What VeriCenter has planned for the former Sprint data centers

Back in mid-January, a quiet little Houston company just down the street from my office became a nationwide player in the managed hosting business.  If you haven’t heard of VeriCenter before now, you soon will.  Having finalized the purchase last month of significant portions of Sprint’s managed hosting business VeriCenter has vaulted into the ranks of the leading players in this space.

In the transaction with Sprint, VeriCenter gained world-class data centers in Boston, Atlanta, Dallas and Denver, adding to the data center it already had in Houston.  VeriCenter also obtained a team of more than a hundred highly skilled technical employees who will continue to service the business, educational and government customers that Sprint had accumulated. 

I had the opportunity to sit down with some of VeriCenter’s key executives to discuss the company’s services in the managed hosting business.  After my visits with CEO Gray Hall and founder, and Senior Vice President Mike Sullivan, I can tell you that this company has a fire in its belly and a clear focus on where it is headed.

VeriCenter considers itself to be a “pure play” enterprise hosting service provider.  That means that VeriCenter owns and manages the system infrastructure that includes the data center, while the customer owns and cares for the application.  The company calls this model utility computing, which it considers to be the future of IT oursourcing. VeriCenter is the “made in America” alternative to the increasing trend towards offshore IT outsourcing.

“We are offering an early version of a utility computing center,” Sullivan says.  “We see everything under the application as a commodity, and we’re wrapping it into a service.  We want our customers to view our services like they view an electrical outlet, where you just plug in an appliance and it works.  If an enterprise application is the ‘appliance,’ our services are everything else that delivers the power to that appliance.”

He adds that the application is the “intellectual capital” of your company.  It doesn’t really matter what server it runs on, or what operating system you use – as long as the application delivers the value that your business needs. 

VeriCenter’s expertise is in building and managing the “technology stack” below the application layer.  The stack includes the data center facilities, transport services, networking, servers, operating systems, storage and backup systems, database and middleware.  “We manage the entire infrastructure stack and provide reporting, monitoring and security so our customers can concentrate on extracting value out of their own application,” says Mr. Hall.

Calling it the “economies of skill,” Sullivan talks about having technical gurus supporting each layer of the infrastructure stack.  “We employ the experts such as DBAs and security professionals so our customers don’t have to.  Each client gets a slice of that expert when needed, and that’s all he pays for.  It’s like electricity – you only pay for what you use.”  Sullivan says a typical client could save an average of 25% to 35% over current IT costs by not having to keep the people and the infrastructure in-house.

Privately held and profitable with 14 consecutive quarters of revenue growth, VeriCenter is clearly focused on the managed services business. “Through designing and delivering best practice IT processes, VeriCenter is able to offer our customers a high level of service at a cost effective price,” says Hall. “This differentiator has enabled our growth and profitability and will continue to define our strategy in the future.”

Who does VeriCenter see as competitors?  “We view ourselves in the enterprise managed hosting arena,” Sullivan says.  He says others in that space include Digex, NaviSite and Data Return.  Sullivan points out that a few of its competitors have had some failures, including bankruptcies, or are losing focus.  “We’re keeping a very focused business model,” he adds.  “We aren’t owned by a telco, which gives us more independence.  We aren’t trying to own the application layer along with the infrastructure.  We just want to do what we do best, and that’s ‘deliver the power to the wall socket,’ reliably, consistently and cost effectively.”

Linda Musthaler is vice president of Currid & Company.  You can write to her at mailto:Linda.Musthaler@currid.com