The somewhat more subdued second day of the SWsoft Global Hosting Partner Summit, currently taking place in Reston, Virginia, began with a keynote session by IDC analyst Melanie Posey.
Posey’s presentation was interesting in part for the simple fact that it was a departure from the general (and perfectly understandable) tone of many of the event’s sessions, which have tended to focus more on selling attendees on the specific details of specific services.
The session was driven largely by statistics and survey data, which is certainly not a surprise, given the fact that statistics and survey data are some of the things for which people turn to IDC.
Her estimate, in general, was that the market for hosting services is growing. And not just in a specific area, such as SaaS, or managed services. In general. The market for shared hosting is growing, she says. And VPS. And the market for colocation is back to growing too. But while all of those areas of the market are growing, their significance to the overall hosting market may become smaller during the next few years.
Much of that will be the result of a boom in what Posey calls “complex managed hosting,” a term which should be fairly familiar by now to just about every hosting provider.
Complex managed hosting, says Posey, already accounted for 58 percent of the US hosting market in 2006 (an $8.2 billion market, by the way). In 2011, she says, complex managed hosting will account for 68 percent of a $16.4 billion market in the US.
IDC, you might say, is optimistic about the market.
Her point more specifically is that growth in managed services is outpacing growth of just about every other kind in hosting. And that includes the SaaS-type solutions being evangelized so emphatically throughout the conference. But it also includes more easily described services: managed storage; disaster recovery; content delivery. Even companies that define what they do as “colocation” are beginning to include some managed elements within their offerings. And you might consider offering them as value-added services (if you don’t already).
Interestingly, she says the major incentives for outsourcing are changing. Customers aren’t necessarily making that decision based on TCO or ROI (which was once the case). According to IDC, the most-mentioned incentives for outsourcing are things like “performance and scalability” and “backup and redundancy.”
Posey showed a PowerPoint slide that listed the services that customers are buying from managed hosting providers, in order of their popularity (“popularity” included both large enterprises and small businesses, which explains the lower positioning of things like email).
In order, they were: network security; storage; hosted email; IT outsourcing; disaster recovery; WAN data networking; enterprise application management; SaaS-based business apps; desktop management help desk services.
An interesting list, although I’m not 100 percent clear in this case what exactly “IT outsourcing” describes.
Overall, the presentation was valuable particularly for the statistical insight it offered into the specific value of specific managed services – the sort of information that could be invaluable in designing a business model around managed services.
Her point was this (partly, but not exactly, verbatim):
Nobody wants to be just a hoster. But it’s important to remember that hosting is a means to an end, and that end will differ based on the customer. Hosting is the foundation for a lot of technologies and a lot of services, and the platform for the solutions to some specific business needs.
The whole package is something she describes as an “infrastructure-fuelled ecosystem” which includes the hosting platform, and it includes functional software applications.
