That's the title of an October 2005 Gartner report. Lydia Leong wrote about a promising market that web hosting providers hadn't (and still haven't) addressed. Large enterprises, she said, often have small projects that don't require industrial-strength managed hosting on stand-alone servers - yet they hesitate to sign up for mass market shared hosting plans that don't offer enterprise-grade redundancy, scalability and accountability.
Lydia recommended that web hosts set up virtualized infrastructure with managed-hosting-like support and SLAs. The goal is to allow enterprises to purchase resources on a cost-per-VE basis, with utility pricing for variable bandwidth needs. A content distribution network, she suggested, might make a good add-on for this product.
Since small projects can grow into large ones (example: Hostway's 100+ server relationship with Fox News began through a $20 shared hosting plan) - and multiple small requirements can add up to a sizable contract, hosting providers who don't offer such a flexible entry point might lose valuable opportunities to build profitable relationships with large enterprises.
I thought of Lydia's report when I read Martin MacLeod's BladeWatch post on cost allocation in an enterprise IT environment. If the IT department has a 350-blade grid, and Application A uses 70 blades worth of resources 15% of the time, should its owner be responsible for 15% of 20% of the cost? What about depreciation? In a separate post, Martin asks whether IT needs to have its own accountants, the better to take each server and split up associated costs per virtual CPU, per virtual GB in RAM and storage... It might take months - at hundreds of dollars per person, per day - to develop processes, procedures and documentation on internal pricing.
My immediate reaction was, wouldn't it be less trouble if they outsourced? AFCOM says 50% of corporate data centers won't have enough power/cooling capacity by 2010 anyway; Gartner thinks this will happen by 2008. The question is, whom should they outsource to? I'm not seeing much discussion of cost-per-VE/utility pricing on managed hosting companies' websites - or enterprise-class support capability from mass market providers. It seems as an industry, we haven't taken Lydia's advice. And maybe we should: doesn't enterprise outsourcing sound like a promising opportunity to you?
IDC, by the way, says we're entering the age of "virtualization 2.0" in which virtual appliances (software packaged into virtual machines; one example is Amazon's EC2 Machine Images) will become household words. I'm a little worried that the web hosting household might not be on the same side of the tracks...
PS - I read about IDC's predictions on Kimbro Staken's Virtualization Daily blog. Kimbro is the CTO of JumpBox; they make virtual appliances.
PPS - Hosted Solutions just issued a press release about - among other things - the importance of "IT as a service". That's way cool - *except* I see only colocation and dedicated servers on their website, no "shared, highly available infrastructure".
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Comment by Anonymous on Thursday, January 11, 2007
Intermedia.NET has many customers at large corporations that purchase shared Web and application solutions from us. Examples include a small division which needs a SharePoint Web site to collaborate. The MIS department of the corporation would not authorize the use of SharePoint and the customizations that they needed. Another example is a division of a large corporation that needed a separate group of Exchange mailboxes to handle a special project. The common thread to success with these companies is to be able to provide useful hosted applications, with an enterprise back-end.
Comment by Anonymous on Thursday, January 11, 2007
Awesome! But why don't you say so on your website? Your "solutions" page below only talks about start-up, soho, small/mid-sized businesses.
http://www.intermedia.net/business-managers/solutions/solutions.asp
Comment by Anonymous on Monday, January 15, 2007
Thank you for your kind comment about Hosted Solutions’ 2007 predictions (IT as a service is a …‘way cool’ …idea). We are fans of your blog, and would like to take the chance to comment on your observations. Clearly IT as a service goes beyond collocation and dedicated servers. Hosted offers many IT capabilities as services in addition to collocation and dedicated servers, including managed storage (both NAS and SAN), security, backup and restore, and monitoring and reporting, which are listed in detail on our solutions/managed services page of our website. These predictions reflect where we think the industry – and our business – is headed. The "compute" side of the equation is clearly the most complex piece to integrate, provision and bill properly for, but Hosted, like I'm sure many other providers, are trying to address as we speak.
Comment by Anonymous on Monday, January 15, 2007
Hi Rich,
Thanks for reading and commenting :) I'm very glad to hear that computing infrastructure as a service may be coming soon to Hosted Solutions!
A few weeks ago I signed up for Google RSS feeds to any news articles or blog posts that mention "utility computing" or "virtualization". The volume of information I've been getting is just astounding. There is soooo much interest on these topic both within enterprise IT and among SaaS/Web 2.0 companies. I hope that in the very near future, services from Hosted and other providers will be mentioned in these discussions.