CXO

Web hosting: Your cost questions answered

TechRepublic members told us they have lots of questions about how to save money when negotiating for Web hosting and collocation services. We posed your questions to Gartner analyst Ted Chamberlin.


If you’re an IT manager, you’re supposed to be the expert at everything computer-related. But how do you make educated business decisions when you have to contend with so many rapid changes in the IT industry? Selecting and maintaining a relationship with a Web host is an example of a responsibility that becomes more difficult because, for many IT pros, this task requires moving in uncharted waters.

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IBM Corporation is the exclusive sponsor of TechRepublic's special series on Web Hosting. IBM's e-business Hosting gives you the freedom to customize an array of services into a solution that is shaped by your business, not ours. For more information, check out TechRepublic's Web Hosting Center, or visit IBM's e-business Hosting site

IBM Corporation is the exclusive sponsor of TechRepublic's special series on Web Hosting. IBM's e-business Hosting gives you the freedom to customize an array of services into a solution that is shaped by your business, not ours. For more information, check out TechRepublic's Web Hosting Center, or visit IBM's e-business Hosting site

TechRepublic wants to help get your questions answered. Recently we asked all of our TechRepublic members what questions they have about Web hosting. Most IT pros wanted answers about the costs associated with Web hosting, so we asked Gartner analyst Ted Chamberlin to provide the answers.

TechRepublic: Is there any big misconception out there about costs and Web hosting that you want to clear up?
Chamberlin: I think people confuse the terms very frequently. They think an ISP does your hosting. ISPs really haven’t, in general, grown competencies in that. They also think telephone companies can do hosting. They really just don’t get the hosting business. The best people to go to in hosting are called the peer play hosters—the people that kind of grew up as a hosting provider and [have] grown from there. ASPs don’t do Web hosting. People like to throw that ASP term in everywhere. It’s a neat click buzz term, but again a little convoluted. In hosting, overall, you definitely get what you pay for.
If you expect this incredible performance and security and you want to spend $79.95 a month, you’re not getting it. There’s a pretty big jump in what these guys say they can do and what they actually can do. RFPs (request for proposals) are probably the best thing you can do. If you don’t put these guys in a competitive bid situation, you’re going to get their list pricing, which is anywhere from 20-40% too high.


TechRepublic: That’s a good figure to know, and should inspire people to take the extra time to do it.
Chamberlin: Exactly. You’re paying these hosters per month for services and if you don’t take some time to do some negotiating, you’re going to really see these costs add up.


TechRepublic: I’ve heard both viewpoints that costs are going up and costs are going down. Where is it really?
Chamberlin: The thing with the hosting market is that you’ve got other services within the hosting collocation services. They are going down pretty dramatically because it’s become commodity. My personal feeling is that basic managed hosting prices are declining. Companies are becoming more competitive, but conversely, what they’re doing is…also adding on all these value-added services. These hosters make their money per service. They try to take their existing clients and keep adding service on top of service on top of service.


TechRepublic: Which types of services add more costs?
Chamberlin: Managed firewall services. Stress testing optimization. Storage on demand. A lot of these capacity services and a lot of securities become really huge in VPI and VPN services as well. We’re seeing a big takeoff in that. I think overall costs are coming down, but hosters are coming up with more managed services that are driving revenues up. It’s kind of a give and take.


TechRepublic: What are some things that you can eliminate?
Chamberlin: Storage, to an extent. A lot of these small Web sites really aren’t going to be getting traffic spikes at certain times of the month. It’s probably better to get fixed bandwidth instead of burstable. That’s a pretty decent cost savings. It’s great for Amazon or Toys.com. They know from September to January they’re going to be getting crazy traffic. I think you can be a little cautious on your bandwidth. You can also scale back on your storage. You really don’t want too much. Unless you have a site that has really high availability, don’t go for all these extra enhanced sale over or geographic load balancing. That’s where the hoster will put your data in one or two data centers. That’s not really needed for non-mission critical applications.
TechRepublic is featuring a series of articles on Web hosting in every Republic this month. If you’d like to see what your IT colleagues are doing with Web hosting, visit our Web hosting briefing center.
TechRepublic: If you really are trying to cut corners, what are some of the risks that you take?
Chamberlin: You really risk having some downtime. If, for some reason, your site sounds similar to a big company site and you get these really unexpected hits, you’re going to crash your server. Downtime is probably the biggest threat to that. Not planning for certain capacity and having to add it in a critical mode will be very costly. Those are the two biggest “gotchas.”


TechRepublic: Another member wrote, ‘I read that bandwidth can have a flat fee as long as you have stable monthly allotments. However, if you exceed those allotments, then how are you charged for the excess bandwidth usage?’
Chamberlin: When you buy fixed bandwidth, it’s kind of a crapshoot. If you don’t budget for certain levels and you go over that, they charge you per minute and it can be pretty costly. That’s where the majority of people tend to go to burstable. You pay a little bit more per month, but it’s definitely a safety blanket.


TechRepublic: He also asked about collocation—what does he get in the contract? Does he do his own maintenance on his server and all he pays for is the space and the bandwidth?
Chamberlin: Yeah. We call collocation powers, pipes, and ping. They power the voltage, give you the bandwidth and pipes, and ping your server occasionally to make sure it’s up. You are responsible for everything aside from that. Maintenance, upgrades, day-to-day stuff, applications, OS; it’s a full-time job. They’re just giving you Internet real estate, that’s what we call it.


TechRepublic: What are customers looking for in a Web host?
Chamberlin: I think a lot of these companies, small to large, are definitely price sensitive. Let’s say you’re a company and you have a small Web presence, but…you know in six months to a year you’ve got potential explosive growth. These companies want to look for a hosting provider who can take care of their needs now, but as they grow and their needs get more complex, they won’t have to move to another provider, which is really painful. A hoster that has a pretty good view of the future can handle client growth.


TechRepublic: Here is one cost-related question that several TechRepublic members asked: Is Telnet access for maintenance of a hosted Web site as safe as an FTP?
Chamberlin: I think they’re both fairly public access, really non-secure methods. Their security is irrelevant. Once again, through a dedicated connection, a VPN, I think those connections inherently really don’t have much security with them, but they’re cheap. They’re very cost effective. FTP is just a little bit more secure than Telnet. Both of them, in general, inherently carry the lowest security enhancements, whereas a private dedicated connection is probably the best, but again, you pay very dearly for that.
How did you save money in the budget during negotiations with a Web hosting service? Share your advice by posting a comment to this article or send us an e-mail to describe your success.

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