InformationWeek
Defining The Business Value Of Technology
January 25, 1999
Well E-quipped?Web commerce is picking up at a frenetic pace, sending IT organizations in search of tools and services that can help
By Gregory Dalton with Jennifer Mateyaschuk
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-commerce is an engine for high revenue growth-and even higher Web-site unpredictability.
Financial firms, retailers, and merchants of every stripe are reaping unprecedented online
customer activity, but the traffic generated by those customers is pushing Web-site
infrastructures to-and in some cases beyond-their limits. IT managers are hustling to bolster
sites under the load. Web trading systems at several online brokerages ground to a halt for brief periods this month as soaring Internet stocks and news about the world economy sent the securities markets into wild gyrations. On Jan. 8, Charles Schwab's system buckled when trade orders backed up on its mainframes, causing a 15-minute period in which orders couldn't be executed on the company's site. The following week, Discover Brokerage Direct Inc., a unit of Morgan Stanley Dean Witter, stopped taking orders on its site for 30 minutes one day as trade confirmations queued up in its back-end systems.
The problems aren't limited to brokerages. Managers of AMR Corp.'s Travelocity travel site were startled on Dec. 28 by a usage surge in what was supposed to be a slow week. As CPU cycles climbed toward Travelocity's time-to-add-capacity threshold of 70%, the company hurriedly shipped a spare Silicon Graphics server to its Tulsa, Okla., data center in case it was needed.
Consumers Drop Slow Sites
Almost 40% of online consumers say poor Web-site performance over the holidays caused them
to leave certain sites, according to a survey released last week by Jupiter Communications. In
fact, Jupiter reports that overall consumer satisfaction with online shopping declined between
July and December of last year, and slow performance was largely to blame.
How are companies coping with and anticipating E-commerce overload? Steps include adding system capacity and rewriting programs to distribute loads across networks. Some organizations are turning to a growing number of service options that promise to ease Web-site congestion, and to tools that give a better reading on site performance. "The ability to buy protection to be able to handle peak loads is going to be increasingly important," says industry analyst Patricia Seybold. "I don't think anybody can predict nor can they afford to have all the capacity they might need."
InterNAP Network Services, an Internet service provider, this week will disclose plans to use advanced routing technology from Cisco Systems to better handle a company's Internet traffic by directing users to Web servers closest to their geographic locations. Also this week, Concentric Network Corp., an ISP and Web hosting company, will begin offering a service that provides Web servers and network bandwidth on an emergency basis. The service, similar to one planned by Cable & Wireless, relies on caching technology from Inktomi Corp. to replicate a company's Web pages on Concentric's own servers so that Concentric is ready to help at the drop of a hat-or the drop of a link.
New software can also help. BMC Software Inc. last week introduced Patrol SafePassage, due this spring, intended to maintain availability between Web and application servers by alerting administrators to performance issues before an outage occurs. And Candle Corp. is developing a Java application-response service monitor, called Ventura and due in the spring, that will measure end-user response times and identify capacity blockages. Candle will also offer the capability as a service.
The options can't come soon enough for harried site administrators. Analysts expect no letup in the Web-commerce boom. The trend in online sales, says Marc Johnson, a senior analyst with Jupiter, is that "each quarter is bigger than the last."
Until now, a common tactic for handling the uncertainty of Web traffic has been to aim for the heavens when planning for extra capacity. But companies are finding those heights are closer than they realize, as yesterday's records become today's averages. "The market volatility in the month of January has been greater than any of us anticipated," says Jan Hier-King, senior VP of electronic brokerage technology at Charles Schwab & Co. "The volumes have been astronomical."
The Nasdaq exchange has handled more than 1 billion trades every day over the past two weeks, while the number of trades placed through Schwab's Web site grew 57% from one week to the next earlier this month. That kind of hyperactivity has Schwab rethinkingcapacity planning. In the past, the company aimed to be prepared for traffic peaks of three to four times its daily average volume. Now it's looking at having as much as 10 times peak capacity, says Hier-King.
Schwab, which receives 61% of its trades electronically, is increasing its trading-system capacity by several-fold. By the end of this month, it will consolidate online trade transactions on a dedicated Hitachi mainframe, which will get Schwab closer to its capacity goal, Hier-King says.
Other brokerages are also taking steps to improve their systems in the wake of this month's turmoil. Discover Brokerage Direct moved its San Francisco data center over the Jan. 16 weekend to a new facility that has four times the floor space, and upgraded from Sun Enterprise 4000 servers to Sun Enterprise 6000s. The new servers will let the company add CPU boards on the fly to maintain its goal of being able to handle two times peak volume.
Discover is also using the Java programming language to rewrite its trading servers, which perform functions such as calculating commissions and processing orders. "They will be encapsulated into different objects that can be distributed," says chief technology officer John MacIlwaine. "That will allow us to scale better than we do now."
Application Scalability
Datek Online Brokerage Services Inc. is making its applications more scalable. At Datek, "it's not
an Internet congestion problem," says Peter Stern, co-founder and chief technology officer. "Most
of the issue is application capacity." One project involves developing Java applets for presenting
stock quotes on the company's Web site. That will reduce the workload on Datek's servers,
because only about 20 bytes of data will be transferred every time a customer updates a quote,
compared with the 20-Kbyte HTML page that's sent now.
E-Trade Group Inc. experienced 20% compounded growth in transactions every day from Jan. 8 to Jan. 13. Moreover, the percentage of the 675,000 active customers visiting the site each day rose from the 5% to 10% range to between 20% and 25%. "We were prepared for a large spike in growth, but we had a tremendous spike. We were close to the top," says VP of technical planning Tim Fleming. In response to the trading surge, this month the company is adding more call-center representatives and has put certain software projects on a fast track.
E-Trade is adding a new technology center in Atlanta that will double its capacity when it goes online in the next 30 days. "Our Internet technology today scales great," says Fleming. "A lot of our problem is on the back end. The back-end systems were built 20 years ago. With the peaks that we have, these larger systems really can't handle it. We need to mask those problems and work around them."
Keynote Systems Inc. measures and tracks the Web-site performance of 20 brokerages and 40 other businesses at 15-minute intervals throughout the day. Keynote's data, based on the time it takes to download a Web page, shows wide performance differences among sites, and that the daily averages of all sites tracked are erratic. The bottom line: Few companies have mastered the art of consistently providing fast downloads. Next quarter, Keynote plans to go a step further and begin tracking Web transactions.
Lesson Of Unpredictability
"One of the most important lessons we've learned is that traffic is unpredictable and we need to
stay ahead of it," says Mike Wilson, VP of product development and operations with eBay Inc., an
online auction site with 1.3 million registered users. A new customer of InterNAP, eBay
considers the partnership between InterNAP and Cisco a potential way of avoiding Internet
traffic jams.
Some IT managers, however, say new site-management products may not measure up to tools developed internally. Brian Sugar, director of new media with J. Crew Corp., considers his company's custom tools a strategic advantage. "Understanding and planning for the amount of visitors that are going to be at your site, to quantify the organic growth of the Web, is the most difficult aspect of the site," he says. J. Crew's online sales surpassed catalog sales for the first time last year.
Conventional businesses have something to learn from online specialists when it comes to Web-site performance, says Jeff Tauber, president and CEO of Cybershop, an online retailer with $18.7 million in revenue. "Logistics, customer service, and site performance are equally big issues," he says.
For companies that do it right, E-commerce can pay off big. Schwab's fourth-quarter 1998 earnings increased 69% from a year earlier due largely to its Internet operations. Any slip-ups, though, are there for the world to see. "If anything goes wrong in Schwab's technology, it shows on the Web," says Hier-King. "The customer sees any of our problems immediately."
With additional reporting by Clinton Wilder, and James
Governor of InformationWeek U.K.
See related story: Outsourcing: A Web Site Option
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