* Deluxe Media Management's utility computing arrangement with Savvis Communications
When Deluxe Laboratories acquired a marketing fulfillment house two years ago, the Hollywood, Calif. provider of media production services discovered that its new division was using outdated hardware and software in a costly co-location arrangement.
“When we took them over, there was hardware to acquire, software to acquire and ColdFusion to administer,” says Mark Winter, executive vice president of IT at Deluxe Laboratories. “This was going to be a horrendous expense.”
So instead of continuing its co-location arrangements with Qwest and WinStore, Deluxe Media Management switched to a utility computing arrangement with Savvis Communications.
Deluxe Media Management signed a utility computing contract with Savvis 18 months ago, and over the summer it renegotiated that contract to lock into lower rates for the next three years.
“Savvis provides the hardware, software, all the management data base servers and they do the back-ups and tuning. All I have to do is worry about my application,” Winter says. “It costs 10% more than with Qwest and WinStore, but I have no capital expenditures and no increase in my headcount.”
Deluxe Media Management ships posters, t-shirts and other marketing items associated with the release of new movies to theatres around the world.
“We have 3,500 to 5,000 shipments per movie per studio per day on an average Wednesday, Thursday and Friday,” Winter says. “We have high volume shipments that need to be made in a short period of time.”
By using a utility computing model, Deluxe Media Management can scale up its network to support peak demand without buying additional capacity. “We can add a server blade or part of a blade or storage bang, bang, bang,” Winter says. “We’ve almost doubled the number of blades we’re using in the past year.”
Winter says it’s much cheaper for Deluxe Media Management to use Savvis’ utility computing services than it would be to bring the marketing fulfillment applications in-house.
“I don’t have a data center with redundancy built into the network. I don’t have the staffing to support this application because we’re not a SQLServer or ColdFusion shop. I’d have to bring in database administrators and ColdFusion developers, and then my headcount goes up,” Winter explains. “This is a high volume, small margin business, and we can’t afford to do that.”
Winter says the biggest risk from utility computing services is that the company would face a significant expense if it needed to switch providers, revert back to a co-location arrangement or bring the application in house.
“The risk in the utility model is always how do I get off my contract if I don’t like it,” Winter says. “It’s a huge capital expenditure if I get off.”
Nonetheless, Winter is pleased with his decision to go the utility computing route and recommends it to other IT executives.
“We’re launching a whole bunch of Web sites where people can order promotional items, and we’re going to put them at Savvis’ St. Louis data center,” he says. “We also went with Savvis to support our DVD mastering division. Savvis has about 3% of our entire business and that’s growing.”
However, Winter says he’ll never outsource the company’s manufacturing applications, which remain at an on-site data center.
“One thing I won’t give up is my internal applications. They sit inside my firewall. They need to be onsite because they need high speed and reliability,” Winter says. “I have two data centers at my plant on different parts of the lot. If one plant blows up, I have a back up on site.”
Winter recommends that IT executives consider migrating from co-location to utility computing for applications that aren’t mission critical.
“Co-location is just using somebody else’s data center. You have the same responsibilities to manage your own hardware and your own operating systems,” Winter explains. “You’ve just changed the physical location, you haven’t changed your computing or service model.”
“With utility computing, I’ve changed my service model,” he continues. “I worry about my core application, but my application servers and networks are managed by someone else. I see no value in tuning Oracle to make my application run. I’d rather let somebody else take care of that.”
To learn more about the Savvis/Deluxe Laboratories deal, click here.
