Hosted IT: It's Big for Small Business - Page 2

By Drew Robb
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Staying with Hosting

With so many SMBs having tested the hosting waters, you’d think you could find plenty of companies with tales of woe who had gone online for some application and lived to regret it. Yet few seem to have gone back to running their own hardware and software.

“I have not seen anyone implement or start to implement a hosted approach, run into problems, and then abandon those efforts,” said Chip Nickolett, a consultant with Wisconsin-based Comprehensive Consulting Solutions.

What he has experienced, however, are SMBs that abandon this approach during the initial analysis. Concerns about security, for example, are a common reason for companies backing off from hosting. Perhaps they are worried about ownership, access or encryption of sensitive data, or there are problems with regards to audit trails.  Other deal breakers are reliability and availability. Businesses with very high performance needs, for instance, may not be able to find good enough service-level guarantees.

“The fear, uncertainty and doubt around those issues have been enough to cause many SMBs to sit back and let the early adopters identify and address those types of problems,” said Nickolett.

Anyone considering hosting, therefore, would do well to observe certain best practices.

Service Level Agreements (SLAs)

Careful scrutiny of service level agreements from hosting providers is a must. SLAs are an insurance policy and the hosting company should make it easy to understand its SLA.

“Your hosting provider should put its money where its mouth is in the event you might experience any issues, such as downtime,” said Lew Moorman, Chief Strategy Officer at Rackspace, a Texas-based IT hosting provider. “And don’t agree to a hosting provider’s SLA if you can’t understand it.”

Generalize Don’t Specialize

SMBs should offload commonplace software applications and infrastructure as opposed to attempting to find a hosting provider for specialty applications or gear. E-mail, storage and collaboration tools, for instance, are ideal candidates.

“Companies with highly specialized infrastructure that is not a commonly supported platform may be better off doing it themselves,” said David Cottingham, senior director of hosting and managed services, at CDW. “But even in those situations, it may make sense to have a provider take care of critical business applications such as messaging and off-site storage.”

Conduct a Complete Cost Analysis

Hosting may look incredibly attractive upfront, but it merits a very close inspection of all costs involved over time. For example, data backup is often charged by the GB, as well as by device and server. Total expected costs per month over a three-year period and compare this to the cost of upgrading your existing gear. Don’t forget to take into account the personnel costs involved in maintaining software and hardware.

“If SMBs are comparing the monthly cost from the hosting provider to only a subset of the total expense associated with doing it themselves, it may not look like such a good deal,” said Cottingham. “Companies that have already made significant investment in facilities they are tied to long term, however, may also not be a good fit.”

Pay as You Go

The average small business typically has a server or two that run e-mail, fax and business applications. A little bigger than that and you often find a server closet stuffed with overheated, under-maintained, and poorly backed-up gear. For most companies, however, adopting the latest and greatest technology is out of the question. They just don’t have the money or resources.

“The appeal of the plug in, turn on, get IT service is compelling in an economy that forces companies to look away from capital acquisition in favor of off-balance sheet methods like leasing and the cloud pay-as-you-go model,” said John Webster, an analyst at Illuminata.

Drew Robb is a Los Angeles-based freelancer specializing in technology and engineering. Originally from Scotland, he graduated with a degree in geology from Glasgow's Strathclyde University. In recent years he has authored hundreds of articles as well as the book, Server Disk Management by CRC Press.

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This article was originally published on June 24, 2009
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