Outsourcing is not a particularly new concept; the first ISPs provided email and domain name hosting services back in the 1980s, and most mid-sized organisations will have some elements of their infrastructure hosted already.
Back in the day, large companies used to generate their own electricity; now they rely on the national grid. Similarly in IT, organisations are looking at hosting, relying on an external source to look after applications in order to simplify and focus on other area of business.
Hosting services include the management of servers, networking, and other infrastructure solutions in a third party data centre. Also incorporated under the hosting umbrella are activities related to provisioning, management and maintenance of the infrastructure that supports a company’s website, web-enabled applications and other business applications.
"Hosting services have been around for a long time; however, as businesses continue to demand improved and simplified IT infrastructure that enables business strategy, there is an increased likelihood that the operational functions of IT departments are likely to be passed to third party providers,” writes Marina Beale, IDC Research Manager IT services and software, in her research on hosted services.
A white paper released last year by enterprise-level hosting provider Rackspace suggested there had never been so much choice about hosting applications, but sometimes the more choices you have, the harder it is to make a decision. It can all get rather overwhelming in this substantial space that is the hosting stratosphere. Consider these options:
We’ve all heard the expression "sharing is caring”, and in this case, everything is certainly shared and shared alike. In a shared hosting platform hundreds of different customers share the same server. Small start-up websites can often be found here, and there is a limit on aspects such as bandwidth and the number of email accounts allowed. Together with the server, the same memory is also shared.
Sean McDonald, CEO of ICONZ, says that "the first alternative to DIY is co-location”. This hosting platform is reportedly one of the most misunderstood services in the telecommunications industry. By definition, it is the leasing of available space and power within a facility in order to operate telecommunications equipment.
A co-location arrangement generally requires the incumbent local exchange operator (ILEC) to provide a separate area, such as a cage, for the local exchange carrier or ISP to secure its termination equipment, switches, routers, and other equipment.
Also referred to as dedicated hosting, this is the most suitable for organisations seeking high uptime guarantees, security, the backing of a complete support team, and the ability to customise their environment. Managed hosting solutions are often designed and built to meet individual specifications, making them suitable for most businesses. The costs that are associated with these solutions mean that this option is better for critical systems. Organisations with compliance requirements are often well paired with managed hosting.
Private cloud hosting
Private cloud hosting comes with many of the benefits that managed hosting provides, but allows for additional customisation and flexibility. Rackspace suggests that by creating virtual servers that contain pre-defined content from templates, an organisation has the ability to scale swiftly, be more agile and react to market demands quicker as they change. Consolidating large server farms and better utilising hardware is an effective way to generate cost savings, not to mention it reduces CO2 emissions – a great bonus with the rise of green initiatives.
It is important to note that while it can be cheaper than managed hosting solutions, the private cloud may not be suitable for those with small budgets as it runs on dedicated hardware, which bears a premium price tag.
Public cloud hosting
If you want uncomplicated IT hosting, then this would be the best choice. Public cloud hosting has minimal outlay and no intricate contracts to navigate your way around, and the fact that it can be scaled so easily makes it appealing if you have a website or applications with seasonal demand or unpredictable traffic.
With the public cloud allowing quick scaling, along with a very appealing price tag, it may be an alluring option for some. Just remember that the shared nature can make it unsuitable for sensitive data and applications, especially in enterprise and regulated sectors. A lack of customisation, uptime guarantees or service-level agreements can also create stumbling blocks.
McDonald warns that there is still a lot of confusion around cloud, compounded by the fact that there are hosting solutions out there masquerading as cloud. "Virtual private server (VPS) hosting plans are a good example, and they are completely different from cloud hosting,” he says. "They are not as reliable or scalable, but on the surface they appear cheap.”
Richard Cheeseman, Chief Solutioneer at Mobile Strategy, says it can be a challenge to filter through these options, remove the buzzwords and retain the factual differences. He reduces the options into three categories:
1. Moving your server in to a data centre, where space is paid for and you provide the server to your specification (earlier referred to as dedicated hosting).
2. Migrating your server to a virtual environment in a data centre, where you pay for certain performance as you need it (earlier referred to as cloud hosting).
3. Migrating to a multi-tenanted environment that is usually paid per user per month (earlier referred to as shared hosting).
If an organisation has the technical competence, and wants to run an application that can be accessed by users, then it could manage virtual server hosting without advanced managed services, says Cheeseman.
By comparison, if an existing rack of servers is moved, then it is likely a dedicated server host is required to support the server. "The benefit and scope of the managed services needed to support the server, depend on the customer’s in-house skills and their focus and approach to IT support,” says Cheeseman. "So the decision comes down to a technical evaluation coupled with the financial Total Cost of Ownership model for that specific customer.”
What’s in it for me?
A 2010 Forecast for Management survey by IDC revealed that the number one business priority for CIOs is to improve the IT infrastructure of their organisation, with the goal of increasing productivity.
IDC points out that this suggests more emphasis is now being placed on future-proofing businesses and not just cost-cutting. In her research paper, Marina Beale writes: "Hosting can harness organisations with the ability to better scale their server infrastructure and bandwidth consumption on an as-needed basis, thereby negating the cost of hiring extra staff as, in a hosted environment, it is the host who provides the technical skills needed.”
While we all know future-proofing is an essential aspect to be addressed, if you can still cut costs in the process no one is going to complain. For example, if faced with moving offices, some organisations will look at the cost of building a new server room. Compared to the cost of hosting, it is more cost-effective to host one and a half racks in a data centre than to build a dedicated server room, not to mention it releases space for other uses.
McDonald believes that more CIOs are now considering hosting as the demand on resources continues to increase. "If you are responsible for a mission-critical business then you need to know that the support is there on demand,” he explains.
Arron Patterson, EMC’s NZ CTO, expands further, confirming that IT infrastructure has become more powerful in the last 10 to 15 years. "Most of our data centres were designed over 10 years ago, only allowing for so much data to be stored within them,” he says. "It gets to a point where you are not able to fit all the information in to that area and it’s highly expensive to upgrade a data centre. The choice to put it in the hands of someone who has the power, the cooling, and the telecommunications is far more attractive.”
Customers have grown along with the infrastructure, and are now more mature, treating IT systems in a business-centric manner. "Traditionally, IT has had a funny relationship with the business as a whole, going over budget a lot of the time, and IT guys have been perceived as speaking a funny language,” states Patterson. There is an increasing number of CIOs in New Zealand who are bringing strategic value to businesses and claiming a seat at the top table.
The challenges of hosting are very similar to those of outsourcing. When you use a contracted service there is some loss to the degrees of flexibility; however you gain predictability in price and performance. According to Cheeseman, in an environment where the host, provider and internal IT team are all separate organisations, whom is accountable for the end-user experience needs to be considered.
He asks, "When a user cannot access the system, who owns the problem until it is fixed, and how do you resolve issues where each of the vendors or teams denies responsibility?” By combining agreements and consolidating with a single provider, this can be resolved to an extent. Contract structures and defining the services you pay for is also helpful, as it clearly outlines the boundaries of those services.
The track record of any potential hosting provider is also important, believes McDonald. "This can be a very confusing market and any business, large or small, can make the mistake of not doing enough research before making a decision.” He advises checking out the clients a provider may already serve, looking at case studies, and also getting third party advice.
Basing decisions solely on technical requirements may not be the wisest choice when it comes to hosting. Patterson states that, realistically, the features that are used to create these services only make up 10 to 15% of the costs, with the majority of costs going towards the running and management.
"A lot of the time, the focus is on that 15%,” explains Patterson. "CIOs need to take a more holistic approach and ask ‘What is the cost to us?’. Look at the business value and the running costs, and focus on those symmetrics.”
New Zealand has always been a fast mover in terms of innovation, and Patterson believes that in five years’ time it will be unusual for people to be building and buying their own infrastructure. Moving beyond the issue of trust and looking at the bigger picture, the pros undoubtedly outweigh the cons and the move to hosted services is clearly a sign of maturity in the world of IT.