An Inside Look at How Netscape  is Approaching The Federal EC Market

Netscape, which in only three years has grown to be a $500 million company, is becoming fully entrenched within the federal government. It has every intention to further penetrate the federal sector with a host of new products and "end-to-end" E-commerce solutions.

John Menkart, Federal Director of Netscape Communications Corp., and Tony Decelis, Senior Systems Engineer for electronic commerce products, recently spoke with Federal EC Report editor Richard McCormack about the company's federal strategy.  Here is what they had to say.

Question:     How is Netscape's government business?
Menkart:     We're growing leaps and bounds. It's going great.

Question:     What does Netscape bring to the government market?
Menkart:      There has been very broad adoption of our technology for infrastructure services.   DOD and the civilian agencies are rapidly adopting our baseline Web services: secure messaging; certificate; and directory infrastructures. It provides them a strong jumping off point to build a robust E-commerce system.  Netscape is well positioned for the government because it has always been very highly secure and its focus is on open standards and minimal costs.

Question:     When I talk to government EC program managers, they talk about online catalogs, CommerceNet and PartNet, VANs and EDI. But I don't hear people talk much about Netscape as being a player.
Menkart:     You mention a lot of applications and solutions that have been applied to E-commerce to date. But to be quite honest with you to accurately represent where we fit in that space, those are the current solutions or current state of application, and we really represent the future. For instance, the DLA E-mall is built using Netscape technology under the hood.  It uses our Enterprise Server [product], but it's clearly a GOTS [government off the shelf] product, in that it was developed by contractors for the government.  But DOD wants to take the E-Mall to a more COTS [commercial off the shelf] oriented solution.  They want to adopt Internet standards in the commerce space like EDIINT (EDI-over-the-Internet).  Those are functions that they haven't even begun to address because they have been focused on building a front end or a presentation system for these products.

Question:     So where does Netscape fit in with the E-mall solution?
Menkart:     The overall architecture of the E-mall was entirely built in a custom fashion.  PartNet is a solution to a problem that was conceptualized by a government study. The problem is how do you gain access to multiple catalogs or do queries against various catalogs on the Internet and return that data back to a user in a consolidated fashion.

As it so happens, there is now a standard in place with open buying on the Internet [OBI] that addresses that same problem but in a standards framework. So instead of having to sign up with PartNet, I can field an OBI compliant catalog on the Internet and then anybody using an OBI compliant buying solution can look at my catalog. That has seen rapid adoption in the commercial sector and we were amongst the first OBI compliant systems out there. Boise Cascade has one catalog and there have been other catalogs that have been deployed that are OBI compliant.

Decelis:       Dell Computer is rapidly moving in that direction.  There is not a requirement that you use a proprietary, or a PartNet solution.  Using the OBI solution solves a great deal of functionality that DLA has not been able to deliver as part of its E-Mall such as a parametric search ability. That's the beauty of an OBI-compliant solution: it is standards based so people are able to view catalogs whether you have an existing relationship with them or not. You can quickly meld their catalog for presentation into your organization.

Menkart:     DLA didn't have the luxury of adopting OBI at the outset because they had to find a solution to the problem before there was a standard that addressed it. They have done a great job of building a solution from the ground up, but right now, we're talking at very high levels with the folks at the JECPO [DOD's Joint Electronic Commerce Program Office) and E-Mall relative to our entire solution set and how it would fill the gaps in the E-Mall and eventually be a migration to a more standards-based solution.

Question:     From Netscape's perspective, what is the role of the value-added networks (VANs) in federal E-commerce?
Menkart:     The government has had an initiative and push for five or six years to conducting all transactions for buying from contractors using EDI over the network. VANs were the answer there, but they found the same thing that their commercial counterparts found which is that it addresses 20 percent of your partners with whom you do 60 to 80 percent of your business because those are the people that will make the investment with you to tie into a VAN and spend the money and resources to set up that facility. But that leaves a majority of your business partners (80%) who you want to do business with uncovered by that strategy. This is where the Internet comes in.  We're working with JECPO and Mitre, which is doing an evaluation of our ECXpert product, our commerce exchange product, which does translation, auditability and management of EDI transactions as a means to replace ECPN [electronic commerce processing nodes]. It not only addresses VAN connectivity so it can coexist with your existing solutions, but it also opens the whole span to transactions into the Internet and brings the security along with it.

Question:     What is the VANs' response to the replacement of ECPNs?
Menkart:      I don't see the VANs going away. The whole idea that VANs will be replaced by the Internet immediately is like the concept of people thinking the mainframes are going away because the super minicomputers are here. Downstream, 20 years from now, there may be another story.

Question:     How does Netscape make money in this scheme?
Menkart:     The federal marketplace is clearly unique from our perspective from that of the commercial sector in that we view ourselves as an enterprise software provider, primarily. We recognize that agencies and services already have existing relationships with integrators.  We don't want to come in and displace those integrators who are already doing a great job of providing support for the services.  We want to come in and supplement them and educate them on our products so they can continue to do the maintenance function and the integration of existing systems that they clearly understand far better than we do.

Question:     Do you have government-specific products?
Menkart:     They're primarily COTS because what we see today is that the government is very interested and is being primarily driven by what happens in the commercial sector. They've gone through the whole areas where they have tried to specify government-specific protocols and products and they found out that is really a dead end.

Question:     Are there areas where the government is leading the field?
Menkart:     In the security area, the government is clearly ahead. For example, the Defense Department is in the pilot stages for the DOD-wide public key infrastructure [PKI], where they are going to issue X-509 certificates for every one of their users in the DOD community and they're asking people to stand up external certificate authority to issue to all the contractors.  Now there will be millions of people --two million-plus people inside of DOD and more than that in all likelihood external to DOD -- all able to authenticate applications using X-509 certificates, encrypted secure E-mail and messages.  We really see them driving the industry in that way and they are implementing a public key infrastructure on an enormous scale far before the commercial sector has been ready to deploy such technology. And they are using Netscape technology, with the Netscape certificate server and Netscape directory server.

Question:     Is that a good business for Netscape?
Menkart:     We sold a DOD-wide site license for a number of our key components, servers and clients in September of last year through DISA and it covers DOD-wide all levels of classification regardless of location and the number of servers. They now can freely deploy the technology, use it to build applications to front-end transactional systems and set up a PKI architecture across the globe covering DOD. That was a model license signed by DISA's Enterprise Software License office. It was the first and is still the only singular DOD-wide license of software.

Question:     Would you prefer to get paid by the number of individual seats you sell?
Menkart:     We've approached all of our large enterprise customers in that way. It provides them much more flexibility. A DOD user can now put up one enterprise server which is our Web server or they can put up 50 Web servers regardless of platforms. They can now make their decision on deployment based on the technical requirements rather than on the license requirements.  From a taxpayer standpoint it is beneficial because now people are making decisions based upon the best technical solution rather than worrying about, 'Well if I stick it all on this one machine it may be too small but it saves money on the license'; or, 'If I build something that is really good and lots of people want to use it, I have to pay the vendor more money.' We at Netscape would rather see our technology widely deployed and not penalize people for building good apps with our stuff.

Question:     What is the length of the license? Is it perpetual?
Menkart:      It was a multi-year contract that allows them to get upgrades and technical support, but the licenses as deployed are in perpetuity, so the DOD users can rest assured that they can use the client or the server products and not have to worry about the licenses expiring.

Question:     Who are your competitors?
Menkart:      In PKI there are a number of companies much smaller and their entire niche market is driven around this. There are solutions that consider themselves higher ended, but they are very high cost per seat, like Entrust [Technologies], but they aren't entirely standard based.  And then there are less robust solutions that are outsourced like VeriSign.   But DOD wanted absolute control of the technology inhouse because they want to control the directory infrastructure and the certificate revocation lists. They want to revoke a certificate should someone leave or no longer deserve access.

Question:     Are there any killer E-commerce apps in the government sector?.
Menkart:     Extranet-based workflow is something that people have been wanting for a long time. Netscape Process Manager is basically a workflow enabling product that rides on existing technologies because it is based on open standards.   You can easily enable workflows where a government group can coordinate with a group at Lockheed Martin, for instance. If they're working on a project together they can have workflow enabled inside and outside the organization.   That has been sadly lacking in existing products because they were built before open standards were available to be leveraged in this way. When you look at the EC market people want to coordinate contract management with the contractors and the users, which may be across a number of services and the contracting office, which may be in another service or agency.

Question:     Are there other EC applications that are beginning to generate interest?
Menkart:     We have 10 to 15 pilots using CommerceXpert and the Netscape application server, which is our high-ended application server, and our Process Manager is ongoing right now in DOD alone.  The Department of Commerce's Bureau of Census is using our solutions for E-commerce and it has for one-and-a-half years. There are finally the standards in place that allow people to adopt these and facilitate interpretability. We feel of all the vendors out there we are clearly the best positioned because we are already the experts on the infrastructure component and we deliver the most broad scale of solutions.

Question:     How many people does Netscape have working in its federal sector and are you
hiring?
Menkart:     About 25 to 30 people and growing. We're finding that in the E-commerce space there are so many people who are interested and are knocking down the door to get information on these products and talk to us about them. We need more people to service both the civilian agencies and DOD.

Question:     There were such great expectations for federal electronic commerce that haven't yet been fulfilled,  for instance with the GSA Advantage, or the FACnet. Do you think there will be as much disappointment with the next wave?
Menkart:     I participated in this market for a number of years and I've gone through that. I was at Oracle seven years ago when they said we have to approach the EC space because everyone wants to do paperless transactions. They had the translators and established partnerships with the VANs and it never took off because there were so many barriers to entry. It was hard to implement. But things are different this time. We're not in for another letdown.  Exemplifying that are the number of inquiries we're getting now.  We're working with a number of financial institutions. Citibank looked at our commerce family of products and the Netscape application server
and said in April that this is what we need to provide support for our customers and one of their largest is the federal government with their issuance of financial cards. NationsBank is using us to support the government travel cards.  The different pieces are coming together. Looking back, there was a lot of lip service to this whole area of paperless contracting. But now people are standing up implementing solutions not only in the government sector because it's the law, but in the commercial sector, which is adopting this stuff so rapidly it's just like a wave.

Question:     Are there other EC applications that are beginning to generate interest?
Menkart:     We have 10 to 15 pilots using CommerceXpert and the Netscape application server, which is our high-ended application server, and our Process Manager is ongoing right now in DOD alone.  The Department of Commerce's Bureau of Census is using our solutions for E-commerce and it has for one-and-a-half years. There are finally the standards in place that allow people to adopt these and facilitate interpretability. We feel of all the vendors out there we are clearly the best positioned because we are already the experts on the infrastructure component and we deliver the most broad scale of solutions.
 

This interview from Federal EC Report is posted with permission.   For information on subscription of the publication contact Richard McCormack at the Federal EC report mailto:pubs@compuserve.com