Monthly Archives: May 2009

Making Sense of Web Stats: Hits, Page Views, Sessions, Unique Visits, and Unique IPs

What’s the most popular site? Is the most popular site the highest-ranked in Alexa? (Not likely.) The site that lists first in the search engine? (Not necessarily.)

Unless you have the traffic logs, and you know how to read them, you’ll never know.

This post attempts to explain the difference between the different types of web statistics out there. It’s important to understand which statistics, and which combination of them, are most relevant, and which statistics are least relevant. More importantly, it’s useful to know when a site is overestimating its audience (which is easy to do if the site’s owner doesn’t know how to configure or convey those stats correctly).

  • Hits

    Simultaneously the most popular statistic and the most misleading, a hit counter tracks every URL load, including accesses from spiders, bots, and reloads in a session. Depending on how your logs and/or statistics software is configured, it might even count every load of every css file, script, and image referenced by, and included in, the page. If it does, that could (falsely) give you a 10 for 1 reading on every site access. Although hits are a great gauge of bandwidth utilization, they are a very poor indicator of site popularity (especially if the site is the target of an overactive bot, a DOS attack, or a small group of loyal followers who like to reload it dozens of times a day to take part in chatter or gossip).

  • Page Views

    Probably the second most popular statistic. If used properly, this will represent the total number of times a page was (re)loaded from the site. It’s a better statistic than hits because, when used properly, references and includes are not counted and spider traffic is partially excluded as well. However, like hits, it can significantly overestimate the unique traffic experienced by a site.

  • Entry Views

    Used mainly with blogs, this counts the number of specific post accesses, as opposed to the number of times the main page was accessed.

  • Sessions

    One of the less popular statistics, and used mainly with portal and commerce sites that require login, it refers to the number of unique accesses of a site by a unique user identifier. It’s equal to the average number of unique visits times the number of unique visitors, and it’s a better indicator of site popularity than page views for a site whose visitors, on average, don’t visit more than a few times during the spanned time period.

  • Unique Visits

    Similar to sessions, except it refers to the number of unique accesses by IP. The difference is that if multiple visitors from the same IP access the site in the same time window (through a proxy server), the number of unique visitors could be under-represented.

  • Unique IPs

    Counts the number of unique IP addresses that accessed the site, and acts as a lower bound on the site’s popularity (since multiple individuals could access the site through the same IP address).

  • Combination of Page Views and Unique IPs

    Combined, one of the best, measures of a site’s popularity. You know the site has at least as many unique visitors as IPs and you know, based on the page views, about how many pages a unique visitor accesses in a given time period.

  • Combination of Unique Sessions/Visits and Unique IPs

    Combined, the other best measure of a site’s popularity. You know the site has at least as many unique visitors as IPs and you know, based on the sessions, about how many times a unique visitor visits the site.

So what are SI’s statistics? Over the past month:

Hits 149,030
Page Views 49,910
Entry Views 17,705
Visits 24,855
IPs *10,825

What does this mean? It means that at least 10,825 people visited SI last month, an average of 2.3 times each, visiting 4.6 pages each. Since about 34% of traffic is search engine traffic, which is mostly accesses of a page or two, we can exclude this traffic. Revising our statistics, we can then estimate that 7,145 people visited SI an average of 3.5 times each, visiting an average of 7 pages each. Furthermore, given that about 39% of traffic comes from external referrals (SI has over 10,000 incoming links from numerous sites all over the internet that link directly to it and redistribute its feeds), and that this traffic displays irregular patterns (and accesses SI approximately 50% as much as regular readers), we can estimate that, last month, there were:

  • 2925 regular readers who visited about 9.2 pages each in 4.2 visits
  • 4220 irregular readers who visited about 4.6 pages each in 2.1 visits
  • 3680 new readers who visited a page as a result of a search engine query

Finally, it is very important to justify the numbers. They must all be consistent. If the numbers don’t make sense, or if they are internally inconsistent, you are dealing with a site that really has no clue at all as to its traffic. The above numbers make very good sense since, while some readers will visit almost every day, my representative reader (who has no time to leave comments) is too busy to visit every day, but makes a point of visiting two (to three) times a week (often on Monday and Friday, which are the peaks of SI activity).

* Lower bound. This is one statistic I’m not able to retrieve by time period from the native blog stats tool, so it was extracted from one of the three third-party stats tools I also use, which rely on (java)scripts that can be cached or blocked, and therefore cause some hits/IPs to be missed.

An Enterprise Software Buying Guide, Part VII: Negotiations

In our last two posts, we discussed the creation of cost models that would allow you to approximate, at least to a well-defined order of magnitude, the total lifetime cost of ownership of the software solutions under consideration, which can then be refined during negotiations to understand the true cost of each proposal put forth by avendor. Today we discuss the process for formulating your objective and negotiations.

5. Define Your Objective

Your objective is defined as a price-performance goal based upon your identified needs, your cost models, your budget, and your ROI expectations. Your objective will be to obtain the solution required to meet all of your key functional requirements, along with as many of your nice-to-have but non-critical functional requirements as possible, at a specific price-point with as much support beyond a minimum level as you can negotiate.

You’ll go into each vendor negotiation with an identified solution blueprint, a support requirement, and a maximum price that you’re willing to pay and be prepared to walk away (and move on to the next solution) at any time if it looks like your minimum objective is not obtainable. This keeps you focussed on your goal and prevents you from getting lost on a vendor led joyride through the backwoods byways which ultimately lead to gator infested swamps.

6. Negotiate Professionally

Traditionally, enterprise software has a lot of margin and even more empty calories. This means that there is usually a significant opportunity to reduce the price through a serious negotiation.

If the purchase is over a million, it’s critical to have someone from procurement lead the negotiation, backed up by the cross-functional team, and if the purchase is over two million, you should strongly consider bringing in a professional deal architect. A skilled negotiator in the enterprise software market can undercut the range every time and save you as much as 40% off of “best-price” on multi-year deals that include significant maintenance and support requirements.

After all, professional enterprise software negotiators are used to the vendor tricks and rhetoric like we have never accepted that price point or legal clause that the vendor sales representatives are trained to deliver at the start of every negotiation. They know when thy vendor is using the “partner” ploy. They know when a vendor is trying to blind you to their failings by pointing out their competitor’s failings. They know that a market quadrant or wave ranking is pointless if the solution doesn’t do what you need it to do at the price point you need it at to get ROI. In fact, they know all the standard stupid salesperson tricks and how to combat them to get you the best deal.

And they’ll be watching out for the Big Lie, which happens when a vendor says “yes, we have that capability” even though they don’t, and don’t plan to, and then price the missing capability ridiculously high in hopes you’ll decide you don’t really need that capability and buy their product anyway.

Tomorrow, in our final post in this initial series on enterprise software buying, we will discuss the importance of carefully reviewing any contract put before you, some common “gotchas” that vendors will try to hide in the fine print, and the secret to long term solution success.

Who Reads Sourcing Innovation?

Educated, informed, driven individuals like you … who care more about education, innovation, and self-improvement than the gossip of the day. You’re in good company. Last week, over a 5 day period, a sample of approximately 1,000 randomly-selected unique IPs were traced back to 888 unique organizations. Here are 88 random companies. As one smart and informed individual remarked, it’s a “who’s who of global sourcing“.

  • Aerospace Distributors
  • Alcan Aluminum Corp
  • Amazon.com
  • Ameriprise
  • Army & Air Force Exchange Service
  • AT&T
  • Bank of America
  • Bell Canada
  • Boeing
  • Canadian Tire
  • Caterpillar
  • Chevron
  • Cisco Systems
  • Computer Sciences Corporation
  • Continental Airlines
  • Cox Enterprises
  • Data General Corporation
  • Deere & Company
  • Defense Research Establishment (Canada)
  • Deutsche Post
  • Earnst & Young
  • Eaton Corporation
  • Emerson Electric
  • Ericsson
  • Fisher Scientific
  • Fox Entertainment Group
  • Fujitsu
  • General Electric
  • GlaxoSmithKline
  • Google
  • Harcourt General
  • HCL Technologies
  • Henry Ford Hospital
  • Hertz
  • Hewlett-Packard
  • Hitachi Credit America
  • Home Depot
  • Honda
  • Honeywell International
  • IBM
  • Intel Corporation
  • Johns Hopkins University
  • Johnson & Johnson
  • JP Morgan Chase & Co.
  • Kohler Company
  • KPMG
  • Kodak
  • Kroger
  • Loblaws Companies
  • Loyola University Chicago
  • MIT
  • Merck and Co.
  • Molson Coors
  • Motorola
  • NBC Universal
  • Nordstrom
  • Northrop Grumman
  • Oracle Corporation
  • Oxford Brookes University
  • Perseco North America
  • Pratt & Whitney Canada
  • Praxair
  • Raytheon Company
  • Research in Motion
  • Rhodes University
  • Royal Melbourne Institute of Technology
  • Samsung
  • SAP
  • SAS Airline
  • Schneider National
  • Shell
  • Siemens
  • Solar Turbines, Inc.
  • Sony
  • Staples
  • Sun Microsystems
  • Suncor
  • Tata
  • Texas A&M University
  • Time Warner Telecom
  • United Nations Office
  • United Parcel Service
  • University of California
  • Uponor
  • Virgin Media
  • Wachovia
  • Wal-Mart Stores
  • Whitepages.com

Like you, these readers are globally focused … and global. Even though about 95% of Sourcing Innovation’s readership, as you would expect, is from North America, Europe, and Asia, in that order (in a rougly 63%, 17%, 15% split), Australasia, South America, and Africa are also increasingly represented. In fact, the last month saw traffic from 168 countries.

SI’s readers are also numerous (and growing monthly). On an average day, around 1,000 of your intelligent and innovative peers will visit Sourcing Innovation, and in an average month, at leat 11,000 of your global counterparts will be here with you, collectively hitting the site about 150,000 times. (And, as I’ve pointed out before, that traffic is on par with many of the “leading” publications in the space, and was enough to secure Sourcing Innovation top blog on three of the five top external traffic ranking sites. See the archived posts, linked on the sidebar.)

I’ve seen some ridiculous claims on websites about readership levels, which is a shame, because it penalizes those of us who provide accurate data. For example, if a site that publishes new content daily claims to have a regular readership of 10,000, yet it only gets 20,000 hits a month, that says the “average” reader only visits the site 2 times a month, which makes no sense. Remember, the numbers have to add up and make sense. If they don’t, they’re just wrong.

I’ll outline in my next post about how to make sense of the confusing jumble of web statistics thrown at you. In Sourcing Innovation’s case, the “average” reader visits 2 to 3 times a week and accesses about 10 pages a month. Most accesses are home page accesses (which allows the reader to catch up on all the posts since their last access). This is about the regularity you’d expect from experienced and informed supply chain leaders who are too busy to spend a lot of time reading blogs, yet take the time to make Sourcing Innovation an integral part of their news, research, and continuing development efforts.

An Enterprise Software Buying Guide, Part VI: Cost Model Calculations

In our last post, we talked about how you defined lifetime total cost of ownership models and what the key cost components of each major software delivery model were, reviewed below. In today’s post, we discuss how you will usually calculate each of the cost components.

On-Premise Hosted ASP (True) SaaS
  • License Cost (Up Front)
  • Maintenance & Support (Annual)
  • Dedicated Server Costs
  • Supporting Software Costs, usually Database and Application Server at a minimum
  • Implementation & Customization Costs
  • Integration Costs
  • Training Costs (Up-Front)
  • Internal Support Costs
  • Major Software Upgrade Costs, usually every 2-3 years
  • Hardware Upgrade Costs, approximately every 3 years
  • (Re)Training Costs (on Upgrade)
  • Annualized License and Maintenance Cost
  • Annualize Hosting Cost that consolidates hardware, bandwidth, and support costs
  • Major Software Upgrade Costs, usually every 2-3 years
  • Implementation & Customization Costs
  • Integration Costs
  • Training Costs (Up-Front)
  • (Re)Training Costs (on Upgrade)
  • Annualized License, Hosting, and Maintenance Cost
  • Implementation & Customization Costs
  • Integration Costs
  • Training Costs (Up-Front)

Based on these model requirements, you can build a spreadsheet that allows you to calculate and capture each cost component using all of the information available to you. These spreadsheets can then be modified during negotiations to capture the true total cost of ownership over the projected lifetime to understand the true cost of each proposal put before you, or your expert negotiator. Each of the costs above can be calculated as follows:

  • License Cost
    The license cost will either be a fixed price or an annual fee. In the first case, it’s a simple input, and in the second case, it’s the annual license fee times the number of years you intend to use the solution. (It’s a good practice to also calculate the costs for a range of years in multiple columns. If you think you’ll use the application for 10 years, calculate values for at least an 8 year and a 12 year ownership term as well to understand how costs change over time.)
  • Maintenance and Support Cost
    This is usually a percentage of the license cost each year. As such, it’s easily modeled as a percentage of the license cost multiplied by the number of years you intend to use the solution.
  • Dedicated Server Costs
    You’ll likely have to add servers to support your new acquisition. The cost will be the number of new servers required times the expected server cost. (Note that tough times will get you great deals on hardware using a reverse auction.)
  • Supporting Software Costs
    Many enterprise applications require database licenses and application server licenses (and some will require middleware licenses as well). These applications generally have license fees, maintenance fees, and per CPU and/or per seat fees. If you are lucky enough to already be licensing the supporting software, the cost will just be the costs to support the new application, calculated either as the number of new CPUs times the per CPU cost or the number of new seats times annual seat cost. If not, you’ll have to add in the license costs and the annual maintenance costs of the supporting applications as well.
  • Implementation & Customization Costs
    In the world of enterprise software, there really is no such thing as “it works out of the box”. At the very least you have to load your data. Usually, you’ll have to bring in a hired gun to install it, customize it, and get it working efficiently on your systems. If you’re lucky, this will be a reasonable fixed fee. If not, it will be a by-the-hour fee (and you’ll need to ask current/past customers to get an idea of the number of person-hours that will be required.)
  • Integration Costs
    If you need your new system to talk to, or work seamlessly with, other systems, you’ll likely have to do some integration. You’ll probably have to consult with a third party integrator to get an idea of project size, which will determine what will likely be a day rate based quote.
  • Training Costs
    Although it’s getting better, most enterprise software is still a long way from “Web 2.0” and your staff will generally need to be (extensively) trained to take full advantage of the system. This will usually be a fixed rate per course or student.
  • Internal Support Costs
    Even if the vendor installs and configures the software and includes “support” as part of maintenance, the support will generally be limited to bug fixes. You’ll still need internal IT resources to manage the instances, manage the servers, and support your users (and the required operating environments). The annual cost will be the estimated number of annual resources required times their average annual salary.
  • Software Upgrade Costs
    Depending on the vendor, every 2 to 4 years they’ll release a major new version of their (on-premise/ASP) solution and discontinue support for an older version around the same time. This means that, every 2 to 4 years, you’ll have to upgrade, for a hefty fee, or risk losing support. This cost can be estimated by looking at the vendors historical major release cycle and average upgrade cost as a percentage of previous system price.
  • Hardware Upgrade Costs
    Every 3 years, your hardware will need to be replaced. Even though the cost per performance unit continually decreases, you’ll need a more powerful machine at upgrade time as your users will be using the system more heavily, the software upgrades will demand more computing power, and you’ll need to support your (hopefully) growing business. A safe bet is to expect the upgrade costs will be roughly equal to the initial hardware costs.

In our next post, we will tackle negotations and how you should go about defining your ultimate objective.

Nearshoring is Finally in Vogue

A recent brief on Purchasing.com noted that, according to a quarterly report on supply chain risk from AMR Research, “buyers are continuing to increase near-shoring as a risk management strategy”. Specifically, AMR Research found that buyers will increase their nearshore sourcing and manufacturing activities by a ration of 5 to 1 (with Mexico, Canada, and Brazil in the lead).

Hear, hear! I’ve always been for nearshore sourcing and home country sourcing not only because it decreases risks, but because it increases competitive advantage manufacturing flexibility while decreasing transportation costs and pollution. Where you see a labor cost savings opportunity, I see an opportunity for innovation. Given that the cost of raw materials and equipment is about the same globally these days, and that transportation costs go through the roof in times of high demand, there’s no reason you shouldn’t be able to make it affordably locally, or at least on the same side of the ocean. And if you say “the labor cost is too high” I say “there’s an opportunity for innovation and automation” … and if you’re the first to find it, think of the huge competitive advantage you’ll have.

When it comes right down to it, the only times it makes sense to source globally are when you have a (relatively) rare raw material that can only be obtained from a few locations, when you need to source out-of-season food that can’t be produced affordably (in both financial and environmental terms) in green-houses, or a good that requires proprietary IP to manufacture that is only held by a small number of suppliers in a certain location. Otherwise, find a way to affordably source it nearshore and you’ll win in the long run.