
Deciding To Outsource
Web-Site Hosting Services
For overworked CIOs, the promise of a friendly glass house is alluring. After all, why get overwhelmed by such day-to-day details as figuring out the best time to upgrade the OS on a server when you need to concentrate on more strategic goals? A host can supply the skills or talents missing from the company repertoire, be available long after IT has closed shop and maintain an organizational and physical wall between public Web servers and internal systems. Just hire a host and you'll get a running start into e-commerce without breaking a sweat, right?
Of course, nothing is that simple. The trick is finding the right provider. A hosting service could be controlled by a multibillion-dollar technology company, a big-name telco, an ISP seeking a higher-margin gig or a college kid operating out of a dorm room. Nearly anyone with a direct Internet connection and some hard-drive space to spare can call himself or herself a host. To make matters murkier, a business promising to handle hosting may be a reseller. In all, thousands of firms are peddling Web-hosting services.
Keeping track of the players is a job in itself. The Web services market is consolidating before the ground has even gotten firm. For a sense of how quickly the landscape is shifting just look at what became of some Web hosting firms cited by research firm International Data Corp. as among the top revenue generators of 1997: IBM's Global Network business was acquired by AT&T; Uunet became a subsidiary of telecommunications titan MCI WorldCom; the U.S. assets of Netcom On-Line Communication Services were bought by MindSpring Enterprises; and Hiway Technologies was acquired by Verio. And now Verio has announced the acquisition of DigitalNation.
The upheavals can make it difficult for an organization to attend to customers. The challenges for hosts don't end there. Add on rapid changes in Web technology, a national shortage of IT talent and the huge surge in demand, and you can see why even the best names in the business are stretched thin.
Nearly half of the corporate customers interviewed by Forrester Research told of problems with their host services. When the researcher asked, "What headaches do you have from working with your hosting provider?" respondents cited customer service (31 percent), host's knowledge (14 percent), billing problems (3 percent) and site reliability (3 percent).
Competition between Web hosts is fierce, but that doesn't necessarily translate into lower prices. Some analysts predict fees to rise for the higher levels of service, while competition drives down the cost of Web-hosting services at the low end.
Fees generally rise with the degree of handholding and focused care. Obviously, the more dedicated and custom the service, the higher the price. The lowballers sell shared hosting services for as little as $4.95 a month. Premium dedicated service operators charge tens of thousands of dollars a month, competing on the basis of reliability, technical support and custom services.
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