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Buying Web Services: The Survival Guide to Outsourcing
(The figures and/or tables mentioned in this sample chapter do not appear on the web version.)
Chapter 1: In or Out? An Outsourcing Overview
About This Chapter
The decision to develop a Web site in-house or to work with an outside Web developer is a significant one requiring careful participation and review from many departments and individuals at a company. This chapter provides an overview on outsourcing Web services as it takes a look at the state of outsourcing today; examines arguments for and against Web outsourcing; presents outsourcing scenarios for small, medium-sized, and large businesses; and offers insight into helping you determine whether your company is the type of organization that can outsource effectively. Finally, a review of the Web development process as well as key members of a Web team and a snapshot of some of the Web teams from highly respected Web development firms provides you with a sound basis for moving forward as you work with a subcontractor to shape your Internet presence.
About the Author
J. P. Frenza worked in publishing and the pharmaceutical industry prior to joining United Digital Artists, a new-media talent agency, where he served as vice president of marketing and business development. He is the co-author of the critically-acclaimed Web & New Media Pricing Guide as well as Smart Card Technologies and the Internet. He has consulted with a number of high-technology clients, including Apple Computer, IBM, and Microsoft Corporation. He currently serves as director of Earth Pledge Foundation's Web group, Sustainable Media, a full-service new-media agency that creates and manages educational seminars, hands-on workshops, Web site development, marketing assistance, and special projects for the nonprofit and corporate community.
Early this year the management of Ryder TRS, Inc. announced plans to outsource the company's entire information systems operations. According to a cover story in the February issue of Computerworld, which defines itself as "the newsweekly for information technology leaders," Ryder, the nation's second largest consumer truck rental firm, has contracted with Cambridge Technology Partners and the Perot Systems Corporation to outsource "everything and anything to do with information systems-including its chief information officer."
If a company can outsource an entire MIS department and its staff right along with it, it seems only logical that the same company can just as easily outsource all of its Web development needs.
However, outsourcing computer management and information systems is one thing. Outsourcing Web site development is an entirely different matter. The nature of designing, building, and maintaining an effective Internet presence requires a unique and ongoing relationship, with deep commitments from both the company and its chosen Web developer.
Hiring an outsourcer to install a network involves some planning, but for the most part it is a discernible physical task with a clear start and completion date. Outsourcing companywide computer repair services or help desk support is a specific fee-for-service contract that is fairly objective and not unlike the same type of agreement that a company might have for its photocopier repair.
This type of relationship can be broken down into easily manageable steps: First, the computer crashed; second, an employee called the outsourcer to indicate that a repair was needed; finally, the service agent fixed the machine. Evaluating the quality of the outsource contract involves reviewing how long it took to repair the computer and the total cost of the repair. An ambitious client might even investigate employee satisfaction with the repair and the additional service offered by the vendor.
The Web doesn't work that way. As more and more companies recognize the importance of conducting business via the Internet, the types of relationships and the terms of those relationships become more complicated. Performance becomes harder to manage. Questions such as these arise: How does the company determine whether or not its Web presence is cost-effective, given the infancy of the Internet? How can a company fairly evaluate the success of its Web development outsourcer when standards for evaluating success of the medium have yet to be determined?
Some business analysts have argued that Web site development must show a clear and decisive return on investment (ROI) in order to justify continued spending and commitment. Even this normally tried-and-true approach fails to yield conclusive results. For example, how does one factor in the cost of establishing a brand in cyberspace? More important, how does one factor in the cost of not establishing a brand in cyberspace? Is there a benefit to having potential customers wade through an interactive database of a manufacturer's products and parts, even though they do not have the option of purchasing online? What is the value of learning about the Web as a medium so that when the opportunity presents itself, a company can be poised to take advantage of the power of networking with its customers?
This is not to say that a company should not or cannot outsource its Web site development with the same degree of bottom-line concerns as it outsources other aspects of its business. The fact that outsourcing the Web offers its own unique challenges presents an all the more important reason to look at a fair definition of what it means to outsource, review the state of outsourcing today, and evaluate the reasons in favor of and against outsourcing in a generic sense-not as is generally presented in the computer trades, but rather outsourcing specifically related to Web development services.
What Is Outsourcing? Perhaps it could be said that, to borrow and modify from Mark Twain, work consists of whatever a body is obliged to do, and that outsourcing consists of whatever a body can pay someone else to do.
For the purposes of presenting a definition that forms the basis of the discussion throughout this book, outsourcing refers to the process via which one company purchases goods and/ or services (in the case of the Web, mostly services) from an individual or business. It seems pretty straightforward: Company A hires Company B to design, program, and host its Web site. Interestingly, Webster's New World Dictionary (Third College) defines outsourcing with a slightly more political tinge, suggesting it is "the practice of purchasing parts or finished goods from domestic non-union shops or from foreign companies."
What about purchasing services? And what, then, does it mean to sub-contract? A literal, dictionary definition suggests that a subcontract represents "a secondary contract undertaking some or all of the obligations of a primary or previous contract" and that a subcontractor is "a person or company that assumes by secondary contract some or all of the obligations of an original subcontractor."
For our purposes (and also because our industry chooses to do so), we use the two terms-outsourcing and subcontracting-interchangeably, despite the fact that we now recognize that there is a technical difference between the two.
When it comes to the Web, it is understood that a company can outsource its site to a Web developer. That Web developer may perform all of the work at its studio or it may, as is common, subcontract parts of the site to firms or individuals that specialize in certain tasks (such as Java, design, connecting Web front ends to legacy databases, etc.).
The State of Outsourcing Web Services Today Because Web developers include not only businesses devoted exclusively to Web development, but also thousands of small and medium-sized businesses operating behind the scenes in a wide range of fields, it is very difficult to get a grasp on the size of the Web development industry and the number of small, midsize, and large firms outsourcing their Web development efforts.
Geri Spieler, a research analyst at The Gartner Group, estimates that by the year 2002 electronic marketplace managers will spend as much as $5 billion to $6 billion on out-of-office expenditures related to their Internet needs. Spieler points out, however, that the figure could be much higher if a company's accounting system allocates Internet-related expenses in other categories or does not report such expenditures at all.
Anecdotal evidence presented in WebWeek's Second Annual Survey, conducted in October 1997 and reported on by Elizabeth Gardner, revealed that the publication, which has since changed its name to Internet World, "had no trouble locating dozens of design firms with at least one Fortune 1000 client on their rosters." The fact that the survey included 91 respondents, up from 39 in its 1996 survey, seems to suggest that a healthy amount of Web services outsourcing is taking place.
Some of the best evidence comes from Managing Web Developers, an Interactive Technology Strategies report published by Forrester, the well-known and highly respected market research firm based in Cambridge, Massachusetts.
The Forrester report, conducted in September 1997, interviewed 50 new-media managers at Fortune 1000 companies regarding their use of Web development firms. Among the many of Forrester's findings:
- Business is outsourcing its Web development needs. Roughly two thirds of those firms surveyed "currently employ two or more outside Web developers," a healthy increase from the 1996 report, which found only one third of the firms surveyed used outside contractors to meet their Web development needs.
- Companies prioritize their outsourcing needs. According to Forrester, "coding and scripting and site design are the most outsourced tasks" in Web site development. Those two functions are followed, in order, by content creation, content management, systems management, and strategic planning for the Web.
- Companies choose outsourcing for specific reasons. Not surprisingly, Forrester found that the number-one reason for outsourcing site development was a lack of internal staff. Other reasons cited were (in order): no technical resources, lack of expertise, and the fact that outsourcing was easier. Interestingly, the least important reason companies cited was the fact that outsourcing was more cost efficient. This supports the claim earlier in this chapter that the justification for outsourcing Web development services is something other than cost, traditionally one of the most important factors considered when outsourcing other types of information services. The "talent, not cost" sentiment was echoed by one executive producer at a large entertainment company who observed, "When we subcontract, it is not about saving a few bucks. If we could find the right people, we'd hire them in a second."
- The future points to more outsourcing. Outsourcing will not only continue to be the buzzword of the next few years, but Web developers can expect work to remain plentiful. The Forrester survey found that "fifty-five percent of the average Internet budget is allotted to outsourcing" and that "over the next year, 86% of new-media managers plan to either increase or sustain the current level of outsource spending."
In Favor of Outsourcing For many businesses, outsourcing represents a cost-effective method for ensuring that a company's Web development efforts do not distract valuable resources from the corporate mission-the "we make widgets, not Web sites" argument.
Before you make the decision to actually outsource your Web site, key departments in your company-marketing, sales, operations, customer service, MIS, and management-should examine the outsourcing benefits presented in this section.
If there is widespread recognition and agreement that your company will benefit from outsourcing Web development services, you will have engaged in an important consensus-making process that will go a long way toward encouraging teamwork and laying the framework for a successful relationship with the Web developer your company decides to hire.
If no consensus exists (and in some cases, the process divides rather than unites the various departments), it is clearly better to find this out at the beginning of the project. In some cases, the company may find that it has no choice but to put the brakes on the outsourcing process. In other situations in which the company does indeed go forward without consensus, it is better to have all of the "turf wars" exposed prior to starting the project and risking a negative and costly Web site development experience. In a perfect world, it would be best if the company could resolve departmental conflicts prior to working with an outside developer. In many instances, conflicts simmer below the surface and various groups maintain agendas that remain hidden. For example, an MIS group may want to delay cooperating with an outside Web developer but may indicate that its delay is based on more pragmatic concerns-for example, that Web development falls after nine other priorities. In any case, exposing potential turf battles and interdepartmental conflicts early on creates the opportunity for a company to overcome such hurdles by setting approved companywide priorities. If the process is an open one from the beginning, there's less chance that hidden agendas can stay hidden.
The Cost Factor. For many companies, the most important consideration in outsourcing the company Web site is cost. Relying on an outside firm enables your company to accomplish more work without necessarily hiring (read that paying) for the staff to carry the work out.
Determining and comparing the costs of developing your site in-house versus working with an outside Web developer is a fairly simple process. First, define the specifications regarding your site. How many sections will it contain? How many pages will each section house? What are the technology requirements necessary to make your site work? For more information on developing your concept, setting goals and drafting a request for proposal, see Chapter 3.
After you have a rough project specification, go through the exercise of estimating what it would cost to build the Web site in-house. Do you currently have all of the staff that you will need? Or will you have to hire one or two additional staff members in order to build the Web site according to specification? In this case, you will want to prepare a detailed budget for your Web site. In doing so, be sure to include additional hardware and software that you will need to purchase, the cost of hosting your site, etc. If you have people in-house, be careful to assess whether you will have to pay those people overtime for work they spend beyond a normal work shift. If the people work in other departments find out whether or not your department will be charged for recruiting their services. Finally, be sure to add the cost of overhead for additional staff members-health care benefits, vacation time, profit sharing, desks, phone charges, computers, etc.
Reviewing all of the true costs you are likely to incur will give you a clear picture as to what developing your Web site in-house will cost. That, of course, assumes that your company has the expertise to produce your Web site in-house. If you don't, be sure to add a hefty amount to the budget for training.
Compare your internal costs to several bids submitted by Web site developers. If you estimated honestly, your answer should be obvious.
Cost should not be the overriding justification to outsource, or not outsource, your Web site development needs. A great many businesses do not choose to outsource because of cost but rather because of need. The need to grow their business and take full advantage of the newly developing online world. Companies that make their decisions solely on the basis of price are likely to find that they will incur the ultimate cost: the cost of lost opportunity. By not working with the best and the brightest Web developers, a company might never develop its Web site enough to take full advantage of the opportunities the Web offers. And that cost alone can have the biggest impact on your bottom line. Knowledge and Expertise. A significant factor in the decision to outsource Web site development revolves around whether a company possesses the in-house knowledge and expertise required to establish an effective Internet presence.
A good Web developer specializes in figuring out what works on the Web and, more important, what does not work-both in terms of technical capability and measuring effectiveness.
Small businesses may lack the time needed to fully understand the best option for presenting their business on the Web. Medium-sized and large businesses might have the luxury of freeing up a limited amount of resources to tackle a Web project, but they still might lack the knowledge to implement all of the minute technical details of a Web project. If you don't have a Web expert in your company (and you can't afford to bring one on staff), an important benefit of outsourcing is that you'll gain a Web developer who has the knowledge and expertise to build a more effective site than you could have produced otherwise.
Growth. Outsourcing your Web site is a great way to dedicate and focus attention on your company's core business. An outsourcing arrangement not only frees up your time and energy, but it also keeps your company growing and preparing for the future.
A number of larger companies outsource the task of designing and producing the company's second-generation Web site while the company's own MIS group puts the finishing touches on its first-generation site. That way, the company can test and implement new systems and technologies via an outsourcing strategy without adversely impacting day-to-day operations. Using a Web developer to build a future site in parallel is an effective method of sustaining growth and progress.
Speed. Today's companies understand that competing in the marketplace requires designing products and developing solutions at breakneck speed. If managed properly, the use of outside Web developers can enable your business to focus on targeted goals and achieve their implementation at a much quicker pace. Web developers can be given financial incentives to deliver their services at a faster rate. Furthermore, because Web developers can specialize in certain aspects of site development, their expertise is likely to add a level of efficiency that your company could not achieve.
Specialization. Not all Web developers are created equal. Each developer has a distinct approach to the Web that can serve its clients best interests. For example, T3 Media is a company that specializes in the development of dynamic Web sites delivered with Microsoft Windows NT Server and Microsoft SQL Database. The company has other areas in which it excels, but its database solutions form the basis of its excellent reputation. Through specialization, T3 Media has achieved a level of excellence that a small, medium-sized, or large business might take years to match. Other firms might specialize in helping their clients establish brand identity on the Web; still others may concentrate on integrating front-end Web solutions with legacy databases. Some might specialize in creating highly targeted banner ads, and another developer might have a focus that includes Java development or implementing a specific electronic commerce solution.
Outsourcing is a way to leverage the specialized experience of the Web developer for your company.
Technology Relief. If your company creates health insurance plans, your business focuses on the design and delivery of the best (and hopefully the most affordable) health care packages. Keeping on top of legislative changes affecting the delivery of health care can be a daunting task. Try doing all of that and keeping on top of the latest and greatest Web technologies, too. For that matter, try just keeping the most recent version of Netscape Navigator or Microsoft Internet Explorer maintained and running on your computer desktop.
Technology comprises the entire sum and focus of your Web developer's life (assuming that time in between programming actually leaves time for a life to begin with). Outsourcing offers you the tremendous advantage of having a specialist tame technology for you. A successful Web outsourcing relationship is one in which your Web developer synthesizes all of the technological change sweeping the industry and presents it to you so that you can make effective decisions regarding the future development of your business. You know you are experiencing the true benefits of outsourcing when you move from the Internet to an intranet to an extranet, all the while delivering better products and services to your customers at a better price-and all based on the advice of your outsourcing partner.
There's no question that this book is in favor of outsourcing Web development services. This pro-outsourcing position, of course, assumes a willing and capable company and a competent and professional Web developer. In addition, this book assumes that the company making a decision to outsource its Web development services understands the process of building a Web site and is prepared to make the commitment necessary to ensure the project's success.
Yet outsourcing is not necessarily a de facto decision that companies need to feel compelled to make-despite what they read in the computer trades. Outsourcing Web sites has its definite downsides.
Our goal in this section is to present the arguments against outsourcing Web development services. The hope is that a company in the process of deciding whether or not it should outsource its Web services will review these arguments carefully, analyze how they may or may not be relevant to a particular situation, and proceed in the outsourcing process, knowledgeable about the potential pitfalls that the process might bring along the way. These arguments are not presented to deter a company from outsourcing its Web site development, but rather to use these issues as red flags to look out for along the way. Many of the issues discussed in this section reappear in the various topics covered throughout this book.
The first set of arguments is applicable to your company's internal operations, while the second set identifies the risks of outsourcing from the perspective of working with a Web developer.
Internal Outsourcing Risks. Outsourcing is not a "no-brainer" decision. In fact, for a number of very serious reasons, outsourcing can be disruptive for your company. These reasons include are described in the following sections.
Company Culture: One of the most significant barriers to the effective outsourcing of services has to do with a company's corporate culture-the largely unwritten rules of operations that play a powerful role in determining how a company conducts its business. Some companies are simply not prepared to outsource their Web development services. Many do not understand that designing, producing, and maintaining a Web site requires involvement and support from multiple groups within the company: marketing, sales, customer service, management, and MIS. For a Web site to be successful, each of these departments (and still others) must contribute to or at least be aware of the company's Web site development. Coordinating day-to-day operations is a time-consuming task. Add to that the requisite coordination and management tasks-first among departments, then with an outside Web site contractor-and it becomes a task that many firms find they cannot manage. As an outsourced project continues, the delay in providing the contractor with input and approvals will delay the project, reduce the chance of its success, and potentially have a negative impact on the budget. These risks are further complicated by the fact that, as should become obvious as this book unfolds, building and maintaining Web sites is a very labor-intensive, nonscientific task that has a tendency to evolve rather than be completed in a finite, predictable manner. A company might start to build a Web site only to see its needs and the capability of technology change to the point in which the Web site needs to be entirely redeveloped. Many companies without experience in outsourcing are likely to be uncomfortable with, or at least surprised by, wh at is essentially the nonfinality of a Web site. "We're used to product cycles," said a manager at a manufacturing firm. "Three months of design, two months of specifications, followed by having a vendor build our product. It is a specific product cycle. With the Web there's this constant. The product is never 'finished. ' We were unprepared for that." In addition to being unprepared for the continuous engagement that building a successful Web site requires, many a company fails to recognize that it is indeed not the "outsourcing type." Companies that are traditionally secretive and those that choose to run their business too "close to the vest" might have difficulty trusting Web developers to apply their expertise to the firm's Web presence. Inevitably, it is difficult for a company that has never outsourced any aspect of its business-from product design to development, marketing, and sales-to make the leap to trusting an outside vendor to determine the best way to present the company on what could potentially end up as the company's largest sales, marketing, and distribution channel. Companies of this nature tend to trust less and control more-something that makes a Web developer's tough job that much more difficult.
Brand: A high-level executive at one of the major credit card companies observed that "we aren't opposed to outsourcing, we just don't let the database leave the building." The executive was referring to the fact that a great many businesses cannot outsource because, rightly or wrongly, they need to control their product brands or proprietary information. Playboy, one of the most instantly recognizable brands found anywhere in the world, hesitates to outsource the development of its products because, in essence, the value of the company is entirely in the company's name brand-the bold type found on magazines on newsstands all over the world. If your company is overly protective of its brand, or of proprietary information that it are reluctant to share with outside contractors, the type of open relationship required to make outsourcing successful might be more difficult. You still might make the decision to outsource, but the entire process will most likely be dictated by your primary concern: protecting brand. This means that everything-from the selection of the Web developer to produce your site to the site's security and marketing efforts-will have to be scrutinized carefully throughout the Web site development process.
Politics and People: Ask yourself honestly: Is your company a political land mine? If your group needs to accomplish a goal, do you get positive assistance and feedback from other groups in the company? Or do you invariably face an uphill power struggle to implement your initiatives? Does marketing cooperate with sales and customer service and MIS? Or is each group entrenched in territorial battles that are bound to make the process of building a Web site rife with politics and disruptive agendas? These are tough questions that need honest answers if the process of building a Web site is to meet the needs of every group in the company. Many Web developers have horror stories to tell about working with a company's marketing department only to find the firm's legal department would not approve one sentence on the company's Web site and would not cooperate in the process of changing the wording. In some companies, it is axiomatic that the bigger the Web site's ambition, the bigger the turf battle. Of course, the bigger the turf battle, the more convoluted the Web site coordination, and that usually translates very quickly into project delays and higher costs. Behind the politics, however, another important issue concerns the role of people in their companies-their job satisfaction and career development. This is particularly true of an MIS group. It's no mystery that the Web is the hottest project that an MIS group can undertake. Figuring out a Web site certainly far exceeds network maintenance and management when it comes to intrigue. MIS teams read the computer trades. They know that for their skills to continuously develop, they need to gain understanding and experience in implementing Web-based sol utions. A company that makes a decision to outsource Web development potentially takes one of the "neatest" jobs away from a staff that spends its days performing the sometimes less appreciated tasks of, for example, network maintenance. "We work twelve hours a day doing grunt work and they hire a bunch of hip consultants to play with our Web site," says one disgruntled MIS worker. "I'm out of here." All of the trade magazines suggest that good MIS professionals are very difficult to find. Your decision to outsource a Web site just might put your company in the hunt for those scarce workers as your MIS staff leaves to go work on more exciting projects at, ironically, a Web development shop. This is not to say that the MIS group should necessarily be the team that produces your company's Web site. In fact, many MIS departments have turned down the option based on their focus and as a result of their long "to do" lists. However, it does make sense to involve the MIS team in the process and make sure that the project has their buy-in, approval, and cooperation. You might also find out that the MIS group can contribute parts of the Web site development, thereby reducing the costs of using an outside contractor.
Cost: And what of reducing the costs of using an outside contractor? It might be theoretically true that outsourcing reduces costs, but several business studies indicate that the results are inconclusive at best. The Web development industry is young, and whether it makes sense to go it alone or contract with a partner remains to be seen. Cost is also difficult to measure. For example, if a company decided to produce its Web site in-house, it might find that because it lacks the personnel to undertake a large-scale Web effort, it will scale back and produce a more limited Web product. Does it necessarily follow that, because the company worked with a qualified Web developer and as a result established more ambitious goals and therefore spent more money, it would have been less costly to develop the site in-house? If the company outsources its Web site and loses several valuable employees in the process, is it fair to say that outsourcing is more cost-effective in the long run? This raises a key point in the outsourcing debate. Outsource because of expertise. Outsource because it will make your business better. But don't count on being able to actually prove that outsourcing was conclusively less expensive. If your company can present an objective analysis proving that outsourcing is less expensive, you will be well ahead of the game. Many firms, however, find that outsourcing is actually more expensive, but they find it is worth it, given what their Web site can do to enhance their strategic advantage. It seems that on the Web, as with most everything, you always get what you pay for.
The Web Developer. Not only does outsourcing carry with it internal risks for your company, but there are external risks as well-risks that specifically relate to working with an outside Web developer. These risks include those discussed below.
Competence: With investments from venture capitalists, mergers and acquisitions, and an influx of cash from advertising agencies scrambling to connect with key technology skills, you would expect the Web industry to have reached a certain level of operational maturity. However, company after company that hires Web developers complains about a lack of business professionalism and an inability to deliver on long-term, technology-intensive projects. As one executive at a major entertainment company pointed out, "Our Web developer was fired for having the manners of children and the ability of infants." This is not to say that there are not very capable Web development firms throughout the country. In fact, in New York City alone, at least a dozen Web developers have already delivered on multiple large-scale projects within budget and on time. The same holds true for San Francisco, Chicago, Boston, Los Angeles, and other hot beds of Web development.
But for every Web site success, there are companies that have hired Web developers and had disappointing results. The ultimate competence of a Web developer-the ability to deliver solid designs, cutting-edge technology, and a host of solutions-is a key issue in determining whether or not your company should outsource its Web development.
The Trap: Working with a contractor to build your company's Web site involves making a major commitment to that contractor. Your contractor's success will, in the end, be your success. If your contractor fails, your project could fail. A number of incidents have occurred involving very big (and prestigious) companies hiring a Web developer, only to have that developer hold the company's Web site hostage over a disagreement on funding or other contractual issues. If your caterer has a dispute over the bill, you might not have breakfast ready for an important meeting, but if your Web developers have a dispute with you, they could be in control of your Web server and all of its contents-in short, a major part of your business could be held hostage. As soon as you decide to outsource your Web site, your company becomes vulnerable. Outsourcing has its risks. The fact that Web developers sometimes go out of business makes this issue particularly important. More than one Web developer has gone "belly up" and had its doors padlocked by its creditors while clients peeked through the locked windows, staring helplessly at their unattended servers. Unfortunately, no sure-fire advice can ever guarantee that your company will avoid these potential outsourcing downsides. In a general sense, one of the best ways to avoid being trapped is to educate yourself (and your company) about the Web development process, the subject of this entire book. If you work with a reputable Web developer and pay a fair price for the services you purchase, chances are better that you can avoid problems with the outsourcing process. Of course, protecting your site and your business is ultimately a legal issue, one that is covered in gre ater detail in Chapter 7.
Accountability: One of the most important reasons to keep a project in-house, assuming that your company has the expertise, is final accountability. If employees at your company cannot deliver on a project, your firm has clear and immediate leverage. You might not want to use that leverage, and it might remain unstated, but the fact is that employees who cannot deliver on a project (assuming no extraneous factors are at play) realize that their relationship with the company is limited. In short, they can be fired. In addition, employees at a company know that if they succeed (and most employees want to do a good job and succeed as professionals in their chosen field), they will face rewards: a raise in pay, additional benefits, promotions, and so forth. The point is that the company has leverage over its employees, and employees know that. Your company has less leverage with a subcontractor than it does with an in-house employee. The subcontractor might have multiple clients, of which you are only one, who warrant their attention and service. Also, the more pressure you put on your Web developers to perform "the impossible," the greater the chance the Web developer will decide to focus on profitable relationships and possibly drop you as a client. That scenario might seem strange, but in an industry in which large-scale, profitable projects abound, more and more Web developers are focusing their business on firms with which they feel comfortable working. Web developers, it seems, can afford to be choosy. This is the same lesson that anyone who has ever contracted to remodel their kitchen has faced: be kind to your contractor. Your old kitchen has been demolished, there's plenty of work to do before you can use the stove again, and the contractor has a stable of clients who will be happy to have his attention focused on their project instead of yours. In order to protect yourself against these circumstances, you will need to be on the lookout for potential warning signs that your project might be "going wrong." The signs and strategies to manage them are discussed in greater detail in Chapter 9. Of course, issues of performance and parting ways should be covered in your legal agreement with your developer. We cover both in Chapter 7. When it comes to the Web, accountability can be a very delicate matter. In addition, if you think it is easy to move your Web site and start over, think twice. First, starting over is not a simple task; second, it is not an inexpensive one.
So how does a very simple Web site shake out when it comes to considerations of cost? This section takes a look at three simple Web sites and compares the costs of producing each in-house against hiring a subcontractor to produce the site. The numbers presented here are not meant to be absolutely conclusive. In any Web project, it is necessary to develop a comprehensive statement of goals and a carefully drafted request for proposal (RFP) and then have that proposal bid on by multiple Web development firms. The purpose of these brief snapshots is to identify a basic snapshot of outsourcing costs for small, medium-sized, and large Web sites. Here we distinguish among the possible sizes of Web sites, not by the size of a business, but instead by the functions and capabilities of the site itself. A large company-a Fortune 100 firm, for example-might not have the need for a large Web site, while a small business might. It follows, therefore, that on the Internet, the size of a company might not be the sole determinant in the size of the company's Web site.
We make some very simple assumptions that indicate the rationale behind the numbers. The circumstances at your company might differ dramatically, and in order to get a more accurate analysis, you may want to plug your own numbers into this basic format.
The numbers and estimates in this section were polled informally from several companies that hire Web developers and consultants, as well as several Web developers, all of whom were happy to contribute to the process but preferred not to be identified due to the sensitive nature of how much they pay or charge for their services.
Small Business Web Site. This case site (see Table 1.1) is a very simple Web site that has the goal of establishing a marketing, public relations, and media kit for a small business customer. The site includes the following information: about the company, the product line (10 product snapshots and specifications), contact information, a database of dealers who sell the product, news and announcements from the company, and warranty and repair information.
For the small business, the company saves money by outsourcing the development of its Web site and, as a result of the Web developer's expertise and specialization, ends up with a more sophisticated Web site that includes the ability to search a database of distributors of the company's products.
Medium-Sized Web Site. In this case (see Table 1.2), the company that is evaluating whether or not to outsource its Web site development has no expertise in-house and would have to create a Web development division in order to build the site. For the purposes of our discussion, we assume that the company has an MIS group and that the Web development group would function under the MIS group's review as an independent unit.
Also for the purposes of our discussion, we assume that the company will include the following options on its Web site:
- Basic information about the company, such as history, background, key personnel, press releases, etc.
- A special section for investors, including the annual report presented online.
- A large product catalog, updated yearly, that includes 500 products and all of the various product specifications. The company does not sell directly to the public; therefore, the Web site will direct interested consumers to the nearest retail showroom where customers can consult with a specialist from whom they can purchase the product. This portion of the Web site also includes a section that allows customers to request a catalog.
- A large-parts catalog for all of the products that the company has manufactured over the years. The company can sell these products directly to consumers; therefore, this section of the Web site includes a secure order form via which customers can place orders for parts, with an option for overnight shipping. The company will ship parts via an extensive shipping department located at its warehouse.
- The site will also feature a multimedia-rich section in which visitors can take a look at presentations that display the company's products being used in homes and businesses across the country.
Large Web Site. Let's run the numbers for a large Web site (Table 1.3)-for example, a site for a magazine or information service to meet the specific needs of a group of trade professionals.
The magazine wants to update content on a daily basis and intends to generate enough advertising revenue from the site to cover operating costs and produce a substantial income. For example, the magazine budgets its operational costs at close to $1 million per year and expects to generate several million dollars in advertising sales.
Here we can see that in the case of this magazine, the numbers point to a cost-effective advantage in terms of keeping the Web site in-house.
This scenario indicates that the larger the Web site, the closer the numbers come to being in favor of keeping the Web site in-house. This is largely because when the Web developer has to maintain a large staff dedicated to one particular project, it loses its advantage of being able to leverage employees across multiple projects.
The numbers presented here are based on a limited circumstance; they can't be extrapolated accurately to every circumstance. If your company is building a large Web site, it would be a good idea for you to run the numbers and get an actual comparison based on your specific circumstances. Remember: The larger the Web site, the greater variance in circumstances and the greater swings in terms of cost.
Use the process with which these numbers were calculated to determine the fiscal analysis for your own company's Web site project. If the numbers shake out in favor of using an outsourcer, you're on your way. If the numbers are close, you might want to consider some of the other factors in favor of outsourcing presented in this chapter as part of your decision-making analysis.
Understanding Your Company
Of all the decisions your company can make about outsourcing, the most important is whether you are equipped to handle outsourcing your Web site. Determining whether or not your company is organizationally equipped to outsource its Web site will give you some early answers that will save you time, effort, and energy later. As you begin to address your outsourcing needs, consider the following issues:
- Are you the outsourcing "type"? Are you a do-it-yourself control freak? When you considered redesigning your kitchen, did you order a stack of books from www.amazon.com and start hanging out at the Home Depot? Or did you call a kitchen designer and have them provide you with designs and an estimate? More important, when the job began, did you find yourself peering over the carpenter's shoulder? Make a list of all of the projects currently under development in your company. How many are on hold because you haven't had the time to conduct the research, write the job specification, and start the process yourself? How many did you turn over to someone else to tackle? If you are not the kind of person who delegates tasks easily, you are probably not the outsourcing type. Carefully examine your personal and professional tendencies to establish whether or not you should outsource your company's Web site. At the very least, if you take a hard (and honest) look at yourself, you'll be able to communicate your style to the Web developer that you hire. Different Web developers have different approaches to client relationships. Some seek to immediately establish a partnership with their clients and actively encourage them to be a member of the team. Other developers look for clients that tend to take a more "hands-off" approach. Neither approach is incorrect as long as the developer and the client are comfortable with the relationship. In either case, it is best to know your tendencies and be upfront with a subcontractor about them.
- How's your outsourcing track record? Has your company outsourced projects in the past? Is it currently outsourcing some aspect of its business? Take a careful look at past or current projects. Were these projects successful? If so, which department contributed to their success? Does your company have a history of unsuccessful outsourcing relationships? If so, why? It might be painful (or painfully obvious!) which department in your company has played the biggest role in making your outsourcing effort less than successful, but that's something that you should know up front. What were the other factors that contributed to the negative results? More important, are the departments or factors that prevented successful outsourcing relevant to your company's Web site development? In other words, if the marketing group is the reason your last five outsourcing efforts resulted in cost overruns, people leaving the company and a lawsuit from the subcontractor, and the marketing department is a key group for the Web site's success, then you know you're going to face some problems. You might want to scale back your expectations and produce your site in-house. Or perhaps you want to involve higher management in the process as you voice your concerns. Better to clear the air before the project starts than spend nine months waiting for design approvals, as happened in one case we know of. It's a good idea to review the numbers on previous outsourced projects. Were projects delivered on time and on budget? Were they delivered on time but over budget? Or were they delinquent in both? As a general rule, a Web site requires far more cooperative work across a wider group of departments than do most outsourci ng projects. Therefore, a poor outsourcing track record will only get much worse when it comes to creating a successful Web site.
- What's the procedure? Barriers to effective outsourcing are not usually as obvious as a single, easily identifiable barrier such as the marketing group or the MIS department. Often, the real barrier to outsourcing is whether your company is structured to work with outsourcers in an efficient, systematic manner. Does your company have a method, process, or procedure in place to make work among employees go smoothly? How about with outsiders? Are there established procedures in place to manage the approval and revisions processes? Web site development is an inexact science and an ongoing process. The more methods your company has set up to manage the process, the smoother the results will be. For example, let's say your Web developer creates a working prototype of a database that will contain all of the products manufactured by your company. Do you have a procedure in place for working with your developer to test and review the prototype? Do you have a procedure in place for everyone in your company (or the appropriate department) to contribute to that discussion? Do you have a place where comments and feedback are collected so you can create a reference for your site's development, thereby making it possible for you to document, review, and evaluate the decisions that were made along the way?
- How do you share? It is not enough to develop procedures that work within your department. If you are considering outsourcing your Web site, you need to ask yourself how well various departments cooperate with each other. Your Web site will most likely involve at least the marketing team, the MIS department, the legal department, the sales force, and customer service. How do these groups normally work together? Does your company tend to suffer from department "territory-ialisis"? Many Web site developers complain that they ramp up to work with a client, only to have that client's Web site put on hold because the client's legal department doesn't have access to the Internet and can't check the site for trademark compliance. If your interdepartmental track record is weak or nonexistent, you could be headed for trouble. If the various groups in your company can't cooperate, chances are you'll run into problems trying to produce a Web site. There are many examples of interdepartmental conflicts so intense that it actually led to several departments developing their own version of the company Web site in competition with one another! It is hard enough to create a single attractive and compelling Web presence, let alone three or four sites.
Once you have made the decision to outsource your Web site, you will want to spend some time gaining a basic understanding of the Web development process. Understanding this process will help you develop an insight into the kinds of issues for which you will be responsible and accountable as you start to shape your company's Web presence.
The following sections provide a simple bird's-eye view of the basic Web development process. They address Web development, independent of outsourcing. In your situation, you may have one person on the team from your company and another person on the staff of the firm to which you have chosen to outsource your Web project. As you review this process, keep two points in mind. First, this process describes the general development of a Web site. The goals, functions, and various technologies that you attempt to implement on your site will more than likely change during development. Still, for our purposes-and for the purpose of laying the foundation for this book-this overview is helpful. Second, this process is not an entirely linear one. For example, this outline describes the programmer getting involved much later in the process than would actually occur. Ideally, the programmer would be directly involved in the determination of the site concept, goals, and functions.
Developing the Concept. During the development phase of the project, the client company and its outsourcer determine the goals of the site. For example, our goal is to reduce customer service expenses by creating a Web site that will deliver important information to our customers as they need it.
Functions. After goals are determined, the Web team translates the goals into specific site functions. Given the example of the customer service goal, this is translated into the following: In order to fulfill our goal, we will have the site perform the following functions: (1) We will provide our entire product manual on our Web site; (2) we will make our technical support database available to our customers; (3) we will make our latest technical notes available to our customers; (4) we will enable our customers to communicate with us and each other to discuss the issues involved with using our products most effectively; and (5) we will make available to our customers information on product upgrades, plug-ins, and the like.
Who? Who should be involved in the concept phase: the project manager of the site, the designer, the programmer, the editorial person and other key people interested in contributing to the development of the site, as well as the outsourcer.
Technology Assessment. After the goals and functions are set, the technical experts seek to determine the appropriate platform and technologies necessary to fulfill them. During this stage of the site development, the company drafts a technical specifications document that indicates the technology options and the benefits and disadvantages of each. This effort should be overseen by the MIS group at the company, with input and oversight from the company's executive management. Smart companies will make sure that this development doesn't occur in isolation and will have active participation from the project manager, the editorial group, and even the site designer. Why? The project manager needs to fully understand the basis for the technical decisions in order to better manage the project. The person responsible for the editorial aspect of the site will need to know how the technology functions so that he or she can provide information and instruction in the most effective manner possible. And the designer must understand how the technology operates so that he or she can best design the end-user experience.
Site Architecture. After the technology assessment, the project manager works in tandem with the designer, the editorial contributor, and the programmers to create, review, and approve the Web site architecture. During this process, decisions are made on how many main sections the site will contain, what they will be named, and how they will be structured.
Design. During the design, the look and feel of the site is created by a team that might include a creative director, a designer, and a team of graphic artists (which could include an illustrator or photographer if the creative direction calls for it).
Editorial. During this process, the structure of the site is translated into user-friendly language that will guide the Web surfer through the site. Editorial copy for every page on the site is written, edited, and proofread. One of the most overlooked aspects of Web site development is often the site's instructional copy. For example, a company might be sure to include a summary of the company's history or the new fall catalog line, but many Web sites will neglect to include a paragraph introducing the company's products and a few sentences that explain each of the types of products made by the company. A good example of instructional copy is, "Click here to browse our award-winning line of high-end stereo amplifiers." If you visit a Web site where the text is well written but the instructions are poorly constructed, there's a good chance that the site was based on a well-produced printed brochure written by an editorial professional, while an inexperienced programmer did little to adjust copy for an online environment.
Production. The production process involves preparing the graphics for viewing on the Web-a process generally recognized as indexing-and coding the final text with HTML. Production also includes the development of specialty multimedia aspects of a site such as animation, sound, or video and basic "soft" programming such as CGI scripting.
Programming. While all of the previously mentioned steps are in development, the programmer is working to implement the various technologies outlined earlier in the process. Programmers, or technical staff, are generally starting to split into two categories: infrastructure specialists and delivery specialists. Infrastructure specialists focus on the server side of the technology equation. They manage the connectivity aspects of the site as well as the server itself, including security, Web server software, backup and administration, and the like. Delivery specialists focus on making the site work. This might include writing custom Java applets or programming a database. Many individuals can master both types of technical work. You might find a programmer who can build, connect, and set up your server and install and program your SQL database, but recent trends in the industry suggest these types of experts are being swamped with so much information and so many technical options that some degree of specialization is necessary.
Testing. Web sites require testing, and lots of it. Some Web developers have suggested that as much as one third of a Web site's development cycle should be allocated to testing to ensure that the site works well on a wide variety of computer platforms and browsers. One thing is certain when it comes to testing: the more ambitious the site, both in function and technology, the greater the necessity to test, test, and test again.
Marketing. What good is a great product if no one knows about it? By the same token, what good is a Web site if no one visits it? The marketing phase of site development includes everything from properly registering the site with search engines to conducting a public relations campaign and advertising the site both in print and online.
Maintenance, Management, and Ongoing Development. After the site is completed, many Web developers say the real work begins. Not only does the site need to be maintained, but it must also be updated to include new content, new features and options, and new reasons to keep people coming back. New technologies should be integrated continually, whether they enhance the server, optimize database performance or just plain dazzle your intended audience. A solid site should be reinvented every six months to keep from projecting a stale, passT image.
The Players: Defining Roles
The Web development process and the players involved vary greatly, depending on the scope of the site. For example, sites with specific marketing goals that don't involve commerce or other major evolving technologies will not involve sophisticated programming and intensive testing and debugging. Some team members come and go; however, the majority of Web site development efforts include basic team members such as designers, production artists, editorial experts, producers, and programmers. This section features two interviews from each of the major types of Web team member. The more you know about what each contributes to a Web project and the issues they face as professionals, the more insight you will have when it comes to buying Web services.
Interview: The Designer
Lee Goodman, firstname.lastname@example.org
Lee Goodman has worked in print design for Milton Glaser and Rolling Stone magazine. A designer by trade, he has worked as a creative director at Adam Curry's company THINK and as group creative director at Poppe Tyson. He is currently creative director of his own shop, The Factory.
Q: Suppose I run a business and I'm new to the Web development process. Can you explain the difference between a creative director, an art director, and a graphic designer?
A: Sure. The creative directors are at the top. They coordinate with an account manager to develop a core strategy for your Web site project. The creative director will help you take your marketing goals and translate them into a strategy that can be understood by your customers. The art directors execute the strategy. They will generate ideas that grow out of the strategy and develop rough concepts that will form the basis of the final Web site design.
Q: Any thoughts on how that is done?
A: Well, it varies depending on the type of art director. Some art directors are very hands-on. They will sit down and create some general page concepts in Quark or Photoshop. Others will pull together ideas and turn to a graphic designer and say," Here are some images, colors, and general concepts that I think manifest the creative strategy. Create some designs that reflect this feel."
Q: So the graphic designer...
A: Well, they are the ones that work the typography. The good designers will go off on their own and come up with variations on the creative theme.
Q: So in your mind, the designer should know HTML and such?
A: I think a good designer should know HTML simply so that they have an understanding as to how their design would be built. The analogy to print here is a good one. You wouldn't expect a designer to run down to the print shop and fill cans of ink and start the press, but they have to know enough to know about issues such as trapping. The more the designer understands how a page is produced, the more successful the design will be.
Q: Any final thoughts?
A: If you are the client, the entire design chain is about developing and extending a strategy that makes sense. The creative director will develop your strategy, and every person that follows in the creative process should give that strategy greater definition.
Michelle Szabo, email@example.com