There are many choices for building and maintaining Web sites. Much depends on how much money you are willing to spend. Choices range from outsourcing the entire Web site development to an external vendor to building everything yourself (in-house). You also have a second decision to make: will you host (operate) the site on your firm’s own servers or will you outsource the hosting to a Web host provider? There are some vendors who will design, build, and host your site, while others will either build or host (but not both). Figure 10.10 illustrates the alternatives.
The Building Decision
If you elect to build your own site, there are a range of options. Unless you are fairly skilled, you should use a pre-built template to create the Web site. For example, Yahoo! Merchant Solutions, Amazon Stores, and eBay all provide templates that merely require you to input text, graphics, and other data, as well as provide the infrastructure to run the Web site once it has been created. This is the least costly and simplest solution, but you will be limited to the “look and feel” and functionality provided by the template and infrastructure. If you have some experience with computers, you might decide to build the site yourself. There is a broad variety of tools, ranging from those that help you build everything truly “from scratch,” such as Adobe Dreamweaver, Adobe InDesign, and Microsoft Expression, to top-of-the-line prepackaged site-building tools that can create sophisticated sites customized to your needs.
The Building Decision
If you elect to build your own site, there are a range of options. Unless you are fairly skilled, you should use a pre-built template to create the Web site. For example, Yahoo! Merchant Solutions, Amazon Stores, and eBay all provide templates that merely require you to input text, graphics, and other data, as well as provide the infrastructure to run the Web site once it has been created. This is the least costly and simplest solution, but you will be limited to the “look and feel” and functionality provided by the template and infrastructure. If you have some experience with computers, you might decide to build the site yourself. There is a broad variety of tools, ranging from those that help you build everything truly “from scratch,” such as Adobe Dreamweaver, Adobe InDesign, and Microsoft Expression, to top-of-the-line prepackaged site-building tools that can create sophisticated sites customized to your needs.
The decision to build a Web site on your own has a number of risks. Given the complexity of features such as shopping carts, credit card authentication and processing, inventory management, and order processing, development costs are high, as are the risks of doing a poor job. You will be reinventing what other specialized firms have already built, and your staff may face a long, difficult learning curve, delaying your entry to market. Your efforts could fail. On the positive side, you may able to build a site that does exactly what you want, and develop the in-house knowledge to revise the site rapidly if necessitated by a changing business environment.
If you choose more expensive site-building packages, you will be purchasing state-of-the-art software that is well tested. You could get to market sooner. However, to make a sound decision, you will have to evaluate many different software packages and this can take a long time. You may have to modify the packages to fit your business needs and perhaps hire additional outside consultants to do the modifications. Costs rise rapidly as modifications mount. A $4,000 package can easily become a $40,000 to $60,000 development project simply because of all the code changes required.
The Hosting Decision
Now let’s look at the hosting decision. Most businesses choose to outsource hosting and pay a company to host their Web site, which means that the hosting company is responsible for ensuring the site is “live” or accessible, 24 hours a day. By agreeing to a monthly fee, the business need not concern itself with technical aspects of setting up and maintaining a Web server, telecommunications links, or specialized staffing. With a co-location agreement, your firm purchases or leases a Web server (and has total control over its operation) but
If you choose more expensive site-building packages, you will be purchasing state-of-the-art software that is well tested. You could get to market sooner. However, to make a sound decision, you will have to evaluate many different software packages and this can take a long time. You may have to modify the packages to fit your business needs and perhaps hire additional outside consultants to do the modifications. Costs rise rapidly as modifications mount. A $4,000 package can easily become a $40,000 to $60,000 development project simply because of all the code changes required.
The Hosting Decision
Now let’s look at the hosting decision. Most businesses choose to outsource hosting and pay a company to host their Web site, which means that the hosting company is responsible for ensuring the site is “live” or accessible, 24 hours a day. By agreeing to a monthly fee, the business need not concern itself with technical aspects of setting up and maintaining a Web server, telecommunications links, or specialized staffing. With a co-location agreement, your firm purchases or leases a Web server (and has total control over its operation) but
locates the server in a vendor’s physical facility. The vendor maintains the facility, communications lines, and the machinery. In the age of cloud computing, it is much less expensive to host your Web site in virtualized computing facilities. In this case, you do not purchase the server, but rent the capabilities of a cloud computing center such as Rackspace (a popular hosting site). There is an extraordinary range of prices for cloud hosting, ranging from $4.95 a month to several hundred thousands of dollars per month depending on the size of the Web site, bandwidth, storage, and support requirements. Very large providers (such as IBM, HP, and Oracle) achieve large economies of scale by establishing huge “server farms” located strategically around the country and the globe What this means is that the cost of pure hosting has fallen as fast as the fall in server prices, dropping about 50 percent every year
Web Site Budgets
Simple Web sites can be built and hosted with a first-year cost of $5,000 or less. The Web sites of large firms with high levels of interactivity and linkage to corporate systems cost several million dollars a year to create and operate. For instance, Bluefly, which sells discounted women’s and men’s designer clothes online, invested over $5.3 million in connection with the redevelopment of its Web site. In 2011, Bluefly had online sales of $88 million, and is growing revenues at 10 percent a year. Its e-commerce technology budget is over $8 million a year, roughly 10 percent of its total revenues (Bluefly, Inc., 2011). Figure 10.11 provides some idea of the relative size of various Web site cost components. In general, the cost of hardware, software, and telecommunications for building and operating a Web site has fallen dramatically (by over 50 percent) since 2000, making it possible for very small entrepreneurs to create fairly sophisticated sites. At the same time, the costs of system maintenance and content creation have risen to make up more than half of typical Web site budgets. Providing content and smooth 24/7 operations are both labor-intensive.
Web Site Budgets
Simple Web sites can be built and hosted with a first-year cost of $5,000 or less. The Web sites of large firms with high levels of interactivity and linkage to corporate systems cost several million dollars a year to create and operate. For instance, Bluefly, which sells discounted women’s and men’s designer clothes online, invested over $5.3 million in connection with the redevelopment of its Web site. In 2011, Bluefly had online sales of $88 million, and is growing revenues at 10 percent a year. Its e-commerce technology budget is over $8 million a year, roughly 10 percent of its total revenues (Bluefly, Inc., 2011). Figure 10.11 provides some idea of the relative size of various Web site cost components. In general, the cost of hardware, software, and telecommunications for building and operating a Web site has fallen dramatically (by over 50 percent) since 2000, making it possible for very small entrepreneurs to create fairly sophisticated sites. At the same time, the costs of system maintenance and content creation have risen to make up more than half of typical Web site budgets. Providing content and smooth 24/7 operations are both labor-intensive.
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