PRELIMINARY (2 April 1999)
We agreed our report and were ready to post it to BB members over the weekend of 20/21 March. However we felt it was reasonable to let ESI have
sight of it before we posted so they could prepare a reply or comment if
they wished.
ESI posted their response at short notice yesterday, and the Six were unable to confer on it beforehand.
The Six welcome the contents of the ESI response, and note their comments
and proposals. However, at our meeting, we were given a different
impression of certain elements of their policy and the priorities ESI has set out.
When ESI sent us their intended BB posting, they also informed us they
objected to a large number of points in our report under the conditions of
the Non Disclosure Agreements (NDA) we were asked to sign as a condition of
the meeting taking place.
We therefore publish our report in full except we have deleted ESI's
replies that they say are covered by the NDA's. We have left the questions as
asked.
We found the tone of the answers to be helpful and a desire to help or at
least consider. In complete fairness to ESI we wish to point out that by putting
NDA's on the answers in no way devalues the contents of the answers nor has
implications.
We accept that ESI would wish to keep some of the answers unpublished due
to their commercial sensitivity, and therefore agree that a blanket NDA to
many answers is both practical and sensible.
Report to the ESI BB of the Cambridge Six on their Visit to ESI on Wednesday 17 March 1999
This report has been kept as factual as we recollect from notes made at the
time. Paragraphs are numbered for ease of reference.
Very little information we received was subject to ESI's NDA's (Non-
Disclosure Agreements) that we all signed. ESI marketing, financial and
technological details that might assist commercial competitors or
journalists are referred to as (NDA) points.
We are grateful to ESI for their time, effort and hospitality at our
meeting, and we were particularly impressed by the technical and customer
support department representations.
BB Delegates in alphabetical order:
anthonyjb, Bullshare(nominated group leader), Dangerous, gd_anon, Greystone, Robin
1. We six met nearby ESI for preliminary introductions and discussions at
around 11:30 hrs, before our appointment at 12:30. We discussed, broadly,
our specific interests and what we hoped to gain from the meeting. We
agreed that on this occasion, Bullshare should be our group leader in view of the awareness he had of the problems and alternatives to the ESI BB.
Further, we should sit back and listen to ESI's presentation then have a
short private break to discuss how our own enquiries were to be fitted in.
2. Attending at 12:30, we were welcomed and offered a buffet lunch, at
which we were introduced to the ESI staff who would be contributing to the
meeting. We started discussions in a conference room at 13:25.
3. Julian Costley, the Chief Executive Officer, outlined the agenda, the
reason for the non-disclosure agreements (NDA), the objectives for the
afternoon, and the proposed presentations.
4. The ESI agenda comprised:
5. 12:30 Buffet lunch with refreshments All incl. Visiting Attendees
6. 13:30 Introduction Julian Costley (JC)
Who's Who
Purpose of NDA
7. 13:35 General Objectives of meeting (All)
8. 14:00 Overview of E*Trade UK JC
Business Objectives and Plans
9. 14:15 E*Trade UK product planning Greg Glass (Marketing Director)
& David Martin (Product Manager)
10. 14:45 Tour of E*Trade UK Operations David Robinson (DR)(Technical Director), Tami Bourke (TB)(Head of Customer Group) and Visitors
11. Coffee Break
12. 15:15 ESI Service Reliability (DR)
Business Continuity
Future Plans
13. 15:45 Customer Communications (TB/All)
14. 16:00 Open Discussion (All)
15. 16:30 Close
16. It became apparent the chief ESI concern over the NDA's was in the
launch and content of E*Trade UK. Put simply, this is ESI taking up the
opportunity to become the UK franchisee of the intended E*Trade global
on-line trading empire.
17. Points considered as commercially sensitive include:
18. The proportion of present ESI subscribers to free users in number;
19. The proportion of site access resources used by present ESI subscribers compared to free users.
20. The timetable for the launch of E*Trade UK.
21. There are continuous changes necessary to prepare for E*Trade and
develop the site for it. ESI say that the changes should be "off the
existing user bounds". We understood this means existing users should not
notice content or service reliability/performance changes leading up to the
launch of E*Trade. There is work currently underway to improve site access
and benefit existing users, and part of this was performed last weekend.
22. We specifically raised the point with ESI: "If we are subscribing to a
service, why should we be subjected to having advertisements appear on the
pages we are paying for?"
23. Answer - (NDA)
24. Julian Costley's introduction finished at 14:38 hours, 23 minutes
behind schedule.
25. Greg Glass took over promptly, and addressed "our" ESI BB.
26. The first 13 minutes were spent acknowledging the BB was successful and watched by journalists. Then there was a review of who the Cambridge Six
were, and what they wanted from ESI.
27. Following this, we were presented with the argument that ESI believes
the UK investment market is not well served by brokers and the broker
community. ESI looks to remedy this, and fill a gap in the market.
28. ESI's object is to provide on-line investing as an alternative to the established market. The role of the Product Manager is to maximise the
revenue from the customer that ESI obtains for supplying its product.
29. 42 minutes later, at 15:20, we agreed the meeting was not going well. We said that so far, we felt ESI had learned more about us than what we had
learned about ESI.
30. Where specific points had been raised such as providing trade tracking and histories, the ESI response was (NDA)
31. This led on to where ESI consider they are market leaders, by providing services to the market before and better than their competition.
32. However, by 15:35 we made the point that we had nothing to show for our meeting so far that indicated how ESI was to counter the concerns of its
existing users. At that point, ESI asked us "How many users do we speak for when we request extra facilities such as price data?"
33. We had been told NDA details about the E*Trade launch and what might in due course be included in E*Trade UK, how ESI assured it would be reliable on launch, how it would be innovative, and everyone would be looking at it by then.
34. ESI were very clear on what they are bringing to the market with E*Trade UK. Unfortunately, even with the NDA, they were not able to tell us.
35. Our point was we were there to find out what was happening regarding the present service. Any add-ons we wanted, said ESI, depended on whether it would bring in additional revenue or users.
36. Running exactly 75 minutes behind schedule, we were invited to inspect the newly relocated computer room at 16:00hrs. The investment in new infrastructure for the new E*Trade UK service seemed very impressive, but the technical details are covered by the terms of the NDA.
37. We left that area ten minutes later, and requested a private discussion to consider the meeting so far over coffee at 16:10.
38. We spent 15 minutes in private discussion, concluding everything is
being emphasised on promises for the future.
39. David Robinson's Service Reliability and Technical Session scheduled
for 15:15 started at 16:35.
40. After his introductory courtesies, we asked: What were the reasons
behind the problems the ESI site has suffered over the last 6 months, and
P>how can we be assured that such problems will not occur again?
41. We did not get the reassurances we were looking for at that point, as
DR suggested all would become clear during his presentation.
42. The presentation described the methodology by which E*Trade UK's new
computer system had been designed with a scaleable system, quality hardware and software, and quality control etc. It did not really address reliability
issues on the current ESI system.
43. The problems with the current ESI site are being caused by more users.
ESI installed more powerful servers, but the then-current architecture was
not easily scaleable.
44. Last weekend (20/21 March), the site was down for a day in order to
install some performance enhancing upgrades we were told about at our
visit.
45. ESI are resolving all these problems by a new appointment making one person in the company responsible for satisfaction and implementing a
Quality Management Policy. The new employee will report to the Head of
Compliance and Finance.
46. There will be changes over the next few months with increasing use of more high quality hardware and software.
47. (NDA)
48. We will be getting our solutions later, but they will be better and more
thought-out.
49. ESI could not improve on the physical constraints of the demand on the system before. Now they can buy a bigger and better box and just plug more
servers in. There is now ample spare capacity and ESI will in future always
have ample spare capacity, due to the scaleable nature of the new system.
50. Customer service availability (NDA)
51. Technical support availability (NDA)
52. Points we discussed included the possibility of engineers having
pagers, back up and stand by equipment, and increased service to the site because subscribers in different time zones will be accessing it. Everything still has to be worked out in detail.
53. The new overall position is that there is a completely unified system now. This is all thanks to going into trading where the information side of the site will get advantages. They are discussing call-out rotas and relevant remuneration terms with the staff now.
54. We raised the question about the live data service being actually live. The data is live when it gets to ESI, but then ESI software internal
processing may delay its publication. We mentioned references to tests detailed on BB threads, which ESI will look into.
55. The computer equipment is now in its new room, neatly racked, and an
improvement on its previous location.
56. Problems - if they occur - will be dealt with by an imminent Business
Continuity Provider contract. The site will be very reliable because there
is a mass of procedural instruction documentation. As the systems will be
documented, ESI will recover from any minor problem as quickly as possible.
57. On the day E*Trade is launched, ESI users will be able to move over at their own pace.
58. At 17:27 (1 hour and 42 minutes behind schedule) we started to put
specific points.
59. Q. Will there be customer refunds for downtime etc?
60. A. (NDA)
61. Q. Will there be 24 hour x 7 day service / maintenance cover?
62. A. (NDA)
63. Q. Is there an uptime target like 99.xx% ?
64. A. (NDA)
65. Q/A (NDA)
66. Q. What about service to subscribers who do their market research etc, at weekends for time or net access reasons?
67. A. (NDA)
68. Q. Has ESI considered becoming an ISP to improve access speed?
69. A. (NDA)
70. Q. Is there differentiation between user levels and response speeds, or can it be provided? (viz., are the Subscribers' facilities being slowed down by demand from free users?)
71. A. (NDA)
72. Q. Has ESI considered cable modem access?
73. A. (NDA)
74. Q. Has ESI considered tick by tick share price updates?
75. A. (NDA)
76. Q. What about Share Alerts?
77. A. (NDA)
78. Q. What about a ticker ribbon?
79. A. (NDA)
80. Q. What about indicating % change in prices?
81. A. (NDA)
82. Q. What about Stockwatch arrows?
83. A. (NDA)
84. Q. What about expanding Stockwatches?
85. A. (NDA)
86. Q. What about yearly highs-lows?
87. A. (NDA)
88. Q. What is ESI approach to stock trade tracking and add-ons?
89. A. (NDA)
90. Q. What is ESI's approach to adding any new features?
91. A. Has to fit in with ESI's trading policies including >
Trading
Regulatory
Best Commercial Return
Who wants it, what do they want, how much are they prepared to pay for it,
We might look at it.
92. Q. Delays on News? RNS is not real time.
93. A. ESI will look into this.
94. Q/A Alert flags on announcements/news? (NDA)
95. Q. Save 6p-type postings and postings-on. / News Copyright. Is it legal?
96. A. AFX do not want their posts in the public domain. RNS are in the same position.
97. Q/A (Question voluntarily censored) (NDA)
98. Q. The charts are not fully interactive. You can't draw lines on them.
99. A. The charts will not be fully interactive. It is ESI policy not to
use Java applets and the like in Web Pages.
100. Q. What about adjustments for stock splits?
101. A. (NDA)
102. Q. What about updating the charts daily?
103. A. (NDA)
104. Q. What will E*Trade UK service be like?
105. A. (NDA)
106. Q. What is the access policy to the BB?
107. A. The BB is valuable to ESI. It strongly distinguishes between ESI and other sites. There will not be a free access policy. Access will be by subscription or by opening a trading account.
108. Q. What about a real time chat room?
109. A. (NDA)
110. Q. What about a BB search for post by contributor?
111. A. We are not keen on users being identified and having their posts
quoted back at them.
112. Q. What about a BB noise/member filter?
113. A. (NDA)
114. Q. What about an indicator or technology to indicate the number of
new, unread posts to a thread, and the total number of postings?
115. A. (NDA)
116. Q. What are better ways to make awareness of service announcements/User Forum etc?
117. A. This was discussed - Customer Support is now posting directly on
the BB, and they are reviewing the matter.
118. Q. What is policy on editing/deleting unacceptable postings?
119. A. (Discussed - general consensus not to be done except in individual cases if need arose.)
120. Q. What about providing Options information?
121. A. Not sufficient demand.
122. Q. What about providing Brokers' stock briefs?
123. A. (NDA)
124. Q. What about providing information like reporting dates downloadable
under contract from other information providers?
125. A. (NDA)
126. Q. Does ESI sell mailing lists?
127. A. Mailing lists are not going to be sold.
128. Q. What about advertising on the BB and Stockwatch?
129. A. We agree these are trading tools and will reconsider our policy on adverts there.
130. Q. What is ESI's approach to us running the BB ourselves?
131. A. Why? Like minded people on the BB police and control it. ESI just
sits back but it is an essential part of the ESI product. The value of the
BB is the people who are there who have been brought together by the ESI
product.
132. (Response) ESI is horrified we would go off and do our own BB - The BB is ESI's Jewel in the Crown.
133. Q. How will E*Trade UK affect the ESI site, response and services?
134. A. E*Trade UK is going to be gradually phased in and kept within volume and user constraints.
135. Q. What about an ESI User Forum?
136. A. ESI is very happy to have an open group and an open agenda.
Quarterly meetings suggested? Topics?
137. A route for feedback? Why don't ESI read the BB?
No one is paid to spend the time at ESI reading all the BB
138. Public threads raised with ESI? More awareness of user and service announcements?
As it was after 1900hrs by this point, we exchanged thanks and departed.
Some additional points that arose, not in chronological order but considered significant by one or more members of this group:
139. The present system of refreshing or posting to a BB thread retrieves
the whole thread and can take a long time. Response - (NDA)
140. We wonder if about 25% of ESI subscribers are outside the UK, if that lends power to the argument for increased out-of-hours service cover.
141. ESI admitted they had now stopped advertising the "ESI" brand as it will be replaced with the E*Trade UK brand.
142. We are concerned a hostile BB response might develop as a result of our meeting. Specifically, subscribers who consider their fees are good value for money, and who do not object to advertising, may feel their views are not being represented.
143. ESI's current Advertising policy thoughts are: (NDA)
144. (NDA)
145. (NDA)
146. (NDA)
CONCLUSION
147. Collectively, we think it is fair to highlight the fact that the
commercial objectives of ESI appear to be geared very heavily to the procurement of new trading business, and they gave us the impression that
requirements of existing users are a secondary concern.
148. However, not all members of the Six rely on ESI for their trading
information and some members' demands and expectations are lower than
others are. In presenting a collective opinion, it is fair to say on behalf of the 'investor/bronze' subscribers within the Six, there is the feeling they can "live with" the service ESI are providing at the moment. The Six have therefore represented those on the BB who have not expressed particular dissatisfaction.
"THE CAMBRIDGE SIX"
20 March 1999
POSTSCRIPT (2 April 1999)
ESI have helpfully suggested we can include their following text in our report:
However the following points are OK to be published and hopefully address many of the points you raised and will be of value to BBers at large.
It was clear the main concerns were:
1. Is ESI viable and profitable - i.e. will we be able to subscribe to ESI and the BB in the future?
2. What is ESI doing about the occasional slowness of the site and its
reliability?
3. What levels of after hours customer support can we expect?
4. How can customers of ESI be sure that all ESI's efforts haven't been solely directed towards the start of the E*TRADE UK trading service.
5. As committed users of the BB what will be the effect of adding new
customers arriving as a result of the trading services.
6. What's the policy towards advertising on the site?
7. How can ESI help its customers know more of its plans on a regular basis?
8. What features might we expect from ESI over the next few months?
We'd like to tackle all these:
1. Since we formed the JV with E*TRADE Group last summer we have been
working hard to create a single branded (E*TRADE UK brand) service
combining the successful ESI market information site with a new trading site to provide online investing. E*TRADE Group Inc. invested $6m in the new venture. E*TRADE are a very active investor and together we created an aggressive business plan for the new UK market.
Key to our plan was that we do all we can to create a viable service for our 230,000+ customers regardless of whether they wish to open a trading account with us. Over the coming months we will create a parallel E*TRADE UK site
containing the trading functionality together with all the old ESI features
plus some more - particularly on charting. The existing ESI site will
continue for as long as ESI feel it is necessary to ensure the safe
transfer of customers to the new site.
We have no plans to cease our market information services - far from it. We
see the market information service, and the revenue it provides as an essential backbone to our strategy. This policy is very clear in the States where many on-line brokers, E*TRADE Group included, have recently added market information.
Customers will always be central to our plans and we value the trust they
place in us. Note also that we have a policy of not selling customer lists.
2. There was understandable concern from the C6 group about quality. We are fully committed to providing an ever-improving service. Over the past few months we have:
Appointed a quality manager who reports to both the Head of Compliance and to the Chief Executive. Her role is to ensure we set and continually meet new higher standards of service for ALL customers.
Moved all our computer and telecommunications systems into a new purpose
built control centre with increased security.
Upgraded the uninteruptable power supply units and will shortly commission our new power generator.
Upgraded our ISP telecommunications links with a new agreement with PSInet. This raises our throughput capability from 2Mb to 8Mb (including an 8Mb standby parallel line). We have retained the 2Mb for even further redundancy.
Created a new architecture of servers to create intelligent load sharing and 'failover' capability. All key servers now have RAID mirrored disc drives
to provide multiple redundancy.
Our architecture is now scaleable and demand growth trends will be tracked to allow us to anticipate necessary upgrades. All Systems run at less than 50% capacity.
Instituted a sophisticated system recovery and escalation policy with
well-documented procedures and internal training.
Entered into negotiations for a back up site to ensure full recovery in the event of temporary abandonment of our primary Cambridge site.
Paying customers have always had priority of processing over 'Free & ESI'
users and that policy will continue.
We are installing sophisticated system monitoring processes that will be used to trigger immediate engineering action - see below Point 3.
We are working on a 'customer quality charter', which will spell out what every customer can expect from our service.
3. We have decided to adopt a full 24/7 technical support policy effective from 1st May 1999. This means that between the hours of 8.00am and 6.00pm during market open days telephone customer support will be provided. On-site engineering support will mirror these times and be augmented by off site locally based technical support staff on-standby 24 hours per day 7 days per week.
This support applies to all services and customers - not just trading systems or account holders.
4. There is no question that we have put significant resources behind the new E*TRADE UK service. The question is have these been to the exclusion or detriment of ESI customers?
There is always scope for improvement in any service and the Web market moves fast. What was an award-winning site last year has, in some areas fallen behind the market. We have been able to make some additions to the features but the key advance has been our quality programme addressing speed of retrieval and outages.
We are never complacent but it's worth recording that we have been able to sustain the same subscription prices for ESI since our launch in 1995 - just £5pm and £20pm. And, during that time we've been able to totally revamp the
site and invest in the quality benefits detailed above. Plus we've made ESI Trader even better value by making real-time news free of charge within the
subscription.
There was much discussion with C6 about the viability and profitability of ESI. Our published results show that we are still loss making and this is a position many of our competition find themselves in also. Realistically we can only reach profitability by increasing user numbers - not by raising prices.
5. What are the plans for the BB?
We regard our BB as a very valuable part of our service offering because
The Internet is all about communities.
We monitor the BB for compliance and unacceptable or offensive behaviour.
We will remove offending threads and cancel the contributors subscription if necessary.
We have been asked to create the ability for contributors to edit their text - but have decided the feature may be used inappropriately.
We have a policy that forbids ESI staff to contribute to a BB thread as
aliases. We also never use the BB to comment on the occasional criticisms of ESI however unfair or unfounded they may be - we believe the whole point of a forum is unrestricted access for the users.
We want the community to grow and so will encourage more users to use the
BB. In practice many more watch than contribute - we know that from the
stats. What we can't do is close the BB to new customers. But what we can
do is ensure that by creating enhancements to the BB we can make it just as effective for the sophisticated users as the less experienced newcomers.
We shared with the C6 some improvements and we hope to bring these to the service soon.
6. Advertising. Like all websites we aim to make money from advertising. To date we have focused on the 'Free & ESI' service although in March we ran a campaign on the Subscriber sites.
We want to make our advertising and sponsorship as unobtrusive to the user as possible. As was said to the C6 - pages on our service are people's investment 'tools of the trade' and should stay uncluttered. If the campaign involves technologies such as Java applets that interfere with effective
usage of the site, then they will either be improved or if they cannot they
will be withdrawn.
We use the advertising along with the subscription income to defray costs
and pay for the new enhancements to the service.
Customer communications.
ESI are looking at a number of ways to add to our customer communications programme. The C6 made some good suggestions such as a BB forum (a separate BB for ESI service issues), and placing customer announcements within the BB itself. We are happy to work with focus groups to develop the way forward for the BB. We feel that although the C6 group met a short-term need of the
BB group it is not the best method by which ESI can communicate with all
Its customers. We want to create the opportunity for more users to raise
critical as well as helpful issues and for those users to hear the
responses first hand from us.
New features.
This was the most sensitive area of our discussion but by the end of the day we were able to cover much ground. All the points are covered by the NDA since we want to announce new features to all customers together in an organised way.
As you know we were able to give you considerable assistance and in turn picked up some valuable comments from you.
We do hold customer focus groups. Not every feature requested by those
groups is deliverable for cost or technology reasons and others have to
ranked and delivered in our chosen sequence.
Our approach to adding new features is first customer demand, second
implementation, sequenced by regulatory, technical viability or cost
constraints.
We do hope the above is of assistance and will be only one of number of communications we will make on a regular basis.
Electronic Share Information
March 30th 1999
(END)
Customer Services posted on the BB regarding the downtime last weekend.
(Thank you)