IT Departments Frazzled at Cash-Short Dot-Coms

FRAMINGHAM (07/17/2000) - As more and more dot-coms fall on hard times, insiders and ex-employees say the IT groups at those firms are frazzled - running short on cash, time and skilled staff.

Millions are spent on advertising instead of operations. The hours are long, but the time to make information technology decisions is short. The chaos leads to mistakes. And staff shortages only get worse when IT employees leave as financial trouble arrives.

To understand life at a struggling dot-com, listen to John Puckett, former CIO at now-defunct Toysmart.com Inc.: "You're standing at the top of a cliff, looking at the rocks below. You can make any [technology] decision you want very quickly - and the impact of it is the company's future. That creates a very interesting feeling in your stomach."

A stingy corporate parent doesn't help. Toysmart in Waltham, Mass., went belly-up last month when majority investor The Walt Disney Co. decided to stop funding the company. But for several months, Burbank, Calif.-based Disney had been reluctant to give Toysmart's IT department the money necessary to, among other things, hire the 15 or 20 additional people it needed, Puckett said.

Drkoop.com Inc., a health information Web site that has been losing money, has seen its IT people quit because of the company's financial problems, which also make it hard to recruit newcomers, according to Lou Scalpati, a Drkoop co-founder and chief development officer.

The company, trying to conserve operating funds, has laid off 35 percent of its staff since the spring, though Scalpati said no full-time IT workers were let go.

The cash crunch at Austin, Texas-based Drkoop also means that plans for a backup data facility outside of Austin have been put on hold, Scalpati said.

Drkoop's in-house data center and its outsourced backup center are both in Austin, but that's a big risk if a natural disaster strikes the area.

Disasters Waiting to Happen

Some dot-coms don't even have proper disaster-recovery plans in place, according to U.S. Securities and Exchange Commission (SEC) documents.

One is Pets.com Inc., an online retailer of pet products in San Francisco. "We do not currently have fully redundant systems or a formal disaster-recovery plan and do not carry sufficient business interruption insurance to compensate for losses that may occur," Pets.com told the SEC in May.

The risk is more than theoretical. During a six-week period in February and March, the Pets.com Web site was unexpectedly down 10 times, once for 13 hours.

Customers either couldn't access the site at all or couldn't place orders, Pets.com told the SEC.

Pets.com declined several requests for interviews; the SEC filings didn't explain what caused the unplanned outages.

"Data has to be their most valuable asset. Not to protect it seems unbelievable," said John Heath, a professor of computer science at the University of Southern Maine in Portland.

Sometimes a dot-com survives a technical glitch only through the heroic efforts of its IT staff.

Despite several server crashes one weekend last summer, Drkoop users never saw the site go down, said Robert Eric Pearse, the company's former systems configuration manager.

On a Friday night, memory problems kept bringing down the Microsoft Corp.

Internet Information Server software. Roughly eight members of the IT staff had to cut short their evenings out to fix the situation, said Pearse, who is now at CarOrder.com Inc., an online car-buying site in Austin, Texas.

While Drkoop developers paged through user logs, "We had two folks at hosting facilities rebooting the servers when they crashed," Pearse explained. "It was tense."

They finally traced the problem to a new server-side script that had overloaded the server software. The script's author should have reconfigured the servers to handle the new code load, Pearse said.

"At least once a month, there's a problem like that" at Internet companies, said Pearse, who has worked at six Net firms in three years. "You're dealing with new technology and you're trying to do it faster than your competition and you just forget stuff."

Yet he insisted that Drkoop "all in all [has] done a great job of system uptime."

Overlooking the Obvious

Inevitably, the chaos leads to carelessness.

During a recent server upgrade at the offices of a major online shopping mall, for example, a young network engineer made the rookiest of rookie mistakes.

As the staff tuned a new Sun Microsystems Inc. Enterprise 10000 server, no one paid much attention to a thick cable lying across the threshold of the glass room, according to the company's former chief technology officer.

"I was thinking, ‘That couldn't be the network connection to the server, because no one would be stupid enough to put it in the doorway,' " recalled the 37-year-old former CTO.

Two days later - it had to happen - someone tripped on the cord and knocked out the server, albeit for just a few minutes. The company's database went down, causing errors for online users doing searches or updating shopping carts at the time.

"The guy who set it up had been reassigned to another facility. Everyone thought it was just a test cable and not the live connection," the ex-CTO said.

"This is what frenzied IT will get you."

The relentless pressure at dot-coms can unsettle IT people used to methodical decision-making, said Gordon Jones, CIO at Beyond.com Corp., an online computer store in Santa Clara, Calif.

"If you want more reliability, you have to minimize changes. But if you minimize changes, then you don't get more functionality," Jones said. "It's not the ideal environment to make long-term decisions."

Plus, every blip of Web site performance can be tracked, traced, reported and dissected - so IT managers are accountable 24 hours per day.

Beyond.com lost US$45 million for the first quarter of this year, while its stock is at $1.50 - down from a high of $30.

Jones has been at Beyond.com for 14 months and oversees a staff of 80. He was CIO at Franklin Resources Inc. in San Mateo, Calif., an old-line financial giant (with $222 billion in assets), where he oversaw a staff of 800.

At Beyond.com, he's still a key senior executive. But now he carries a beeper that flashes hourly statistics on how the Beyond.com Web site is running, and he has to report to business managers every Monday on site performance.

"There's quite a bit of pressure," he said.

The intensity can wear down even the most enthusiastic IT people. Toysmart's Puckett, who is in his early 50s, said he has gotten "hundreds" of calls and e-mail messages with leads on new jobs but isn't sure he'll stick with the Internet life.

Puckett's wife, Helen, said she doesn't care if he goes to a traditional company or another Internet venture "as long as the hours are better."

Join the newsletter!

Error: Please check your email address.

More about Beyond.comDrkoop.comIT PeopleMicrosoftSECSecurities and Exchange CommissionSun MicrosystemsWalt Disney

Show Comments

Market Place