Choosing whether to outsource your e-business or keep it in-house is a key decision for firms rushing to stake a corporate claim in the Internet age.
Richard Beal, group IT director at insurer Direct Line, has done both. But he says it is not a question of discovering which is best for e-business in absolute terms. For Beal, it is a question of horses for courses.
Direct Line's first online venture was Directline.com - a Web site that gave the insurer an alternative sales channel to its trademark red telephone careering to the rescue.
Although it is a new direction for the company, Beal says, "Directline.com is very tightly integrated with our core system - it is very much at the heart of our business".
Version 3.0 was launched in September last year and has already registered a million and a half hits. Customers have been able to complete their entire insurance-purchasing transaction over the Web. Or, as many prefer, they can use the Web site to do their research, get a quote, and then actually buy their premium over the phone, speaking to a real person at Direct Line.
Because the site is just another channel, it has to be tightly integrated with the company's call centre, says Beal. "You can get a quote on the Internet, save it, and when you phone in to the call centre staff can bring it up on their screens."
Because Directline.com is fundamentally an expansion of an existing business, Beal opted for an in-house approach. "We couldn't have done it so quickly if we'd outsourced," he explains.
The key criteria for the site was to develop a user-friendly, easy-to-use front-end which did not just throw up a screen version of an old-fashioned insurance form.
One example of how the site makes things easy for visitors is that it allows the customer merely to enter the registration number of the car - the system searches its own database to identify the make and model.
Directline.com runs on two NT servers, interfacing with the company's massive Hitachi mainframes, which hold multiple terabytes of data for the insurer's core applications.
Altogether, says Beal, the nine month project cost under £500,000. To put that in perspective, Direct Line spent £2m on advertising the Web service on television.
The company's latest e-commerce venture is quite different. Direct Line has just launched its Jamjar site, which aims to provide everything a motorist could want - including the ability to buy cars from authorised dealers at fleet prices.
Jamjar, which will go live in the summer, it is the opposite of a Web add-on to existing business. It is a £50m business venture funded by Direct Line's owner, the Royal Bank of Scotland.
With the software developed by Quidnunc - "I didn't want to hire 20 to 30 Web specialists for six months," says Beal - Jamjar is, he says, "a very major development, a huge system, coping with huge volumes". Huge enough to require 13 Solaris servers to keep it running.
Because Jamjar is both massive and stand-alone - with hotlinks to Directline.com - Beal went down the outsourcing route.
Computasoft's Web-hosting service Sitehost will house the servers and provide whatever bandwidth proves necessary, charged on a pay-as-you-go basis. Whenever utilisation of the existing bandwidth hits 60%, more will be added automatically.
Direct Line is also buying in 24x7 managed support, with engineers on site at the servers all the time - not something Beal wanted to spend money on in-house.
But it was not a blind "outsource everything in sight" strategy. Buying servers and storage made sense because Direct Line's contract with Hitachi entitled Beal to buy storage at favourable prices. "We could exploit our purchasing power for both the Suns and storage," he says.
Beal's recipe for pain-free e-business outsourcing is a mix of the usual good practice for traditional outsourcing, while allowing for the special-case status of e-business:
To outsource or not to outsource your e-business presence is becoming one of the burning questions of the Internet age. Next week, Julia Vowler outlines the decision path you need to follow.
This was first published in May 2000