E-commerce and e-services , two business models triggered mainly by the Internet, rule the new dot.com economy. In a variety of ways, both affect corporate storage needs as organizations require faster access to much larger storage systems to contain data--both current and archived--that includes images, sound, and video. These two business models, in turn, are changing the storage requirements for traditional applications.

E-Commerce

In the e-commerce model, a new channel of commerce between companies and customers--largely via the Internet--replaces the traditional commerce channels. In addition to offering new consumer sales channels, e-commerce has fueled the emergence of new types of businesses where neither manufacturing nor merchandise stocking takes place. These new businesses act as intermediaries between a warehouse and a customer, with an electronic catalog to promote and market the products.

The foundation of an effective e-commerce system comprises five major components--merchandise promotion (often through an electronic catalog), order entry, payment processing, order fulfillment, and customer service. E-commerce uses a breadth of applications ranging from OLTP to database access for decision support to multimedia presentations for merchandise promotion. Each application has its own set of requirements, but in general, all the activities can be described as data flowing from one storage system to another. Thus, flexible, reliable storage is essential to e-commerce activity. E-commerce usually requires you to

~ maintain a list of goods and services with attributes (e.g., price, specifications, availability, and performance)
~ maintain a set of detailed instructions for goods procurement
~ advertise products using extensive graphics
~ provide stocking information and product availability
~ record transactions
~ maintain a list of customers with attributes (e.g., name, address, marketing profile, statistics)
~ keep a history of customer activities
~ track shipment details together with the modes of transportation
~ maintain detailed information about returns and warranty
~ maintain the accounting for each transaction, along with tax determination
~ provide rapid data access for customer support

All of these activities require reliable and timely access to extensive amounts of storage.

Equally crucial to e-commerce is ensuring complete customer confidence in the safety of business dealings. This is especially true in credit-card based transactions where fraud is a potential risk. To combat this risk, merchants and consumer groups collect data in huge databases to track all aspects of fraud on the Internet. The collected data that must be "data mined" calls for yet more highly available storage.

E-Services

E-services are computer-related utility services that application service providers (ASPs) offer to help organizations perform a function that would traditionally require a competent internal IT staff. In this business services model, sometimes called a "utility model," organizations "outsource" these functions or services. ASPs specialize in performing a given number of these services very well. For example, bill reconciliation, credit checking, freight forwarding, customs clearance, field service, inventory management, and supply replenishment are all services that you can easily procure today from a variety of ASPs.

As applications are outsourced, the need to outsource storage follows logically. While outsourcing implies that users give up some control over their data, outsourcing storage operations alleviates the procurement, management, and maintenance chores associated with IT operations.

As the trend toward outsourced services matures, server environments will require realtime performance with concurrent user and/or transaction volume increases of up to 1000 times today's levels. At the same time, life-cycle information about potentially millions of customers suggests the need for unprecedented customer data management capability--all linked in realtime to front-end Internet presence or call-center systems.

To meet the need for outsourced services, including storage, Internet service providers (ISPs) or ASPs and storage vendors are forming a wide variety of partnerships. This in turn, is fueling the development of another layer of corporations dedicated to supporting the ASP's. For example,

~ ASP FutureLink announced that it will base its network of data centers on hardware and software from Compaq Computer. Compaq will comarket FutureLink's application hosting services as part of the deal.
~ Hewlett Packard (HP) and Qwest Communications announced a 3-year initiative to deliver storage-on-demand services through Qwest nationwide Web hosting facilities. Other services may include backup and recovery, remote data copying, security, and disaster recovery.
~ HP also announced a partnership with, as well an equity stake in, Intira (formerly Digital Broadcast Network). In this arrangement, HP is the primary storage supplier, and Intira provides IT and network outsourcing services to comprise a total package that includes storage for customers' databases, backups, restores, and remote mirroring needs.
~ IBM signed a deal with Application Service Provider Interliant Inc. to install IBM's hardware and software in Interliant's data facilities.
~ Imation, best known for manufacturing media, announced recently that it plans to focus on services and reorganize itself as an independent storage provider.
~ Nortel Networks announced agreements with vendors including HP and software.com to funnel managed applications to small and mid-sized enterprises. Nortel's Managed Application Services Initiative will "integrate all the parts needed by service providers to offer a single, pre-certified solution" to organizations. The firms will provide hardware, software, billing, consulting, and administrative support to ASPs. [~ Service provider PSINet said it will deploy EMC's storage systems throughout each of its 21 global Web hosting centers over the next three years.

Broadband communications is an essential part of the total e-service solution, and we can witness a similar great activity in partnering among the network, telecommunications, and cable companies . As an example, In December 1999, Cisco Systems, a leading manufacturer of equipment that powers the Internet, agreed to buy the optical networking systems business of Italy's Pirelli. A few months earlier, Cisco acquired the optical networking companies Cerent and Monterey Networks. These acquisitions--estimated at close to $10 billion--round out Cisco's options for sending phone, Internet, and video traffic over fast optical networks.

The Internet has bridged the gap between the enterprise and the consumer and, in doing so, has created a utility-oriented technology model that forms the foundation for new ways of doing business. This new model suggests a structure in which numerous service providers compete to provide organizations with the services they require. As organizations look for ways to leverage the power of technology without actually having to own it, we see emerging storage utility services that let organizations take advantage of leading-edge storage technology without the significant up-front investments required to manage the storage.

Statistics 1

~ Buying and selling on the Internet has become big business. Forrester Research estimates that more than $1 trillion in U.S. goods and services will be traded on the Internet by 2002. In 1999, e-commerce was already a $24 billion-a-year business. Consumer-only e-commerce is estimated to rise to $75 billion by 2003.
~ The number of e-business Web sites is expected to top 1 million by 2003, up from 700,000 in 1999. (IDC)
~ A study by Andersen Consulting indicates that more than 25 percent of the purchase transactions at online stores never go through.

Statistics 2

~ It is estimated that 50 percent of large companies are planning to outsource their e-commerce system development. In addition, the majority of these new businesses lack the necessary expertise in large-scale, distributed IT systems and are expected to outsource most or all of their IT needs and management.
~ United Airlines has announced its intention to outsource its entire email system to Internet messaging provider USA.NET. United is the first Fortune 500 company to outsource its whole messaging system to an Internet mail provider.

Statistics 3

~ Financial: It costs banks only 1 cent to process an Internet transaction, compared with 27 cents for an ATM transaction and $1.07 for a branch transaction.
~ Travel: It costs airlines $1 to process an e-ticket, compared with $8 for an agent-booked ticket. Jupiter Communications estimates that by 2002, online bookings will account for 62 percent of airline ticket sales while conventional ticket sales will account for only 20 percent.
~ Trading: Online trading is running at 37 percent of all retail trades. It's expected to hit about 50 percent by end of 2000 next year [2000 or 2001?].
~ Manufacturing: In 1998, companies farmed out 15 percent of all manufacturing. In 2000, they will outsource more than 40 percent. (Hambrest and Quist)
~ ASP: According to IDC, spending in the high-end ASP market will grow from $150 million in 1999 to more than $2 billion by 2003, representing a 91 percent 4-year compound annual growth rate.

By: Farid Neema

PERIPHERAL CONCEPTS, INC.
351 Hitchcock Way, Suite #B-200
Santa Barbara, California, 93105
Tel: (805) 563-9491
fneema@silcom.com

This article was published in the Marh issue of Windows2000 Magazine