Become Your Own Web Hoster

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1 Decision Framework, L. Leong Research Note 6 August 2003 Become Your Own Web Hoster Central IS organizations can move toward a utility computing model by providing effective Web-hosting services to internal clients. Here's how to plan and deliver hosting within your enterprise. Core Topic Enterprise Networking: Network Procurement, Sourcing and Staffing Key Issue Which organizational and management strategies and architectures will enterprises use to successfully deliver service excellence? Large central IS organizations frequently serve in roles that are comparable to those of an external outsourcer. Individual IS departments within a large enterprise often use the capabilities of an overall corporate IT group. State governments often offer IT services to local governments. Industry consortiums often offer IT services to member businesses. The central IS organization can deliver expertise and achieve economies of scale not otherwise available to internal clients. Enterprises that build scalable internal shared services platforms have a powerful entry point into the future world of utility computing. Insourcing to a central IS organization can help standardize IT infrastructure and reduce costs while achieving greater efficiency, when compared with decentralization and outsourcing. It is particularly beneficial to loosely federated organizations, such as large conglomerates or trade associations offering IT services to members. In such situations, the alternative is often dozens of outsourcing contracts with an equally large number of service providers; this is wasteful and may have long-term systems integration impact on the organization. Consolidating outsourcing contracts might be a useful approach in many cases, but this may be difficult, depending on the product mix. For instance, if the entities primarily use shared hosting products, there may be no cost benefit from consolidation with a single vendor. Consequently, internal consolidation may be the only viable option. Gartner cautions, however, that for Web hosting, an insourcing approach of this type should only be used when the IS organization has deep technical expertise in Web operations, can provide 24x7 support where necessary, and will be responsible for handling at least a dozen disparate Web sites. Furthermore, you should carefully consider whether IT operations are a core competency (see "Should You Be Your Own Web Hoster?"). Gartner Reproduction of this publication in any form without prior written permission is forbidden. The information contained herein has been obtained from sources believed to be reliable. Gartner disclaims all warranties as to the accuracy, completeness or adequacy of such information. Gartner shall have no liability for errors, omissions or inadequacies in the information contained herein or for interpretations thereof. The reader assumes sole responsibility for the selection of these materials to achieve its intended results. The opinions expressed herein are subject to change without notice.

2 An IS organization like this functions as an internal service company (see "Running IS Like a Business: Introducing the ISCo Model"), and it must take on the key organizational attributes of one (see "Defining the IS Internal Service Company"). Creating Hosting Products The starting point for network-centric utility computing most often is Web hosting. Your central IS organization may be able to offer Web-hosting services to internal clients in a manner that delivers equivalent or superior service levels, for a lower cost. For instance, low-end shared and dedicated hosting products frequently carry profit margins of 30 percent to 60 percent; consolidation passes those margins on to you in the form of cost savings. To do this in a scalable manner, however, you will need to create "products" standardized services that are delivered for a set price (see "Developing a Customer-Focused IT Product Portfolio"). You also should create internal service-level agreements (SLAs). Then, you will need to document and publicize these products within your organization. You also may need to make some staffing changes to properly support these services. Four primary categories of hosting are co-location, dedicated server, virtual dedicated server and shared server. Regardless of the types of hosting that you do, you must have conditioned data center space, as well as network connectivity. If the servers will be connected to the Internet, appropriate security precautions also must be taken. Commercial Web hosters perform packet filtering at the router level, and most sites also will be protected by a firewall. If you are offering co-location, and clients need access to your data center, you should segregate co-located equipment into a separate area, preferably a separate room within your environment. Individual clients should have equipment in their own cage or locked cabinet, and should be monitored when they are physically within the data center. You must develop a set of security policies around physical access, including hours of availability, required identification and escort requirements. The trust level extended depends on the nature of the relationship. In the case of a trade federation, for instance, competing companies will need access to the data center, so strong security precautions must be taken. In the case of a state providing services to local government, the precautions may be slightly less. If you have clients with limited Web-hosting needs static "brochureware" with little to no need for dynamic content or database connectivity then shared hosting will be the most 6 August

3 cost-effective solution. Multiple clients can share a single server, using the "virtual hosting" feature of the Web server software. Hosting automation software from a company such as Plesk, Ensim or Sphera can make it much easier to manage a large number of shared hosting clients. Such software has the added advantage of providing clients with a "control panel" that enables them to perform most administrative functions without the aid of your support staff. To be price-competitive with external Web hosters, such as Verio and Interland, shared hosting should be priced starting at about $20 per month. This is a good place to reuse older hardware, keeping your costs down. Enterprises that have more demanding needs but do not need the full computing capacity of a dedicated server may be wellsuited to a virtual dedicated server (VDS). Virtualization technology from Sphera and Ensim enable multiple VDS instances to be located on a single physical server; each VDS appears, to the user, to actually be a dedicated server. Commercial Web hosters typically charge $150 per month or more for this service. Dedicated servers offer clients the greatest flexibility, security and control, but they are also the most difficult to manage in a scalable manner. To control costs, you must standardize on a limited number of platforms and set up well-defined limits on what your staff is responsible for. You must, however, offer sufficient breadth and flexibility to meet client needs; focus your thinking on solutions. You should determine the hardware, operating systems and software that you will support. In general, for each operating system that you choose, you will want to pick a preferred Web server, application server and database server. For instance, one typical combination is Windows 2000, Microsoft IIS and Microsoft SQL Server. Unless you have a homogenous environment, you are likely to have to support one Microsoft-based solution as well as one solution based on some flavor of Unix; most commercial Web hosters choose Solaris on Sun hardware for the latter. You also should pick particular versions of the operating system and software to standardize on, and thoroughly test the resulting platforms to ensure that the combination is stable. Dedicated servers are the trickiest to charge back. If the client does not directly purchase the equipment and any necessary software licenses, the pricing needs to ensure that these costs are amortized during the lifetime of the service no longer than three years and possibly as little as a year. Pricing should be tiered based on the number of services provided. At the base level are server reboots and application restarts. Application management should incur additional costs, as should database 6 August

4 administrator (DBA) services. Your operations staff needs to work with the application developers to determine when the "hand-off" in responsibility takes place. You also should determine whether periodic operating system and software patches and upgrades are included in the service, and if so, in what manner they will be performed; the greater the amount of proactive management, the more the service should cost. Typical commercial-dedicated server prices range from $1,200 a month for basic services, to more than $4,500 a month for a fully managed server. Additional services also could be provided on a time and materials basis, according to whatever cost structure is used by your IS department. Creating Service-Level Agreements Not every application requires 100 percent availability, and the hardware and software configurations should be chosen accordingly. Furthermore, not all applications require availability outside of business hours. Appropriate SLAs should be crafted to reflect the expected availability of each type of hosting bundle. This should take technical considerations of the architecture into account, as well as make exceptions for special circumstances, such as service outside of business hours, on weekends and during holidays. At minimum, an SLA should include overall application availability, which would encompass the network, systems and software. Additional SLAs might be available around specific components; for instance, a network SLA might include packet loss and latency guarantees. Agreements should also be around the support itself maximum time to initial response to a problem, mean time to restore service, mean time to repair, intervals for updates to a trouble ticket, escalation path, and so forth. Enterprises are most concerned about responsiveness; they want to know that you'll be available to fix things when they break, that you'll add new capabilities when they need them, that you'll communicate in a timely fashion, and so forth. Organizing Your Staff Your internal IS organization is likely to be very different from the operations organization of a hosting company. You will need to assign hosting-related duties to your established IT staff. You may choose to dedicate staff specifically to hosting, but unless you have the capacity and skills already in your organization, you should not pursue this kind of insourcing arrangement. At minimum, your IT staff needs to be able to manage the following tasks: 6 August

5 Configuration engineering Determining appropriate hardware and software; building new servers; writing "run manuals" detailing the operation of a site Daily operations Monitoring, troubleshooting, routine systems administration, backups, security, configuration management; includes on-call or on-site coverage needed to meet SLAs Ongoing engineering Testing new configurations, including operating system patches and software upgrades Help desk support Field client support calls, s and the like, which are specific to Web-hosting issues One particular characteristic of hosting companies managing large accounts is that they frequently assign dedicated staff to a large site. However, it can be more efficient to use a pool of resources that manage the entire hosting operation, with some personnel specializing in the management of particular sites. However you choose to manage your hosting operations, you should make certain that there are clear lines of responsibility, including an explicit escalation path (see "Managing Service Delivery in the ISCo" for some recommendations on process development). Acronym Key DBA database administrator ISCo internal service company SLA service-level agreement VDS virtual dedicated server Bottom Line: You can effectively be an "internal outsourcer" for the Web-hosting needs of your organization. However, if you plan to do this on a large scale, you should invest in creating a standardized approach to managing your operations to achieve the same efficiencies of scale that can be found in the best Webhosting companies. 6 August