October 26, 2005 -- (WEB HOST INDUSTRY REVIEW) -- Managed services continue to gather momentum in the hosting space as Web hosts and pure-play colocation providers have expanded and introduced new offerings in recent weeks, pushed by the growing requirements of the enterprise customer and a thirst for new revenue sources.
Miami, Florida-based Terremark (terremark.com) has offered managed services with its colocation for several years now, albeit on a somewhat limited scale. This summer the company acquired European managed hosting provider Dedigate, largely because it wanted to expand the scope of its managed services.
"Acquiring Dedigate is consistent with our strategy of maximizing our revenue yield by layering managed services onto our existing infrastructure services and connectivity platform," said Terremark CEO Manuel D. Medina in a release. In addition to a stable of customers, Dedigate brought enhanced firewall capabilities, intrusion detection, IP optimization, load balancing and caching into Terremark's portfolio.
Javier Rodriguez, Terrmark's senior vice president of product and services marketing, says the move was precipitated by strong demand from the enterprise sector, where companies are growing in sophistication and are beginning to understand the value of getting managed services alongside their conventional infrastructure hosting. Another important market driver, he says, is the need for disaster recovery solutions in the post-911 world and the regulatory compliance requirements mandated by the US government such as Sarbanes-Oxley and HIPPAA.
TELEHOUSE (telehouse.com) is another colocation provider that has experienced growing demand for managed services and moved up the stack as a result. The New York-based company recently expanded its own managed services offerings, introducing application management, clustering implementation and enhanced monitoring of network and resource activity.
Atsushi Izuka, vice president of sales and marketing, says expanding its focus from server and database management to providing application management services and storage is essential because of the needs of enterprise customers. They want one-stop shopping and a single point of contact for their entire IT infrastructure needs, says Izuka. And as a result, TELEHOUSE is working on developing closer partnerships with application service providers. As part of its commitment to the managed services space, TELEHOUSE is holding a "managed services boot camp" at the end of the month.
Web hosts without the means to acquire managed service capabilities have looked to form partnerships with vendors specializing in these services. XO Communications (xo.com), with most of its resources directed towards its shared and dedicated hosting lines, recently partnered with NEXL Systems (nexl.com) so it could offer a full suite of managed services with its managed hosting plans. XO will provide the hosting and infrastructure, while NEXL - recently acquired MTM Technologies - will design, implement and manage a variety of application, security and storage services.
Barbara Branaman, vice president and general manager of the hosting unit at XO Communications, also cited the more demanding customer and the preference for a single service provider as key factors behind its move.
In Europe, colocation specialist Redbus Interhouse (interhouse.net) recently teamed up with traffic management solution vendor Zeus Technology (zeus.com). Redbus says the partnership adds traffic management, acceleration and security to its already formidable portfolio of managed services capabilities.
Back in the US Rackspace Managed Hosting (rackspace.com) has responded to the demand for managed services from enterprise customers, particularly those hosting applications. This summer, the Texas-based company, which includes a full suite of free managed services with all its managed hosting plans, launched the Linux managed hosting service Rackspace Red Label. The company cited similar market factors. Rackspace says Red Label was designed to accommodate increased demand from larger enterprises for management, monitoring and security services for their hosted applications.
Not to be outdone, the large telecommunications carriers have tuned in to the managed services trend as well, with both MCI (mci.com) and AT&T (att.com) announcing new managed services capabilities in recent weeks. AT&T unveiled a server and operating support service for managed hosting customers with hosted applications, in addition to server virtualization and managed utility computing services. MCI launched an on-demand storage service for its managed hosting customers.
While managed services are not an equal point of emphasis among the industry's players, and vary in definition, it is clear that they are gaining importance with hosts looking for new revenue sources in the wake of the sector's collapse only a few years back. And as companies realize their potential, it is a good bet they will continue to introduce managed services both in larger quantities and higher up on the food chain.
"Customers are expecting more from all of us," says Terrmark's Rodriguez, "in delivering more services to make our facilities much more attractive to their current needs, and that includes the ability to take on an environment and service it from soup to nuts."
