How to cut costs with developers

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You write a request for proposals, or an RFP, for your electronic-commerce site. You send it to some developers you find in the NetMarketing Developer Directory.

You start getting responses. The developers quote you this month's Web Price Index median price of $730,000. Your eyes widen at the figure, but they assure you it's reasonable for what you're asking.

So what can you change to cut costs? What are the variables, and how significant are each of them? We put our heads together with David Levin, president, and Brad Alperin, VP-technology, of AppNet, New York, and came up with the following:

* Database integration. This is a big variable. Do you have existing systems that your e-commerce system will need to integrate with, or are you starting from scratch? Either can be costly.

If you are building from the ground up, you will have to factor in certain hardware and software costs. If you have systems in place already, it will take database engineers time to make the new system work with the old.

* Distribution. Is your product distributed from a central location or multiple sources? This won't be a cost of development as much as some of the others, but it certainly will factor into the overall cost of your e-business and into the systems your developer will need to build for you.

"Ninety percent of the RFPs we see only talk about secure credit card transactions," Mr. Levin said. He points out that the Web can also be used to great advantage as a means of controlling inventory across multiple stores and warehouses. Inventory systems can be built into your e-commerce initiative, and at least need to be thought of in terms of how your system integrates with your existing business.

* Customer relationships. One question companies don't ask enough when building e-commerce sites, Mr. Levin said, is not, "How do you build sites?" but "How do you build customers?"

Your system should have some feedback for customers to ask questions about your product, check order status and interact with your company just as they do with a toll-free number or an in-store customer service representative.

"Customers want to be multichannel," Mr. Levin said. They want the toll-free-number operator to know all about the order they placed online, he said, and if they have a problem, they want to be able to take the item back to a store -- "whatever is convenient for them at that moment."

He cautions that you don't need to build this detailed, fully integrated interaction into the first phase of your site, but you need to be scalable.

* Server platform. Most e-commerce systems are hosted on either Windows NT or Unix. Which you choose will affect how scalable and robust your applications can be and how many machines you need. And the number of machines will affect hosting and maintenance costs.

Get the facts from your developer first. Many developers prefer working with one system or the other, and that could change your bottom line.

No matter how you proceed, scalability is the key factor and something you're more likely to get with a custom-built application than an off-the-shelf version, Mr. Levin said.

"More up-front costs can still be more cost effective in the long run," he said.

Mr. Levin said answering the following questions yourself or with your developer can help you work out the details: "Where do you want to be over the next three years? And what detailed, quantifiable and qualifiable goals can you set as benchmarks?"

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