Internet businesses depend on their Web sites being available when their customers are. Downtime is expensive because a customer that clicks away can be lost forever. "When a Web site is down, an ecommerce company loses revenue, brand recognition and customers," notes Tom Jones, CEO of StrataSource, a Fremont, California BPO provider.
No Internet business can afford to go down for long. Contingency Planning Research estimates the average cost of downtime per hour for a Web-based business ranges between $14,000 and $6.5 million, depending on the type and size of the company. Going down can be a leading cause of going under, especially for start-ups. "You don't have the chance to reschedule a sales call," points out Jones.
In the old days, when a computer system crashed, companies could call a help desk to get the system back in business. In the meantime, they had procedures in place to do things the old way, by hand. The outside sales force was able to keep making calls so the revenue stream still flowed. Employees were inconvenienced, but the work continued.
Not today. Ecommerce has made computing much more complicated. Databases, networking, applications and operating systems all interface with the public at the Web site. Companies are outsourcing this necessary but technical task to companies like StrataSource, which specializes in ecommerce infrastructure management. Its chief goal is to employ its proprietary software to maximize a Web business' uptime.
Fixing Ecommerce Problems Immediately Is Too Late
The paradigm before the rise of ecommerce was to react to infrastructure glitches, fixing problems as soon as they appeared. Companies had in-house technicians who acted like firemen, always at the ready when the fire bell rang.
Now, with the astronomical cost of down time, fixing things immediately is too late.† StrataSource's programmers have written a special application called LightsOut! for E-commerce that automates infrastructure management. The application, which resides on the customer's server, can detect problems and fix them remotely so a site never has its lights out.
Whenever there is a problem, the system sends an email to StrataSource's operations center in Irvine, California. There, StrataSource's technicians can log into the customer's system and solve the problem from California. "We can do everything remotely except change a tape," says Jones. The customer never sees the technology work.
No task is too small to monitor. The application even checks out the paper tray in the printer. An empty paper tray means the printer can't produce orders.
Because LightsOut! detects errors when trouble first starts brewing, the experts can fix them before they gather steam and become hurricanes. "Errors tend to be smaller and easier to resolve because we find them early," Jones explains.
Jones says the application is so easy to install that a new customer can have LightsOut! monitoring its infrastructure in 24 hours after it signs an outsourcing contract. StrataSource experts visit every customer at the outset to install the software as well as to analyze its computer systems. "We will suggest changes" if the BPO has a better suggestion.
In addition, StrataSource is experienced with back end systems that handle processes like Customer Relationship Management (CRM) and finance and accounting. Its second product, called LightsOut! for Enterprise, works as big brother monitoring these applications the same way. Many of StrataSource's ecommerce customers outsource the monitoring of these enterprise applications to the provider, too.
High Profile Customers
Currently StrataSource has over 60 customers with five international sites. High profile customers include Warner Brothers, 20th Century Fox, the Federal Home Loan Bank and Home Shopping Network.† StrataSource also attracts companies that are growing faster than their infrastructure or those supporting global operations. Its customers include sites that derive their revenue from ecommerce as well as Application Service Providers (ASP) who also need their sites to be available 24/7 for their customers.
The firm was launched in 1999, separating from Relational Data Systems (RDS), a systems management consultancy and custom software developer based in Irvine, California. Armed with a distinctly different mission than RDS - to serve as the de facto infrastructure administrator for its customers - StrataSource obtained first round venture capital funding of $6 million. Jones says 90 percent of StrataSource's new business has been in its ecommerce division.
Buyers turn to StrataSource because they can't find the talent to administer their own ecommerce applications. "The number of people available to do this work is shrinking and their cost is rising," says Jones. But Jones says these high tech workers "love to work here" because their expertise supports the company's core business.
Outsourcing Solves the Personnel Problem
Outsourcing to StrataSource shaves its customers' payroll dollars. StrataSource provides infrastructure monitoring for a fraction of the cost of hiring just one administrator, maintains Jones. In today's environment, companies typically need at least two people to administer the site, Jones reports. With StrataSource on the job, companies don't need in-house personnel to manage their production systems. "Our customers would rather have their IT staff working on strategic goals than putting out fires or dealing with routine, day-to-day tasks," says Jones.
In February, 2000 the company began concentrating on ecommerce. It currently has 50 employees.
Lessons from the Outsourcing Primer:
- Businesses based on ecommerce can go out of business if their Web sites go down. So they must monitor the infrastructure underpinning their Web sites.
- Fixing things when they break can be too late for Web-based businesses. Fixing them early on prevents problems from growing into major issues.
- Automated software can monitor problems and fix them remotely.