Jupiter: Outsource Web hosting and save millions

In-house Web hosting is on its way out, according to a recent report by Jupiter Media Metrix, as U.S. companies discover that they can save big bucks and potential time and money-eating errors by outsourcing Web-hosting tasks.

U.S. companies could save anywhere from $6 million to $12 million over 3 years by outsourcing Web hosting services, Jupiter said.

Currently, 34% of U.S. companies handle hosting internally and another 24% manage their applications internally but outsource server management. Many companies have opted for in-house hosting due to security concerns, control issues and customer service and confidentiality issues, according to Jupiter.

The problem is that companies overestimate the competitive advantages of in-house Web hosting, and fail to see the possible cost reductions that come with outsourcing the service, Jupiter reported.

U.S. companies with in-house Web hosting spend more on staffing and technology than they would if they outsourced these functions, saving 30% to 40% of their Web-hosting costs, according to the researcher.

The cost-reducing benefits of outsourcing are most apparent in companies with mid- to high-traffic sites, Jupiter said. Over three years, a company with a staff of 18 to 25 people would pay three times more per year than it would to outsource the activity. Furthermore, management tools and expenses would cost the company another $2 million over a 3-year period.

In addition to paying too much for Web hosting, companies perform other Web hosting blunders such as initiating Web projects before their site hosting and technology infrastructure design is built, Jupiter said.

Eighty percent of companies jump the gun on their Web development projects, Jupiter said, and due to this lack of planning, nine out of 10 of these ventures will incur some avoidable rebuilding.

Jupiter recommends that companies undertake infrastructure design in tandem with first-stage application planning and development. If this precaution is not taken, companies risk exceeding their scalability limits and may have to "shift into crisis mode," incurring sky-high hosting costs, the researcher reported.

By choosing a technology infrastructure provider simultaneously with an application developer, companies can cut implementation delays by 25% to 30%, Jupiter reported.

When selecting for a Web hosting provider, companies should look for reliability, scalability, security, a proven track record, accountability, response speed and customer service, the researcher suggested. After all, according to Jupiter, slimming down a company's in-house Web hosting could fatten up its bank account in the long run.

Jupiter Media Metrix, in New York, can be reached at +1-212-780-6060 or at www.jup.com/.

The IDG News Service is a Network World affiliate.