Upgrade to ease E*Trade's load

Early next year, E*Trade (EGRP) will roll out a new system architecture designed both to address capacity problems that have emerged on heavy trading days and to add new services quickly.

By cutting the time to add new services, the online brokerage said the new architecture advances E*Trade's goal of becoming a destination site for financial matters with many financial resources and offerings. That positioning could put E*Trade in competition with Intuit's (INTU) Quicken.Com personal finance marketplace.

"We don't consider ourselves a transaction processing company that uses technology. We think of ourselves as a technology company that conducts transactions," E*Trade chief information officer Debra Chrapaty said, adding that her information technology (IT) department boasts 200 people.

The new system is designed to boost E*Trade's ability to handle large volumes of trades, addressing a problem that led to a class action lawsuit filed November 21 against the online brokerage over capacity problems on high-volume trading days October 27 and 28. However, E*Trade insists the upgrade is not a reaction to high volumes.

The new system also adds additional data encryption features and will let E*Trade incorporate new kinds of security, including the use of VeriSign digital certificates for access control.

The new setup generates Web pages from a database, thus allowing each customer to personalize their view of the Web site.

The new architecture is "stateless," meaning that every request for information or order to make a trade is handled by E*Trade's back-end systems as a new transaction, thus boosting capacity. Today E*Trade's servers track each visitor to its Web site constantly, sapping the number of other users who can connect.

After a year in development, E*Trade tapped the new infrastructure when it debuted its new mutual funds center in November. The infrastructure will be rolled out through March as E*Trade adds new services and expands trading to Australia, Chrapaty said.

Among the new services contemplated are: fixed income offerings, off-hours trading, and banking and mortgage services as an affiliate to another financial institution.

E*Trade said the upgrade cost about $20 million on top of its existing IT budget. It uses Web server software from Netscape, BEA System's Tuxedo monitoring software to track customer activity on the site, and Kiva Software. Netscape acquired Kiva this month. E*Trade runs on Sybase relational database software.