InformationWeek

December 7, 1998

Tools For Growth In E-Commerce

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One of the key factors to keep in mind while evaluating marketplace applications is the protection of buyer-seller relationships. For example, many customers may have negotiated private contracts with particular sellers--and the contract price must be protected from other buyers and sellers, something that can be a challenge in a marketplace environment. In addition, a marketplace application may need to support secure contract negotiations among buyers and sellers.

The only two vendors we saw whose products support marketplace applications are Trade'ex (Procurement for the Marketplace) and Connect Inc. (MarketStream). Trade'ex provides a packaged application for marketplace uses, making it easy for service providers or portals to get into the game. Connect Inc.'s primary revenue source is in services, and the company will use its technology to build marketplace applications for consolidators and aggregators. In the future, expect portal service providers such as Yahoo and America Online/ Netscape to play in the marketplace arena.

E-commerce applications have four distinct layers: low-level system services (load balancing, scalability, failover, database connection pooling, etc.), specific business logic (catalog functionality, inventory-handling capabilities, or shipment request and tracking functionality), administration (which can also include modules for target marketing or personalization), and payment processing.

No matter what type of application you're trying to implement, your application must include these layers. Clearly, you have choices when it comes to application development and deployment. There are five basic approaches you can take:

Build a homegrown solution. You can always build your application from scratch. You'll have lots of freedom and flexibility--but you'll need a team of skilled developers to do lots of low-level coding, and you'll have to maintain the application code yourself. While this approach used to be a company's only option, today there are simpler ways to create E-commerce apps.
Use Web application development tools plus in-house customization. Most development environments for Web applications provide low-level system services and graphical development environments. Using these tools, organizations can simplify development and leverage the low-level services that are already provided in the application server environment. Incorporating the commerce portion of the application will require custom development.

Some vendors that provide these middle-tier servers include Allaire, Bluestone Software, EveryWare Development, Haht Software, Netscape, NetDynamics (recently purchased by Sun Microsystems), SilverStream; and the BEA WebXpress division of BEA Systems (formerly WebLogic).

Use Web application development tools plus specialized E-commerce toolkits. Many vendors provide E-commerce toolkits that can be used in conjunction with Web application development environments and servers. The result is a further simplification of the development process, eliminating the need to build the commerce transaction portion of the application from scratch. Examples of E-commerce toolkits include Microsoft's Site Server Commerce Edition and IBM's Net.Commerce.
Use packaged applications. Packaged E-commerce applications are designed to provide most of an application right out of the box, which hopefully means rapid deployment. With these applications, getting a system up and running is more of a configuration and setup issue than a custom-development initiative. On the downside, such applications may lack the flexibility to perform specialized or highly complex processing, and they can be far more expensive than E-commerce toolkits. In addition, many packaged applications use their own low-level services instead of leveraging industry-standard middleware or application servers, which may sacrifice reliability and scalability.
Outsource everything to a third party or hosting service. Of course, you can always contract with an integrator or service provider to build and maintain your application, and even host it externally. This approach is especially attractive to smaller companies that lack internal development resources and expertise.

Outsourcing relieves you of the headaches associated with development and maintenance, but you may be giving away some flexibility and control. Keep in mind that not many service providers offer sophisticated outsourcing and hosting services for business-to-business applications, although it is a prime area for market growth. In addition, you may have to pay a fee for every transaction your service provider handles.

Sorting Through Your Options
If you're looking at E-commerce for your business, make sure you take a close look at the type of applications you want to support. Do you need a buy-side application? A sell-side application? A marketplace? Each application type has different requirements and considerations. Also keep your long-term objectives in mind. For example, if you want only buy-side today but plan to implement sell-side or marketplace Web commerce in the future, don't limit yourself to a product that handles only buy-side.

Second, make sure you determine what resources you have available for application development and deployment. Do you want to get an application up and running quickly, and do you have limited technical expertise? Look at packaged applications such as those from Ariba, Netscape, Open Market, and Trade'ex. Do you need more flexibility, and do you have the time and people to do custom development? Look at a toolkit such as those from Connect, IBM, and Microsoft.

No matter what the application type, one of the biggest keys to success in your application is usability. If you don't get buy-in from the people that use your application (the buyers and sellers), no amount of technology will make them use the application. Another key consideration is reliability. Not all the products available leverage the scalability and availability of environments such as Web application servers or middleware. If your system is down when customers want to use it, they may never come back.

The fact that the E-commerce technology market is not very mature doesn't make things any easier. If you're delving into E-commerce--no matter which application type or development approach you use--realize that it's a complex undertaking.

Jeetu Patel is VP of research, Mark Schenecker is VP of electronic commerce, and Gautam Desai is an analyst for Doculabs, an independent research and advisory firm. They can be reached at info@doculabs.com. Jason Levitt is a senior technology editor at InformationWeek.

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