Generating Higher Levels of Responsiveness with Sell-Side E-Commerce Applications

By Louis Columbus

The direct model for sales, which focuses on inventory turns and velocity of transactions, served as the inspiration for many companies to rethink their distribution and sales strategies, hoping to become as financially efficient and successful in the market as others that had blazed the direct model trail. The year 2001 brings an entirely new set of criteria for evaluating success.

The Application Service Provider (ASP) model is attracting more companies than ever before, providing a greater selection of solutions from which to choose when considering outsourcing. Yet, getting the best possible performance from an ASP takes more than just the standard Service Level Agreement (SLA). The ability to exceed this agreement is the mark of an ASP that is capable of making strong contributions to your business.

An SLA must focus on the metrics that matter for your business. If you are considering outsourcing any application to an ASP for hosting, be sure to get past what are the generally acceptable, industry-standard components of a Service Level Agreement to what really matters. Managing an ASP by metrics of scalability and performance spells out the difference between growth and stagnation for your business.

Finding a Technology Partner that Can Grow with You

First and foremost, it's important to find out if your application service provider can go the distance with your company as it grows. The application service provider you choose to work with must provide a highly scalable solution to handle the increasing number of transactions, inquiries of your databases, and increasing number of employees querying and using applications that comes with business growth. Regardless of the number of ASPs you choose to work with, each must provide this strong consistency of scalability.

A much used term today, scalability is defined as the capability of a computer application or product (hardware or software) to continue to function well as it is changed in size or volume to meet a user need. Another definition of scalability that is being actively promoted in the context of e-business is the capability of a server, application, or Web site to not only function well in the rescaled situation, but also to take full advantage of it. For example, an application program would be scalable if it could be moved from a smaller to a larger operating system and take full advantage of the larger operating system in terms of performance (user response time and so forth) and the larger number of users that it could handled. Table 1 shows metrics that highlight the need for having an ASP that can truly be scaled to meet your business requirements. Scalability can spell the difference between your company reaching its full potential or not.

Scalability Checkpoints

In evaluating whether or not to work with an ASP, keep in mind these key points regarding scalability:

Table 1: Transaction site growth and architecture shows the scalability needed to sustain a growing e-business

Client-side application considerations:

• The type and extent of operating systems and platforms supported



• The performance offered by the software client, typically accessed through a Web browser

Server-side considerations:

• The number of users or clients that are supported. This is the current maximum workload for the application(s) you are considering leasing



• The number and type of server operating environments being used



• Whether a single server supports a given application, or whether different application services are provided by different servers

Network considerations:

• The network media being used



• The network protocol being used



• The number of intermediate nodes typically located between the client and the server

Application complexity considerations:

• The size of the applications



• Whether the applications are processing-intensive or I/O-bound



• Whether the application services are offered by different machines in the network and, if so, how many systems must work together to support the application



• The number of tables in the database



• The size of tables in the database



• The data types of items in each record (for example, voice and image)



• The number of joins or file accesses required when accomplishing a given transaction



• The number of databases being used in a given environment

The type of applications in a given organization's application profile is also significant. This is particularly critical, for example, in companies that have widely distributed offices throughout the U.S. and the world. Here are additional considerations to keep in mind for the type of applications your organization is running:

• Data legacy requirements at regional offices to successfully serve customers and maintain relationships



• Availability of graphically based data, which requires an inordinate amount of storage space online



• Manageability of network security for a widely dispersed network



• Connectivity and the ability to provide reliable e-mail systems throughout all offices

Monitoring Performance and Scalability Metrics

The Asps you are considering working with need to have a strong knowledge of solutions that measure the level of scalability possible with respective servers running their operating systems. Indeed, there are tools available in the marketplace today that include this functionality in the baseline configuration of their respective operating systems. If your ASP has its own data center, ask to see the relative performance data over time for the servers in the center. You can learn how seeing the data and also seeing if the data is available at all runs the data center.

You don't have to be an expert on systems scalability when contracting with an ASP, but it is important to have the right questions in mind as you qualify one. There are additional tools for gauging relative system scalability that you should ask the ASP if it is using or planning to use.

Exploring Service Level Agreements and Assurances of Performance

Some industries mature extremely rapidly while others are continually defined through the interaction of customers and suppliers over time. The burgeoning ASP industry is quickly being defined by the level of services provided to customers, yet the quantification of these performance guarantees has been less evident. The purpose of the Service Level Agreement is to define the minimum performance metrics you will accept from an ASP you work with. The industry is still waiting for this practice to take hold in a broader context than it has today.

A Service Level Agreement is actually a commitment from the ASP you are working with to provide consistent levels of uptime, performance, and accuracy of transactions from e-commerce sites. These SLAs are evolving, and like many aspects of the ASP model, are being influenced by the role of early adopters in this marketplace. The continued growth of outsourcing is driving the development of these SLAs into documents that are actionable.

When creating your specific Service Level Agreement, quantify key performance variables and their allowable ranges. If you are familiar with the tools used for managing scalability, be sure to use the metrics associated with those tools in your SLA Agreement.

The key success factors to include in a series of metrics for your Service Level Agreement are profiled below. Keep in mind that with a Service Level Agreement, you can structure the contract to list and quantify your expectations for performance. Although many Asps are not yet to the point of providing a month's free services if servers hosting your applications are inoperable on a Monday morning from 8:00 a.m. - 12:00 p.m., for example, you can stress the need for concessions based on performance.

Set required performance levels to define the key attributes that a SLA needs to meet to fulfill contractual agreements. The most important is the percentage uptime metric.

• Percentage Uptime

The majority of hosting companies and Asps can provide this metric, and many specify 98%. For many of the larger Web sites hosted internally by companies, uptime is hovering around the 99% range. The statistics provided here are the minimum quality standards. You should hold an ASP to at least the same level of performance.

• Quality of Service

This metric measures how long your ASP takes to solve technical problems and work through the development of modifications to its applications. The integration of legacy data and the extent of its functionality also provides a measuring stick for the level of quality of service provided by the ASP.

• User Satisfaction

Taking the initiative to understand your customers and their experiences on your site is critical for the long-term growth of your business. Gauging how many visitors become customers and how many customers become repeat purchasers is a metric closely tied to the scalability of the site. Agree with your ASP to set a minimal customer satisfaction ranking through a mutually agreed upon methodology to ensure your customers get the service they expect.

• User Expectations

Other metrics that can be directly written into an SLA is the use of uptime and response to requests, in addition to the metrics of how your company is perceived by customers. A typical agreement for service quality levels is rather broad and global. Strive to get individualized metrics into the SLAs you write with your Asps It's critical to have those targets in place before a site or application goes online.

The Future Direction of Asps Regarding Scalability

Clearly, the range and depth of statistics available on performance of e-business sites worldwide needs to be increased. Industry associations such as the ASP Industry Consortium have pioneered the development of Service Level Agreements, adding in performance incentive clauses in addition to creating templates for companies to use in creating their agreements with customers.

Metrics continually being developed to monitor other aspects of e-business also have direct impact on the ASP model. For example, Web metrics measurement applications can define bandwidth used by an e-business and the relative level of traffic that it experiences over time based on its use of promotional offers. The entire consideration of load balancing will eventually migrate into metrics that will be listed in Service Level Agreements.

Those businesses that are early adopters of the ASP model are playing a powerful role in focusing the industry on scalability as well as product development requirements. Taking the initiative with the Asps you have chosen to work with can pay dividends down the road, since your company's Web site performance will be quantifiable and unequivocal.

Hosting companies coming online today will need to differentiate themselves in the area of scalability as convincingly as possible to establish a market presence. The technical aspects of scalability are indeed worthy of entire books. The intent of this article is to provide you with a set of guidelines for defining the expectations you and your customers have for Asps you are either working with today or planning to work with in the future. Scalability metrics are essential in your e-business strategy for getting a continually high level of responsiveness for your customers.

As Senior Analyst, Sell Side E-Commerce, at AMR Research, Inc., Louis Columbus is responsible for analyzing and reporting on key trends in the B2B order management area of sell-side e-commerce, including tracking content management, personalization, and Customer Relationship Management (CRM) technologies. He is the author of thirteen books and over fifty articles on a variety of technology-related topics including e-commerce, the application service provider marketplace, and Microsoft's Windows2000 operating system; his latest book is Realizing e-Business with Application Service Providers. Louis received his M.B.A in Marketing and Finance from Pepperdine University and his Bachelor's in Business Administration from the University of Arizona. You may contact Louis at lcolumbus@amrresearch.com.

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