Outsourcing Will Replace Internal Web Hosting, Reports JMM

• By theWHIR.com , August 16, 2001

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Mike Drach, theWHIR.com

August 16, 2001 -- (WEB HOST INDUSTRY REVIEW) -- By hosting their Web sites and technology infrastructures internally, over one-third of U.S. businesses are overlooking a chance to save 30 to 40 percent on their costs, according to a study released by Jupiter Media Metrix (jmm.com) on Wednesday. Over the next three years, these costs could add up to between US$6 million to $12 million.

"Companies that continue to host their own sites will gain little

competitive advantage and spend more money on staffing and technology than

those that outsource these functions," said Jupiter research director David

Taylor. "Those that act and act now will be saving millions in the long

run."

The most highly trafficked sites stand to derive the greatest savings from

outsourcing hosting responsibilities, according to the report. For

instance, analysts found that an in-house staff of 18 to 25 costs over three

times as much per yea, while management tools and expenses run an additional

$2million over a three-year period. In addition, recurring costs such as

bandwidth, co-location services and vendor management can easily add more

than $1 million dollars in costs during the same period.

Jupiter predicts that an increasing number of business will choose to

outsource their hosting needs over the next three years, as the available

savings become more apparent. Currently, some executives have been slow to

make these changes because of concerns over security and control issues, as

well as poor customer service by outside vendors.

Along with these findings, Jupiter also reported that over 80 percent of

companies undertake Web development projects before their site hosting and

technology infrastructure design is built. According to Jupiter analysts,

nine out of ten of these ventures will face some form of avoidable

rebuilding as a result.

"Companies engaged in Web development projects must select a technology

infrastructure provider simultaneously with an application developer," said

Jupiter. "Doing so will cut implementation delays by 25 to 30 percent by

eliminating wasted development time."

The report advised companies to consider a range of criteria when choosing a

hosting provider, including reliability, scalability, security, proven

success, accountability, response speed and customer service.

Additional key findings will be presented in full at the Jupiter Web

Enterprise Forum on September 12-13, in San Francisco. The forum will

examine the planning, development, and management problems affecting all

businesses that embrace Internet technologies. For more information, see

Jupiter's Web site.

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