Outsourcing Your Datacenter

How much is too much? It's hard to say -- especially with datacenters. It's a subject that has troubled CIOs who have over-provisioned in the face of soaring business demands and need to cut costs at the same time.

More and more frequently, the balancing act brings CIOs to one question: should they build and maintain their own datacenters or let others run it to help manage costs and enable growth?

The current slowdown is pushing more CIOs towards an outsourcing strategy. Only half in jest, one CIO says that in a time of crisis, even God outsourced the building of the Ark to Noah. By turning to managed hosting services, CIOs hope to curb capital and operational costs and help make their organizations more agile to changing market scenarios.

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How much is too much? It's hard to say -- especially with datacenters. It's a subject that has troubled CIOs who have over-provisioned in the face of soaring business demands and need to cut costs at the same time.

More and more frequently, the balancing act brings CIOs to one question: should they build and maintain their own datacenters or let others run it to help manage costs and enable growth?

The current slowdown is pushing more CIOs towards an outsourcing strategy. Only half in jest, one CIO says that in a time of crisis, even God outsourced the building of the Ark to Noah. By turning to managed hosting services, CIOs hope to curb capital and operational costs and help make their organizations more agile to changing market scenarios.

It's a trend that Forrester's principal analyst Bill Martorelli is monitoring. "The popularity of managed hosting will likely increase because of current economic pressures," he says.

Galen Schreck, principal analyst, Forrester Research agrees. "If you needed more office space, would you build an office from ground up or would you look for a larger, more modern office building to lease? A new datacenter represents the same kind of choice, and increasingly it makes more sense to lease datacenter space."

Run Datacenter Run

The CIO of Elbee Express, Shirish Gariba, agrees. The Indian logistics and express delivery company that covers most of the country and 200 worldwide locations hosted its apps, including its Web-based track and trace system called eTabs, its mailing ecosystem, and its consignment database at a third-party datacenter.

"I am the only IT person in my organization," says Gariba. "I'm not a server-hugger. Managing your own datacenter means creating big pools of job roles at the expense of organizational agility -- and a continuous stream of cost to maintain both human and technological resources," says Gariba.

According to Martorelli, hiring a provider also makes sense from a power perspective. "Customers under capital spending constraints will find upgrading their own datacenters for higher power needs hard to justify. With its limited requirement for upfront capital investment, managed hosting can help relieve these concerns," he says.

Elbee Express's primary need was round-the-clock availability of its apps and consignment database with adequate power backup and resource management. Gariba was finding it increasingly hard to keep changing his datacenter's dynamics to meet his organization's growing needs.

After Gariba chose an on-demand model while outsourcing his IT infrastructure, sudden surges in demand for consignment shipping could be easily managed by renting servers at a fixed rate for brief periods of two to four months. "This enabled us to evaluate whether a surge was one-time or part of a larger trend, giving us time to buy additional in-house servers," points out Gariba.

Today, Gariba runs a client-server infrastructure where local servers capture data and replicate it to the hosted datacenter. In next couple of months, he plans to browser-enable core applications and get rid of local servers. "We want to concentrate more on business and business apps and not worry about managing infrastructure," he says.