Interview with Dean Denhart of Knight Ridder Digital

Background

Taos: Tell us about your background in helping companies create an e-commerce program.

Dean: I have been in the Information Technology business for about 23 years, but my direct e-commerce experience started in 1997 when I responsible for the Software Systems Group for Air Touch Communications. At that time, as a result of the increasing potential and acceptance of the internet, we began putting together a web presence that became increasingly sophisticated allowing customers to review service choices, purchase mobile phones and ultimately service plans online. As the internet boom was starting, I then went to HomeStore, which is an online Media and Technology Company that also owns and operates the popular consumer site Realtor.com which is used to look at residential property. The site indirectly drove a lot of business in real estate; allowing both home buyers and agents the ability to search homes online. Then I came to Knight Ridder. Clearly e-commerce was relatively new to Knight Ridder Digital as their newspaper sites where just that, news and informati on resources. In October of 2004 we launched a service which provides a person to person private party commerce capability. This is our paid online classifieds marketplace that’s directly associated with each of the newspaper entities within the Knight Ridder Corporation, all 27 newspapers.

Business Considerations

Taos: What business issues does a traditional business like Knight Ridder have to consider when looking towards
e-commerce to augment its revenue streams?

Dean: As people in the online world know, the online world experience, the user community is hugely different. And the business rules and processes are vastly different than a traditional brick and mortar company. A lot of businesses assume you can take your brick and mortar business model and just transplant it to the web and that the revenue just flows in. This doesn’t work. You must first work to simplify your business processes as much as possible and frame them appropriately for a world in which the user themselves is driving the process and technology, not a sales representative, order fulfillment clerk, customer service representative, etc. In the offline world there is generally a live person that does the facilitation between the consumer and the physical environment. Whether its process or technology, a lot of your complexity about how to get your product to market is hidden from the consumer and the business can choose to live with the clumsiness that might exist within the system. In the online world the consumer is dealing directly with the technology and process and so all the complexities of the business are right in front of them.

A good case study for companies to consider would be to look a Southwest Airlines in comparison to American Airlines online. American translated their complex business directly onto the web. Southwest had a relatively simplistic business but they made it even more simplistic on the web. Southwest its click, click, click and you’re done. You have to simplify your business process because you are asking your customer to take themselves through it.

Taos: You were also saying that the online community itself is very different.

Dean: One of the most interesting things we’ve found on that front is we can up-sell more online. When you present people with the option to buy more in an environment they control, they are likely to do so. Up-selling through a representative has less success as people tend to feel they are being “sold” and are inclined to say no.

IT Leadership

Taos: What do you see as the IT leadership role in working with executive management around the business strategy?

Dean: As the organization responsible for building and managing our online presence (both for news and information as well as our private party marketplace), we have to become the experts in how e-commerce works both from a technical as well as the product process perspective. For example, in order to achieve our ease of use strategy, we need to raise the awareness that the business processes need to be rethought in the context of an online presentation. A significant part of our time, energy and resources are spent on helping the business to make hard choices around not translating the complexity of the core business into the online experience. I tend to think that we spend more of our time on product and process simplification than we do on actual technology integration challenges. It is also important that as a member of our senior management team, we work through how to translate the expectations of what our services have the potential to do for the company into a strong functional design. Scope management and business process controls are significant concerns within our focus, and making something simple is not easy. It’s actually very hard. Generally if you see a simplistic but functional commerce application there was a lot of work behind it to make it so.

Taos: Where should the ownership of the site lie; meaning who’s responsible for maintaining, upgrading, keeping the site alive and managing that site as a dynamic part of the business?

Dean: In Knight Ridder’s case, that responsibility is split between the head of marketing and myself. We jointly own that responsibility. But what you really want, if you think of it from a strategy perspective, is to have the business unit(s) think they own it. They are the ones we rely on from a sales and marketing perspective to be able to drive the revenue and provide direct feedback. Obviously they can’t go in and say “I’m going make these six changes to it”, but from a day-to-day operations perspective we feel that we have achieved our goals, when we hear from somebody in the field and they say “this is my system; this is my commerce application.”

Custom vs. Off-the-Shelf

Taos: At this point in the maturity of online commerce, how easy is it to get a site up and running. How “off-the-shelf” can it be?

Dean: It can be very easy or it can be very difficult depending on what you want to do. Today there are a lot of components that you can and should choose off-the-shelf. For example, a commerce engine, a categorization engine and a search engine. You don’t have to build all those. And when I say commerce engine I mean everything all the way up through and including the financial transaction component. You can buy those core elements and integrate them fairly easily, even for a large scale.

Custom work comes in when you are working to integrate the
e-commerce functionality with your core business; tying into offline business processes. Every application is slightly different. Every business is going to do something slightly different. There’s not a cookie cutter model out there that works. I’m skeptical of anyone who says there is. Unfortunately I’ve seen that happen, a product vendor will come in and sometimes they’re smart enough to know not to go to the CIO or the CTO because they’ll get shot down without facts. However, sometimes they’ll go to the business side and the business side will get enamored with the slideware that they’ve been shown and how easy something is to integrate. Then they’ll come back to the tech folks and say “I saw this company who said they can do this and they said they can do it in a week.” And then what happens is you tell them all the things that are wrong with what they told you but they don’t hear you. They just hear the good news; and there can be a tendency to rationalize all the negatives away.

Taos: What can you do to get the business to slow down and see the complexities that exist?

Dean: This is one of the Achilles heals of the industry. If they are insistent on pursuing the path the vendor laid out for them, you might just have to let them do it. Then you stay close and be prepared to help them back up and start fresh. But, if you can get them to understand from the start that anything that sounds too good to be true generally is, you’ll save both of you a great deal of struggle and wasted time and money.

Infrastructure Decisions

Taos: What technologies do you prefer when building your site?

Dean: You are touching on a religious war with strong arguments on all sides. As I understand it, Dell uses a Microsoft platform and they’ve got a pretty big commerce engine, Amazon is all open source now. Other large sites utilize Unix and related components. All things being equal, my preference is open source, but all things are not equal. The choice for each company will be largely based on what their internal knowledge base is already and their relative core competencies. If you are going to build it yourself and run it in house, you don’t want to have to totally reinvent your internal IT team at the same time you are trying to deliver significant business value. Sounds great in theory, but pretty difficult to achieve.

Taos: Is there a place where you’re finding weakness in open source?

Dean: Sure. The state of the application server marketplace for example in open source is not as strong as other aspects, but, it is only a matter of time before this is resolved. Also, while growing, the experience level with the database side at least for larger implementations is still small. On the web server side, we do run an open source solution and we’re exploring open source solutions in the middle and backend.

Taos: How do you go about sizing your environment, figuring out the scale, and how does that impact your choice of technologies?

Dean: I would argue, and a lot of people would take exception to this, that you don’t need to worry as much about scale in advance in terms of which platform to choose. Clearly, scale is an issue from a deployment architecture perspective. And, in terms of weighing costs, again there are pros and cons with both. I would argue that running Weblogic and Oracle is grossly expensive, but then you can argue on the Microsoft side you’ve got a lot more increased issues around virus attacks. It isn’t easy to figure out which one is more expensive when you take all the variables into account. However, when you factor in opensource the argument becomes more interesting.

Taos: How do you take availability concerns into consideration in the design of the e-commerce system?

Dean: This is an interesting challenge that, for a traditional brick and mortar company, goes back to the discussion about roles. We need to help the business think about what it means to go from “store hours” to 7 x 24 x 365. For example you have to make some pretty hard choice points around what you are going to do with customer support. Will it simply be web based? Will it be live web support, say with IM? Are you going to actually have live customer support via phone? Then you have the performance characteristics as well. How many companies that have never been in the online world really understand performance? Are you going to run a replicated site? Are you going to actually run two different physical sites, side by side, so you can do failover? Are you going to run the e-commerce site out of two datacenters to support a business continuity plan? Are you just going to run it in one and keep your fingers crossed?

Availability decisions are affected mainly by brand and perception preservation, revenue opportunity risk, and cost. You have to take a look at every facet of the e-commerce presence you want and ask the question of what level of availability must each have to support or boost out brand and/or drive revenue goals, and what can we afford?

Security

Taos: How do you address security concerns?

Dean: Security concerns are on multiple levels. I think you have to spend a lot of time on your privacy policies. And you really, really have to adhere to what your policy is. That’s the most important thing. A lot of thought needs to go into how you treat information. So that’s one element of it. The other side of course is protection of our assets from illegal access. In those cases, you can do as much prevention as you can from a planning and architecture perspective and then you hire independent firms to do audits. The thing that I can’t stress enough is continued external monitoring and auditing of your environment, because no matter how good you think you are an external set of eyes is incredibly valuable. Whether it’s a paper audit or a vulnerability assessment or it’s actually trying to hack in it should be done with regularity. This is the thing that concerns me the most, frankly, especially with commerce because of the sensitive consumer information that is gathered. One bad exposure and your brand could be significantly impacted, clearly recent news about several credit bureaus is a good example.

Taos: You mentioned having a strong Privacy Policy you adhere to. What are your concerns here?

Dean: If you look at how web applications are built today a lot of information is created and served by third parties. You have to be really careful when you say you’re not going to share your customer data; what does that mean? Do you ship data to an organization performing behavioral targeting? Then you’ve just violated your own policy, unless you have specifically stated this. I think a lot of people don’t realize that’s what they’re doing when they do this. Beyond that, if you do ship data out, are you following all the necessary encryption and security logic that you need to? Similar to the availability exercise, you need to look at all the points within the system where you could have a breach of your security policy and make sure you either set the processes and technology in place to support the policy, or change the policy to something you can support.

Parting Words of Wisdom

Don’t make the mistake of simply taking your traditional business and transposing it onto an e-commerce presentation. Rather investigate the ways in which the online experience and community are different and build the system to address those.

Don’t look for quick solutions to difficult problems; no matter what a vendor might tell you there isn’t an out of the box solution for your custom business processes. There are core components that can be bought off the shelf, but the functionality to serve your business will need will have to be built specifically for you.

Finally, make sure you craft your security and privacy policy carefully and do the necessary auditing to ensure you can and do follow it.

With nearly 25 years of experience in technology management, Dean Denhart oversees the strategic development and implementation of technology across Knight Ridder Digital (KRD) operations. He is charged with leading the improvement, development and acquisition of technology and tools to support content delivery, product development and the commerce-related components for KRD's Web sites.

Previously, Denhart was the CIO and executive vice president of product and technology for HomeStore, an online real estate marketing company, where he was responsible for product engineering, site design, content management, internal systems and data and network center operations, in addition to contributing to the overall company strategy.

From 1997 to 1999, Denhart served as the vice president of AirTouch Communications' software systems group, responsible for developing the overall systems strategy, and planning for all aspects of the U.S. cellular operations. Previously, he was an 18-year veteran of SBC Communications/Pacific Bell, where, as vice president for network systems, he oversaw the core telephone operations for both Pacific and Southwestern Bell. An expert in network systems organization, Denhart served in a variety of leadership roles in both the wireline and wireless companies, including a tour as the CIO of Telecel, a Portuguese cellular operator.