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A Cloud of Hosting Providers: Know Their Role

I frequently come across several common misconceptions around types of hosting services. The main one is that cloud = off premise hosting. This is incorrect and if you refer to the NIST cloud definition you will see that cloud may include but does not require off premise hosting. Next most common is that self hosted means on premise. This is incorrect as a company could self host in a datacenter that is not on premise.

With that clarification, this post will break down the 5 major categories of companies that provide off premise hosting services. I will not get into technical issues or comparing all the quality of one or another, rather the business side which should help readers distinguish what they need and make good strategic decisions. I’ve listed them in order of completeness in offering a comprehensive business driven IT solution.

1) Traditional Data Centers. Examples are NTT/Verio, Exodus and Qwest. This is good for companies seeking to buy and manage all equipment and software in a better location than their own facility. The data center will provide the physical building, environment controls, redundant Internet, and power systems. They may provide racks, but it’s likely you will need to buy your own. Some of them have evolved I to the next category, but generally not much beyond that.

2) Traditional Managed Hosting Providers. Examples are Rackspace, Terremark, NTT/Verio, Amazon EC2, and Microsoft. This is good for companies seeking a general infrastructure provider that will focus on keeping the servers and maybe operating system running. Quite often these providers rent rather than own the datacenter. The cost is generally low because they are not managing your business applications. If you have your own application management team, this can be a good option.

3) Business Software Vendors. Usually a vendor that host their own products or has partnered with one of the above. Examples are Viewpoint, Meridian Systems, CGC, e-Builder, Skire, etc…This is good for companies seeking a single application from one vendor with no other vision. It’s also good for companies that like the comfort of getting everything from one entity. The hosting cost (not to be confused with the software cost) will generally be highest since their core focus is selling software and market rates for hosting services generally dilute that margin for shareholders. While their product knowledge may give some cost advantage, it’s likely eaten up by inefficiencies in engineering as a second focus to building and selling software. Unless you plan to have 10 of these in different locations from each vendor you work with, this is generally a short term solution. Other limitations will be working with other vendors, especially competing ones, and general innovation around technical management since this is not their core business.

4) Business Software Resellers. This includes any value added reseller (VAR) or general product reseller of a Business Software Vendor. I’m not convinced where this model makes sense because they likely have less knowledge of the product than the vendor and restrictions of other vendors and focus due to being primarily a reseller. Cost will likely be similar to the Business Software Vendor as they tend to follow the vendor for business guidance. Alternatively they may subsidize the hosting services by selling you software, their main focus. These providers will likely have more breadth of offering than Business Software Vendors, however they are usually legally bound to not working with competing products, so this will likely become an issue of you are seeking neutrality in application choices. I am seeing more resellers partner with other provider types in order to offer this valuable service and benefit from the recurring revenue without taking on the risk or burden of changing focus from selling software.

5) Application Hosting Providers. Some examples are The Cram Group’s AECCloud service (My own Company), Loadspring, and Assist Global. This is good for a company seeking a partner to manage some or all of their applications in a unified, turnkey environment. They generally work with a combination of types 1 & 2 in order to stay focused on their core business of application management. Cost is usually optimal if they are managing more than one application because you are not paying double for the platform. Similar to type 4, a disadvantage may be access to products, similar to the struggle a typical IT department has. Check into the companies in house skill sets for AEC domain knowledge, AEC Tech knowledge, experience and partnerships. Some advantages (our company does these) will be service focus, Business+IT partner mindset, cost transparency, openness to work with business software vendors & consultants, open to new technologies, continuous R&D around application management.

On Licensing: Types 3, 4, and 5 could offer SaaS (bundled subscription licensing) or Managed Host (you own your own licenses). This has nothing to do with the provider type, and more to do with licensing options from the software vendors. If interested in this, see my 4 part article on Software Licensing.

On Support: Types 3, 4, and 5 may have varying levels of support. Support should not be confused with hosting and should be evaluated separately as it is a different team of people, even if at the same provider, and has little to do with quality in other areas.