What is Hosting?

Hosting is a service that enables businesses to rent or share space on a hosting company's server(s) in order to carry out its web based activities, including running its website and the functions within it (such as online ordering).

One of the fundamental reasons for using a hosting service is to share the hosting company's resources and expertise. For example, if a single person rented a six bedroom house, it would be expensive and wasteful. It would be far more cost effective for that person to share the house with a number of other people and spread the cost.

Hosting is similar to outsourcing. However, hosting means that only one particular element of an IT department is being outsourced rather than the whole department.

The future of hosting

To host your own web activities in house is often an expensive overhead. You would need skilled IT personnel as well as the required hardware and other technology on your premises. Hosting companies provide all of these services and resources as part of their offering, along with other useful services such as firewalls for generally less than it would cost to manage all of this in house.

With companies continually looking at ways to reduce their overheads without compromising on service, the use of a hosting company can provide a very viable option.

Why hosting?

You can achieve many benefits by using a hosting company, from cost reduction to spreading payments for the service on a monthly or quarterly basis. This can make a considerable difference to your overheads as your organisation won't need to make one major capital outlay. For example, rather than having to spend £5,000 on a server and software, the hosting company pays for all necessary hardware and software and then splits the services cost over an agreed period.

Furthermore, the hosting company will employ experts that will resolve any issues and problems that occur and support all your requirements 24 hours a day, 7 days a week, 365 days a year. For most companies to achieve such a high level of service in house would prove too costly. Hosting companies allow organisations to share not only their resources but also servers, storage, firewalls, load balancing equipment and bandwidth that can greatly increase service levels and efficiencies to their customers.

Types of hosting

Free hosting
Some companies offer free hosting facilities but this is generally only suitable for personal use, as these services are often quite basic. The hosting company usually generate their revenue from advertising on their site. Whilst it can be a viable proposition, it is very much a case of 'you get what you pay for'!

Dedicated hosting versus shared hosting
When choosing which type of hosting service you are going to use you generally have two options.

The first option is shared hosting. This allows you to rent space on a server together with a number of other organisations that are doing the same. The benefit of shared hosting is cost. Again, if we use the analogy of a single person renting a six bedroom mansion, it would be far more cost effective sharing this property with a number of other people. There are however downsides to this option, such as lack of privacy. With a shared hosting facility, it is possible that you will be using a server shared by hundreds of other companies, potentially opening up your data for others to see.

The second option is to have your own dedicated hosting facilities. This would allow you greater freedom to use the rented space as you see fit because there wouldn't be issues surrounding privacy.

If you are a large organisation you might find using a shared system to be restrictive as you would be sharing resources with other companies, therefore a dedicated hosting system is more likely to be the best option. Larger companies often attract more internet traffic therefore require more disk space, bandwidth and higher levels of security. Using a dedicated system will be more expensive but often the benefits of such a system outweigh the cost issues. Many companies start with a shared service until such time as they can either afford or perhaps not afford to have a dedicated system! You are likely to know when a shared system isn't working as well for you as the system will start to slow when you are generating more web traffic. Your supplier should be able to advise you as and when this occurs.

Co-location hosting services
Some companies want to use their own equipment such as servers, load balancing equipment, firewalls and other security measures but don't have the right type of physical space needed to run these efficiently. For example, a server environment often needs air-conditioning throughout the year in order to prevent systems over heating. Larger computer rooms might also need heightened security in order to prevent theft or vandalism, or a high security access system that only allows approved personnel to enter the room.

In these cases you might simply just need to rent space in a controlled, secure environment. Co-location hosting (often shortened to 'co-lo') is then a good solution because your organisation would own the hardware and software but the hosting company will provide the required space and environment, as well as any additional resources you might need.

Service level agreement

A service level agreement (SLA) is a list of services and objectives that the hosting company agrees to deliver. These terms can differ according to organisation type. For example, if your company uses the website to sell goods or services and this service wasn't working properly this would have a negative impact on your business and credibility. It is important that you agree on a SLA to ensure that any commitments made by the hosting company are legally binding.

The SLA provides a framework that both you and your service provider agree to. In broad terms, it may be that the hosting company must respond to an issue within a fixed period of time, provide you with problem management and resolution and offer performance measurement reporting.

If the SLA conditions are consistently not met, you could terminate the agreement and your supplier could face penalties. Theses penalties are often financial, therefore act as a deterrent to delivering poor service (unless there are justifying circumstances).

Benefits of using hosting

• Organisations can gain a number of benefits by using a hosting company.
• You can save money. Most companies that provide hosting services are often able to offer these services for less than hosting in house. This is achieved through either sharing servers or services such as trained and expert personnel, which would otherwise be expensive to employ.
• Quality of service. It is also possible in some instances to improve service quality through having more resources and better qualified personnel provided by the hosting company.
• Access to a wider array of skills. The hosting company can often provide skill sets for use for specific projects as and when you require them.
• Allocation of resources. Even if your company has a substantial IT department with highly skilled people, it can often be more effective for them to work on business focused projects rather than manage your web facilities.
• Operational expertise. Hosting companies may be able to provide the relevant expertise that most companies don't have access to or find difficult and expensive to develop in house.
• Budgeting. In tough economic climates, being able to pay for a hosting service over a period of time means that your company can retain capital (cash) in the bank and help with budgeting and cash flow.
• Flexibility. Hosting services will allow you to upgrade as and when your business requirements change.
• Hosting companies will often guarantee up time, i.e. that your website will remain online consistently. However you must ensure that such a claim is supported by a service level agreement.

What type of companies would benefit from hosting?

Generally most companies benefit from using a hosting service but this does differ from company to company depending on the requirements.

As web based services are fundamental to many companies there is often a desire to retain hosting facilities in house. Companies that have the finance, facilities and the space to run dedicated equipment and who have specialised personnel would benefit from in house hosting as they would be able to ensure that their website is 100% operational 100% of the time, whilst retaining full control over the security.

Disadvantages and potential pitfalls

• There are a number of risks associated with hosted services that you need to keep in mind. Risk is seen as one of the biggest issues with hosted services. You need to be aware of any security issues relating to sensitive data and privacy. By using a hosted service you can potentially run the risk of losing independence and control of the system and your data.
• You may loose the flexibility to react quickly to changes in business conditions. For example if you need to improve service levels or if you require more resources. It is imperative that you continually communicate your requirements to your supplier throughout the life cycle of any hosting agreement. For example, you should let the hosting company know of any changes in strategy or conditions that might impact their ability to deliver the service you require.
• There is a potential threat to the security and access of confidential information. There are many examples where confidential data has gone 'astray' or been sold, click here to read about one such example. You must ensure that processes and procedures are in place to ensure that only certain personnel can access specific information, specifically with regards to with payroll systems, human resources and client records.
• Failure to meet your agreed service levels. This can be caused by changing needs, unclear objectives or through incompetence.

Buying and installing hosting

Step one

In the initial phase, an organisation must ask questions such as:

• Why do we want to work with a hosting company?
• What are the risks?
• What are the benefits?
• Do the benefits outweigh the risks?
• What sort of relationship do I expect from a hosting company?
• What sort of relationship will they expect?
• Don't take anything for granted.
• How will we measure results and whether the relationship is working?

Step two

• Analyse your business needs in the areas that you are considering outsourcing
• Are you looking to save costs/money?
• What service guarantees do you need in place? Do be aware that the more rigorous the SLA is, the likelihood is that the price will be higher. You may find that the standard SLA more than meets your business requirements.

Step three

Identify the right supplier:

• Use the Conjungo search box on the right hand side of this page.
• Look through magazine and online reviews.
• Talk to others who have recently installed a hosting solution in the same area as you.
• Use forums, networks and personal contacts to obtain recommendations.

Ask questions such as:

• Who has the experience of working with a company of the same size and profile as yours? This is particularly important if you use your system for 'trading' or ecommerce purposes.
• Are any of those suppliers local to where you are located?
• How many similar customers do they have?
• How many outages have they had that have impacted their customers?
• If their services were not working, how long was this for?
• Ask for references - ensure that the company is capable and reliable.
• Talk to a couple of their customers in order to see what benefits have been gained and what pains those customers went through when installing the system.
• Obtain a credit check through ICC Credit through the direct link within your chosen supplier's profile in Conjungo to ensure that they are financially stable.

Step four

• Request a proposal from three or four of your preferred suppliers.
• Set a deadline for when you need the proposal back.
• Give out details in advance as necessary to ensure that the suppliers you have selected can give you the best proposal.
• Go and meet them in person - get a good feel for whether you will be able to work with them.

Step five

Select a supplier:

• Who best demonstrates that they understand your business and your requirements?
• Is it cost effective? Have they shown how and where you will save money?
• Does it clearly demonstrate the functional benefits - rather than just listing particular features? Does the proposal clearly show what the benefits are?
• Have you spoken to a couple of your preferred suppliers' customers?
• Agree on financial terms - Will the service be payable monthly or annually?
• Don't agree to anything more than a three year agreement. Committing to more can be short sighted as you may wish to re-evaluate the agreement for shorter period of time. While it might be necessary to revert to using the courts in the event that you are given unsatisfactory service, it can be expensive and time consuming to do so.

Step six

Implementation:

• Plan how you will handover the hosting with your supplier. This is easier if you are starting from scratch. If you are moving from your own system to a hosting service provider you must ensure that all data is transferred and backed up.
• The same applies if you are moving from a current supplier to a new one. The transition phase is extremely important so ensure that there strong communication between your previous and new supplier until you are satisfied that the project is complete.
• You may need to run each system in parallel for a short time until the hosted services supplier is in full control.
• Communicate regularly especially in the early days of implementation to ensure that all your questions and issues are addressed.

Points to remember when planning hosting

1. You must be absolutely clear why you are considering a hosted service. Make sure that terms are defined, objectives are clear and that all parties know exactly what is expected of them and how process improvements can be made.
2. Scoping. You will need to ensure that you scope your requirements accordingly. While you might have plans for a global ecommerce site, you might not initially need a comprehensible service with a price to match! It is much easier to increase your requirements as and when your needs change.
3. It is important that when you request proposals that they meet your business and technical demands, but also that they are 'like for like'. While it may seem obvious that the most expensive is not necessarily the best, you should make sure you find out why one company is more expensive than another. Perhaps they have a more secure or resilient service. Make sure you ask why there are differences.
4. Security. It is important that your data is protected and that unauthorised access is prevented. For example, a bank will have an undertaking to protect its' customer records and financial details. This protection must be ongoing even with backup data. Unauthorised access of customer records will be in breach of the Data Protection Act.
5. Length of agreement. The agreement should allow you flexibility so you can change certain areas of the agreement especially when it comes to renewing or cancelling it. Ensure that the agreement is long enough to make a difference and short enough to remain flexible.
6. Scope and terms. Make sure that terms within any agreement are defined, and that any objectives and the SLA's are clear. Ensure that all parties know exactly what is expected of them.
7. Will the SLA compensate your organisation should you suffer financial loss due to an issue caused by your hosting provider?
8. Compliance. If your organisation is effected by legislation or codes of conduct such as Sarbanes-Oxley, this must be considered and be potentially written in to any agreement. Legislation and codes of conduct relating to records generally fall within the remit of your companies IT function so ensure the new system keeps you compliant.
9. Backup. You need to ensure that backups or copies of vital information are kept regularly. This will ensure that if any of your vital information is lost or if you experience some technical issues your data can be quickly and easily recovered.
10. Transition plan. You will need to work with your hosting company to fully identify how the services will be transferred if you are moving from another supplier.

In summary about hosting

Hosting is a very effective way of reducing costs and providing companies with web based services such as e-commerce that would otherwise be extremely expensive to provide.

However, you must have very clear objectives and ensure that any agreement you enter into is scalable to meet your future business requirements. The hosting service you choose should be flexible to adapt with your changing business requirements. It is best to start with a service that you can upgrade and change at a later date, if or when your business requires you to do so. As revenues increase you can increase your hosting services requirements in line with those changes. This will help you grow your business in manageable steps.

Frequently Asked Questions

What is hosting?
Hosting is a service that enables businesses to rent or share space on a hosting company's server(s) in order to carry out its web based activities, including running its website and the functions within it (such as online ordering).

How does it work in practice?
It works by allowing the resources of under utilised computers to be used by over utilised computers, whilst appearing as one single computer.

Why do I need a hosted service? What are the benefits?
To host your own web activities in house is often an expensive overhead. You would need skilled IT personnel as well as the required hardware and other technology on your premises. Hosting companies provide all of these services and resources as part of their offering, along with other useful services such as firewalls for generally less than it would cost to manage all of this in house.

How do I find the right vendors and partners?
Conjungo is a great starting point, because it will let you find the right supplier according to your location, company type, size and whether they have the right accreditations. Furthermore, Conjungo is completely unbiased, has most of the major vendors' partners included and is supported by the vendors as well as being free to use. Just go to Conjungo and use the search box on the right hand side of the page or go to the main search engine.

How will I make sure that the hosting provider will provide the services that we agreed to?
Both parties must agree to a service level agreement (SLA) which is a list of services and objectives that the hosting company agrees to deliver. The SLA provides a framework that both you and your service provider agree to. In broad terms, it may be that the hosting company must respond to an issue within a fixed time, provide you with problem management and resolution and offer performance measurement reporting.

Glossary

• Outages - An outage is another term for when a computer system fails or stops working.
• Load balancing equipment - Load balancing divides work between two or more computers. The work gets done in the same amount of time without any one computer getting overloaded. You can use hardware, software or a combination of both to achieve better performance of your computers.

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