Web Site Development Comes Back Home

As Web sites evolve, e-businesses find that moving programming talent in-house is the way to go

The experience Cheryl Mathews had developing GoodHome.com proves that e-commerce managers can go home again. When Mathews was assigned to launch GoodHome.com in San Rafael, Calif., she interviewed 10 different Internet design houses before selecting two companies--one to build the front end, another to develop the back end. The site was up and running in 12 weeks and was a great success with cutting-edge features like an app that lets online customers design a living room with furniture in different shades and fabrics.

But when GoodHome.com upgraded the site just eight weeks later, Mathews backed away from the outsourcers and used in-house programmers she had hired since the initial site was launched. Mathews, now GoodHome.com's director of customer service, says the change was totally a matter of control: "You want to bring everything in-house as soon as possible."

GoodHome.com is an example of what end users and analysts say is the newest trend in constructing e-commerce sites. Most companies, feeling the "Internet-speed" pressure to get their sites up fast, need the experience and resources of outside vendors. At the same time, however, these end users are taking charge of those sites as soon as possible. Local control lets them make improvements faster and saves money on expensive hourly fees each time they need to make a small change to the site.

"The build vs. buy decision changes along the life span of the site," agrees Eric Budin, vice president of corporate development for More.com, a health care e-commerce site based in San Francisco. "At a certain point, you have to own your crown jewels, and our crown jewel is our site."

Of course, before you can come back home, you have to leave. And the reality is that few companies can launch a site with in-house talent. "They can have a great problem recruiting people, or they don't want to spend their often-scarce resources on building up their IT organization," says Gartner Group principal analyst Leah Knight.

The complexity of implementing e-commerce solutions is also causing companies to look for outside help. "Intershop and Microsoft Site Server now come out of the box less assembled, giving users much more flexibility in how they customize their storefront," says Jamie Lerner, co-founder and chief technology officer for Xuma, the San Francisco Web developer that built the back end for the initial GoodHome.com site. "Even when they buy stuff off the shelf, customers are still exposed to risk and a big integration effort."

Dennis Mulryan, vice president of operations for software vendor Ipswitch in Lexington, Mass., found that even off-the-shelf packages needed a fair amount of customization when he developed his firm's e-commerce site. Mulryan hired a consultant to build some of the middleware. After the site was running, the consultant came aboard as Ipswitch's director of Internet marketing. Now Ipswitch does all its e-commerce work in-house.

"The whole loop of going through a third party creates too much of a delay in the iteration cycle," Mulryan says. "We are into rapid application development, so we have to move quickly."

The easiest way to get a site up and running, analysts say, is to go through an application service provider that can deliver a purely hosted solution with relatively little customization. "The ASP model can be a low-risk way to test out e-commerce before taking it in-house," says the Gartner Group's Knight. "When e-commerce solutions become a mission-critical application, companies can become uncomfortable outsourcing them. If their site goes down, their business goes down."

Even with the ASP approach, though, IT managers find they often want to bring control back home. Brad Lewis, e-commerce manager for Snap-On, a tool and equipment maker in Kenosha, Wis., hired ASP OnLink Technologies to implement a catalog for the company's e-commerce site. Lewis wanted his industrial customers to easily navigate through the 17,000 products listed in Snap-On's print catalog, as well as integrate the site with Snap-On's ERP system. "If we developed this application in-house, we would have spent six to nine months just designing and implementing it," he says. By using OnLink's Rainmaker Data Model system, Snap-On was able to get the entire catalog up and running in four months.

What was unusual is that Lewis integrated his staff with OnLink's to help transfer those catalog-building skills. Lewis himself spent several days a week during the four-month development period at OnLink's headquarters, where he had his own office. He concentrated on developing application features and integration with back-end systems. "By spending so much time at OnLink, I became a member of their engineering group, and other members of my staff became temporary members of their professional services catalog group," Lewis says.

The result was that Lewis created an in-house ASP for Snap-On, providing guidance to other departments and subsidiaries that want to put up catalogs on their own Web sites. "One of the first questions we pondered before we outsourced was whether we could later bring that expertise in-house," Lewis says. "We didn't want to do it any other way."

Analysts say companies are beginning to appreciate the evolutionary nature of e-commerce sites and are changing with the times. A customized e-commerce site built from the ground up typically needs substantial changes six weeks after the launch. "People now look at e-commerce systems having a half-life of three to six months," Xuma's Lerner says. "During that time, when you want to revise your Web site, the best-of-breed products may have changed."

Xuma is in the forefront of this new development model: Xuma builds e-commerce sites using "pre-integrated" standard e-commerce components and packages, such as electronic data interchange, tax calculations, and credit card processing and fulfillment.

"Product selection is a very lengthy process, particularly in the e-commerce space," says Xuma's Lerner. "There is no silver bullet, but we come with pre-architected combinations of products."

Xuma's approach is to have a lightweight, multitiered architecture using simple programming language, such as Java over C++, to provide flexibility. Xuma releases new applications every week--the latest being a gift certificate application--that can easily be added to a hosted e-commerce site.

"In this model, the site would already be in a host environment, and components are already there, so you can quickly add to the site," Dataquest senior analyst Justin Behar says. "USWeb has something similar, and this model is the wave for how e-commerce development will go."

Mathews of GoodHome.com used Xuma to handle back-end integration of her initial site and hired a design house to create the front end of the site. She was pleased with both firms, especially Xuma's fixed-priced system, which lets customers pay a flat fee for the Web site configuration they select. "You don't get the sense of being price-gouged," Mathews says. Xuma had a strong methodology and a project manager who was dedicated to her e-commerce site and drove through milestones and provided weekly status reports, she says.

Despite this praise, Mathews prefers working with in-house staff. She built e-commerce sites with internal staff at Boeing and McDonnell Douglas. "When you're trying to go fast, there's nothing like having it all in-house," she says. "If I want to change something, I could walk down the hall to the Web developer and designer and have it done in minutes. When you outsource those changes, it can literally take days or weeks instead of minutes."

Of course, Mathews acknowledges that Boeing and McDonnell are large companies with enormous resources. Building an in-house technical staff takes too long for small and mid-sized companies looking to post a Web site quickly. Mathews needed to have the GoodHome.com site up in 12 weeks, which required her to find an experienced design shop and back-end integrator. "The only advantage to an outside contractor is speed," Mathews says. "But for a large site, that's not a long-term strategy, because you can't rely on an outside contractor every time you want to make a tweak."

Mathews advocates finding a design firm for the first iteration of the site, while quickly bringing in coders, programmers and developers to start creating new features. "Immediately, I have the staff begin building a parallel site on a parallel set of servers," Mathews says. "I have the staff develop custom code or take code from the first site and have them develop around that. Once the second generation of the site is done, I simply turn off the switch on the old server and turn on the new one." In Mathews' case, that second version of the e-commerce site went up a mere eight weeks later.

Analysts say that even if a firm realizes it will make substantial changes, an e-commerce project must begin with a clear vision of the business and revenue model. "The mistake companies make is to not fully develop their strategy," says Knight of the Gartner Group. "They don't understand the role of e-business and don't look at their customer and supplier relationships to see what is the most strategic and the least strategic."

Some companies, of course, turn to vendors to provide just that sort of guidance. But even so, deciding which chores to outsource can be a delicate balancing act. "You have to learn what you know and what you don't know," says James Lam, founder of Enterprise Risk Solutions in New York, which operates erisk.com, a site for risk management professionals. "We know the risk business, not e-technology. But we still need to maintain control over the evolution of the site, because at the end of the day, it's our business."

Lam says he was quite happy with Breakaway Solutions, the Boston full-service firm that built the first incarnation of his Internet portal for risk management professionals. The outsourcer provided a full-range of services, from helping to hone the final vision of the site to building the prototype and then hosting it.

Still, as Lam goes to the second and third incarnation of the site, he plans to re-evaluate his vendors at each stage. "Going forward, we will have new business requirements," he says. "We will have to evaluate whether they are still the right vendor for us."

Of course, the most common model for developing an e-commerce site is a partnership of external and internal teams, varying depending on the skill sets of the people. "In almost every project, you need to partner with people who have some fairly arcane skills," says Yankee Group senior analyst Andrew Efstathiou.

"At the same time, in-house people are usually better at connecting back to the legacy environments to create a fully functional e-commerce site," adds Efstathiou. "Your people have to be comfortable with and vested into the new system that will be running under their aegis."

Even companies that outsource large parts of their e-commerce sites, at least initially, often handle many of the tasks in-house. Michael Osborn, executive vice president of eVineyard.com in Portland, Ore., says his internal staff keeps control of the coding that provides the look and feel of the site. "Everything the consumer sees is internally developed," Osborn says. "The consistency of the look and feel is everything to us."

Budin, of More.com, has built up a 50-person technical staff that does most of the development on his site. Nonetheless, despite his mantra of needing to "own your crown jewels," Budin still outsources specific areas of expertise. Budin purchases some applications--such as one on smoking cessation--rather than spending months to build it in-house. He also outsources usability testing and brings in consultants for tuning its Oracle database.

"Anything that is core to our business we keep as close as makes sense," Budin says. After all, there's no place like home.

Joe Mullich is a freelance computer journalist based in Glendale, Calif. He can be reached at joemullich@aol.com.