Can Microsoft do the job? 02/22/99

A lot of vendors are vying for e-comm business, with Microsoft as one of the most aggressive. Does Site Server have enough muscle?

By MARK GIBBS
Network World, 02/22/99

Microsoft owns the desktop with Windows. It has secured a solid spot in enterprise networks with NT. It runs a good portion of the World Wide Web with Internet Information Server (IIS). Will the mighty Microsoft have its way with the business-to-business electronic commerce market, too?

In all likelihood, yes, but it won't be a pushover. First, Microsoft has to persuade companies planning big business-to-business e-commerce initiatives that its flagship e-commerce server, Site Server 3.0 Commerce Edition, can do the job. Second, Microsoft has got to convince its independent software vendors (ISV) that they should help by creating the strong business applications that Site Server lacks.

The first challenge is an interesting one. It seems that even some of the IT managers who have bought into Microsoft's e-commerce line aren't 100% committed to it. They're using the products successfully, but aren't completely happy with them or convinced that the strategy backing up those wares is sound.

Cendant Corp., for example, uses Site Server to power its online sales operations. The massive consumer and business services company owns a range of world-famous brands, including Avis, Days Inn, Howard Johnson and Ramada. Cendant chose Site Server not for any technological reason, but because it cost less to support than the e-commerce software the company originally used. Cendant switched from Open Market's LiveCommerce software, running on Sun's Solaris Unix operating system, to Site Server running on Windows NT, says Scott Chin, who, as intranet project manager, has been involved in formulating Cendant's e-commerce strategy. "It's so much easier to get IS staff with NT and IIS experience compared to Sun Solaris with Open Market."

Sighted on Site Server

Site Server Commerce Edition builds on the basic Site Server, which is IIS with Web site development, support and analysis tools. The commerce edition includes a Site Builder Wizard and five sample sites.

A quick look at the samples could lead you to perceive Site Server Commerce Edition as purely a business-to-consumer product. But that assumption misses the product's architectural breadth, including business-to-business features such as data interchange services.

The Site Builder Wizard is a step-by-step process for building the underlying database schema of a commercial Web site, as well as the framework for presenting information and products. The samples provide reasonably good examples of how sites can operate. Of the five samples, the Microsoft Market site is the most relevant for business-to-business purposes. It's actually a copy of Microsoft's own corporate purchasing site, which handles more than 5,000 orders per week (see sidebar, this page).

Microsoft provides plenty of server-side functionality in Site Server by bundling it with Windows NT 4.0 Option Pack and SQL Server 6.5 Service Pack 3. The packs provide the latest version of the core Web server, IIS 4, the Microsoft Transaction Server (MTS) and the Microsoft Message Queue service (MSMQ). MTS ensures transactional integrity, while MSMQ provides the mechanisms for managing the transfer of data between internal processes and between internal and external processes.

Site Server includes the following components:

Dynamic Merchandising, which provides management of product and price promotions.
Intelligent CrossSell, an affinity prediction subsystem that uses trends of previous shoppers to make recommendations.
Personalization Server, for user profiling.
Membership Server, for managing user accounts.
Direct Mailer, which handles personalized mail-outs.
Ad Server, for managing and monitoring the deployment of and response to banner ads.
Dynamic Catalog Generation, for creating customized catalog content in sync with data from the personalization and membership services.
Commerce Order Manager, for tracking and managing customer orders.
Commerce Host Administrator, which provides centralized administration of multiple virtual hosts.

In addition, Site Server offers server analysis, support for real-time credit authorization with secure transaction protocols such as Secure Sockets Layer and Secure Electronic Transaction, and other financial transaction mechanisms, including Microsoft Wallet.

Perusing the pipelines

Among the most powerful Site Server subsystems are two application-to-application data interchange "pipelines."

The Order Processing Pipeline (OPP) uses business rules to run sequential functions for checking inventory, calculating sales taxes and shipping and handling charges, and authorizing payments. It integrates with existing back-end systems, such as BackOffice, and can be extended with products from ISVs. Microsoft includes more than 100 Component Object Model objects to extend functionality of the pipelines.

For example, Taxware's Internet Tax System is an OPP object. It includes merchant profile creation, customer address verification, exemption processing, product taxability, jurisdiction logic, tax calculation, transaction tracking, and international taxation and reporting.

The Commerce Interchange Pipeline provides application-to-application information exchange using the Internet or existing electronic data interchange links, making it a foundation for business-to-business data transfer services. The data could be Extensible Markup Language or an EDI protocol, and can travel over any transport, such as HTTP, the Simple Mail Transfer Protocol or DCOM.

The pipeline's strength lies in ease of programming. It's fairly simple to modify the pipeline as new business rules and interbusiness relationships emerge with companies using Site Server.

Lastly, Site Server Commerce Edition includes the Commerce Server Software Developer's Kit, a set of APIs that provides access to the order processing and commerce interchange pipe-lines. Visual Basic for Applications scripting is the default programming language, but you can use any other language you please.

Some users, in fact, say the Microsoft e-commerce server requires too much customization.

"We were looking for a full off-the-shelf package. From what I could tell, Microsoft was offering more of a tool kit that would require us to do a lot of building," says Tom Williams, director of information management at WidiaValenite, an industrial products unit of Milacron, a world leader in technology, systems and tooling for processing plastic and metal (see story).

Microsoft's e-commerce server didn't make it into Milacron's final round of evaluations back in early 1998. "I wasn't as comfortable with Micro-soft on an enterprise, bet-your-business level as I was with other companies," Williams says.

Other users don't mind the fact that Site Server is more of a tool kit than a full package. However, they point out that customization can get expensive. As an early adopter of Site Server, National Semiconductor has had to finagle the product quite a bit, says Phil Gibson, director of interactive marketing for National in Santa Clara, Calif.: "I've found it to be an unbelievable money sinkhole."

For example, the first releases of Site Server had backward-compatibility problems: "We found ourselves rewriting for every release," Gibson says. But the product is much more stable and feature-rich today, and National is happy with it.

That said, Gibson has no plans for making Site Server his only e-commerce server. National uses Windows NT for application services and Unix for publication services.

The fact that Site Server only runs on NT, an operating system not exactly famed for its reliability, is a competitive burden. Most major commerce servers run on NT 4.0 as well as on one or more Unix variants.

For example, IBM's Net.Commerce, iCat's Electronic Commerce Suite 3.0 Professional Edition and Intershop Communications' Intershop 3 Merchant Edition each run on HP-UX and Solaris. The iCat and Intershop software also run on Irix, while Intershop and, understandably, Net.Commerce, run on IBM's AIX, too. Netscape's e-commerce products currently only run on Solaris, but the company plans to broaden its operating system choices this year.

Operating system support aside, there's little in the way of major functional differences among the primary e-commerce packages. For example, the IBM, iCat, Intershop and Microsoft servers all offer wizards, storefront templates, shopping baskets and WYSIWYG HTML editors. In addition, they support the calculation of shipping charges and taxes; browser plug-ins, ActiveX and Java; and commerce, encryption and management services.

Microsoft's pricing is pretty much in the middle of the pack, with Site Server costing about $6,500. IBM and Inter-shop charge approximately $5,000, and iCat about $10,000. With Site Server, of course, you also need to add SQL Server at a cost of $1,399 for five users. IBM, iCat and Intershop bundle database support with their products.

Netscape now addresses the e-commerce market without offering a specific commerce server, which it once did. The company offers a selection of third-party e-commerce applications, marketed under the CommerceXpert brand, for its Application Server.

Netscape's e-commerce family comprises six products: ECXpert, for commerce information exchange; SellerXpert, for business-to-business selling; BuyerXpert, for business-to-business buying; PublishingXpert, for information selling and targeting, advertising and delivery of personalized information; BillerXpert, for bill presentment and payment; and MerchantXpert, for business-to-consumer services.

That Netscape's products target a different market is obvious from their functional scales, as well as the associated price tags. Netscape's foundation for e-commerce is Enterprise Server, which is bundled with ECXpert. All of the other modules use ECXpert as a framework. It costs $75,000 for a two-processor server. The components have equally impressive price tags, with the high end at $250,000 for BuyerXpert.

Open Market also falls into the upper pricing tier, with its Transact e-commerce server starting at $65,000.

Clearly, Site Server is not as high-end as products from competitors such as Netscape and Open Market. But that's intentional, Microsoft says in a document called "Microsoft's Vision for Electronic Commerce." In the paper, the company says its value is in providing enabling technologies: "We fully expect that the people who are really smart about . . . the business needs will produce the business objects."

In other words, Microsoft will rely on ISVs to supply the expertise and applications, says Stan Dolberg, group director of research for Forrester Research in Cambridge, Mass. "Microsoft has 10,000 ISVs. Its plan is to put a fairly basic product out into that channel and nurture those development people to the point where they can deliver the products."

And it seems that ISVs are starting to be productive. In fact, one of the top-end commerce servers, Pandesic's Web Business, is built on top of Site Server. Backed by Intel and SAP, Pandesic has added all of the business logic and services required to support business supply chain operations, including shipping, inventory, replenishment, warehouse, accounting and financial reporting, and return processing. You get a Site Server-based system that starts at $25,000 but typically costs more than $100,000.

What's more, Microsoft is encouraging its big channel partners, such as Merisel, to use Site Server for their own e-commerce sites. By building e-commerce integration up and down the supply and sales chains using its own technologies, Microsoft can grow its market and lock partners into its vision. It's a more powerful and enduring approach to e-commerce than the competition uses.

"Microsoft wanted to drive down the cost of operating its channels, and its strategy was to have Site Server on both ends of the network - that is, at Microsoft and the reseller - and it has the clout to mandate it," Dolberg says.

Yet Microsoft won't be able to dominate e-commerce - as Dolberg points out, the market is far too segmented. You've got purchasing, workflow, security, back-end connections, applications and hundreds of other functions. "What's going to be difficult for Microsoft is that this is not just an infrastructure play, it has many dimensions, and the potential for Microsoft ownership is limited because it won't own all the spaces."

But even as a mid-range player, there's little doubt that Microsoft can do a good job in the e-commerce market. Site Server is now a solid product that has a huge number of ISVs committed to its development and distribution.

More importantly, Site Server already has proven that it has enough oomph to power big, transaction-heavy e-commerce sites, such as Dell Online. The success of Dell's e-commerce operation has been stunning; the site produced $10 million in revenue per day in the third quarter of 1998. That equates to a whole lot of online PC purchases.

After launching the site with a different e-commerce server, Dell Online converted to the Microsoft technology and has stuck with it for the past two years. Dell Online is quite involved with Microsoft's Site Server development effort, having had a lot of input into the product's design, says Mike Dunn, chief technology officer of Dell Online.

Dell Online plans to increase its commitment to Microsoft by rolling out Active Directory and a number of other new and upgraded technologies, Dunn says.

Can Microsoft do the job? "We sure hope so," Dunn says.