Changing market drives longs to ASP
Finding a bug in your service providers system would normally be cause for alarm. But in the case of Longs Drugs Stores, that event played an unlikely role in convincing the retailing giant to outsource its Web site and several critical electronic commerce applications to hosting company Intira.
The bug, as it turned out, wasnt a computer virus it was of the garden variety, and it somehow managed to set off a fire alarm at Intiras Pleasanton, Calif., operations center. What impressed Brian Kilcourse, Longs senior vice president and chief information officer, and Linda Rossi, Longs director of Internet technology, was that the hoster was able to hand over its entire Pleasanton operation to a backup center in St. Louis with practically no service disruption.
That happened just as Longs was completing its due diligence on Intira.
"We could never have done that internally," Kilcourse says. "It just brought home the point that they could keep operating under very challenging circumstances."
The hosting contract with Longs was the first major win to come out of a new alliance between Intira and Deloitte Consulting. Under the pact, Intira and Deloitte will jointly market their services to Fortune 1000 clients. Deloitte has taken a minority equity stake in Intira, and will use Intira to host and manage its Web site as well as several enterprise applications.
The Longs contract represents a multimillion-dollar win for the new partners and is another vote of confidence in the application service provider business model. The deal wasnt finalized until Longs was absolutely sure that its customers personal information could be protected.
Intira will host a personalization engine from BroadVision so information on Longs Web site can be customized according to a customers health concerns. If a customer is interested in diabetes, for example, the page presented can offer relevant information.
While the personalization technology is viewed as a major sales and customer service tool, it also presents a security challenge. If information about a customers health and the drugs that person is taking is compromised, theres a strong potential for abuse.
"We have absolutely promised our custom- ers that their personal information is a sacred responsibility," Kilcourse says.
The decision to outsource the companys Web site and several key applications was based on new drivers affecting the drug retailing business.
Like many of its brick-and-mortar and dot-com competitors, Longs accepts orders for prescriptions over the Internet. It also provides health-related information. At last count, the companys site featured more than 27 million pages of content. "Our world is gravitating towards a 24 by 7 computing environment," Kilcourse says. "People are accessing our Web site and ordering prescriptions at all hours."
Rossi says there were significant technical and administrative hurdles to overcome in turning Longs data center into an around-the-clock operation. A cost analysis was done, and hosted services won hands down.
The pact with Intira is a good study in how new e-commerce applications are being integrated with enterprise applications. Intira will host the application that takes customer orders over the Web, along with an extensive product catalog and health-related content. But when orders are placed, the e-commerce application uses BEA Systems WebLogic platform to tie into Longs existing price management and financial systems.
Rossi says Longs has an advantage over competitors in that it doesnt have to spend a ton of money to acquire new customers. "Our goal is to give customers new reasons to shop in our stores," she says.