Hosting: What is it and why should CIOs care?
Jan 5, 2000
Tim Landgrave
You've seen the press reports and
analysts' predictions. Writers in the PC tabloids rave about the new business
models that allow large companies to outsource their electronic mail, customer
relationship management, or accounting software. Most analysts are predicting
that the application service provider business (also known as hosting) will be
anywhere from a $2 billion to $10 billion business by 2003. But if you're one of
those companies that is certain you'll never let your IT functions leave
the four walls of your building, then why should you care about software hosting
at all?
Read the entire series |
This is part 1 of a four-part series on issues that a
CIO needs to consider when examining outsourcing or
hosting. |
What is
"hosting?"
Before we go much further, it may help to define what we
mean by hosting. For the purposes of this article (and the remaining articles in
the series), we'll define hosting as "running all or part of an application in a
shared, centralized data center." Wait a minute! You already do that yourself!
Well, sort of.
Most larger companies have been running mainframe or
minicomputer applications for the last few years that have been part of a
distributed network that includes intelligent workstations (PCs with Windows) as
a front end to the system. Doesn't this qualify as a hosted environment? Yes, by
our definition it does. The problem arises when you consider most companies'
implementation of microcomputer technology—file servers, application servers,
and directory servers—in the data center. These assets haven't been given the
same attention, respect, consideration, and investment as their minicomputer and
mainframe brethren.
The greatest example of this comes from companies
who have "bet the farm" on Windows NT 4.0. I've been in on hundreds of these
installations over the past couple of years and can count on one hand the number
of facilities where simple rules like restricting physical access, obeying
change control procedures, and limiting administrator accounts are even
documented, much less followed. I've heard countless CIOs and network
administrators complain about NT 4.0's reliability, only to find that their
standard answer to any problem is to reboot the server. In most cases a simple
start/stop of a service would have solved their problem with no system downtime.
System engineers who've never set foot in a real data center installed most of
these systems. Their concept of reliability is rebooting less than once a day.
In fact, in installations where strict rules and procedures for the
installation, support, and maintenance of Windows NT 4.0 are followed, companies
are achieving uptime of 99.999 percent with ease. But most companies will never
reach this level of reliability.
Why can't most
companies build reliable PC data centers?
Because they don't have the
"data center" mentality for their distributed systems. But hosting companies do.
CIOs and IT managers are turning to hosting companies to alleviate several major
problems in their own organizations:
- The shortage of experienced engineers and developers makes it difficult
for companies to hang on to some of their most valuable employees. They can
generally make it compelling for the top echelon to stay, but they soon
discover that they don't have enough manpower to do more than maintain the
status quo.
- The cost of deploying software to PCs is declining modestly, and with the
shortage of qualified developers to re-code applications from one- or two-tier
applications to true distributed applications, these costs aren't going away
by themselves.
- The capability of most software packages far outstrips the company's
ability to install and support them. Very few companies are using the
collaboration features of products like Microsoft Exchange or Novell
GroupWise. The effort involved in just getting people up to speed on e-mail
and calendar functions and maintaining the system leaves little time for
innovation.
New companies that host applications on the
microcomputer platform have the distinct advantage of recreating their own data
centers from scratch. They can design and build robust platforms with defined
policies and procedures for issues like change control, backup, and problem
escalation. Application Service Providers (ASPs) are counting on the
availability of reliable, high-speed bandwidth to make their data center
connections transparent to the customers who engage them. And with the increased
emphasis on data warehousing and analysis of Web data, as well as the future
need for reliable video storage and retrieval, the data storage requirements for
most companies will increase rapidly. ASPs will be able to provide this storage
at a fraction of the cost since they'll be buying in larger quantities over
longer terms.
It's not as easy as it
looks
Since ASPs are going to build these new, shiny, robust data
centers, we should just hand over the keys to our own data center and let them
move our applications to their new platforms, right? Not so fast; it's not as
easy as it looks. Companies building new platforms based on off-the-shelf PC
technology have a lot of challenges ahead of them. Like the mainframes that
preceded them, these new platforms will have to meet expectations of
scalability, reliability, manageability, and interoperability. And meeting these
requirements is a lot more difficult than it appears on the surface.
In
the next three articles in this series, we'll look at the issues surrounding the
ability to develop, install, and maintain a distributed platform based on
off-the-shelf microcomputer hardware and software that can support thousands of
users from different departments and/or companies.
So why should you as
the CIO care about the issues ASPs are going to face in building their next
generation platforms? I can give you two very good reasons.
First, if
you're going to hand over all or part of your data center operations to one of
these firms, you should know that they've thought about and resolved these
issues. Your reputation—and probably your job—is on the line if you send out a
mission-critical application to a company that fails to deliver.
Second,
and most importantly, you can use these issues as a guideline if you choose to
"self-host." Self-hosting, in my opinion, will be the next big trend after CIOs
try sending their work out to external hosting providers. Once some applications
have been moved out of their own data centers, CIOs will have the time and labor
necessary to re-architect their own data centers. Leaders who use this time
wisely will be in a position a couple of years from now to take back the
applications that they've farmed out to ASPs and run them on their own internal
platforms—now redesigned to handle the load properly. Let the ASPs burn through
their cash to find out the pitfalls of building and maintaining shared data
centers, and then you can use the technology to create your own next-generation
data center. Over the next three weeks, we'll show you how to gauge their
progress.
What do you think? |
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experience been a positive one? Or maybe not so positive? We'd like to
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