In the summer of 2002, Mobil Travel Guide was assessing outsourcing options for its system and network operations. A request for proposals was presented to a number of leading outsourcing service providers. In addition to proposing a traditional outsourcing arrangement, IBM presented the opportunity for my company to become an early adopter of its on-demand utility offering. Under this approach, Mobil Travel Guide could scale its transaction capacity up and down in response to demand. Costs would follow resource utilisation.
The proposal was attractive relative to other offerings, including IBM's traditional outsourcing proposal. While no single factor led to the decision to adopt an on-demand service, we saw a number of advantages that, taken together, led to the decision to move to on-demand service. Our business plan called for rapid growth. In addition, as a business focused on the drive traveller, we also knew that we would have seasonal demand, with a peak in the summer and a substantial reduction in the winter months. The ability to ramp up capacity and then bring it back down allowed cost to follow revenue.
Many seasonal businesses size capacity to the level of customer demand on the peak day of the year, thus meeting their customer promise during the most important sales season. Unfortunately, this often leaves substantial unused capacity sitting idle most of the year.
One benefit of on-demand technology is speed to market. Mobil Travel Guide contracted for services in August 2002. Within a few weeks, a test version of the database and application was in place in a dedicated Linux environment on a shared server. This appeared to the development team as a dedicated processor running Linux. Production operations began in October 2002, less than two months after executing its on-demand agreement.
Reliability and security are other benefits. Most medium-sized businesses aren't able to devote the resources to ensure 24/7 physical security of their data infrastructure. Redundant connectivity to the Internet without single points of failure in the network provider's infrastructure may be difficult to achieve without substantial redundancy. Power supply from different substations and stable backup power systems add to the expense. On-demand technology provides these benefits without investment in infrastructure and management attention.
As a start-up, Mobil Travel Guide would have needed to build a database administration and systems operation staff capable of managing a high-availability 24/7 operation. On-demand technology packaged support from a team of professionals to deliver a stable, scalable processing environment as our company has grown.
Most importantly, we were able to take on growth opportunities rapidly without the commitment of new capital ahead of the growth. Mobil Travel Guide recently began offering private-label travel services to a firm with more than twice as many monthly Web site visitors as us. This service was implemented about a month after the decision was made to go forward. In a traditional environment, we would have been scrambling to fund, acquire, configure and test the additional resources to support doubling of traffic overnight. With on-demand, we were able to co-ordinate an increase in capacity ahead of this growth.
The combined impact of these advantages has allowed us to focus most of our people, energy and resources on the new products and services demanded by our customers.
Mercurio is senior vice president and CIO at Mobil Travel Guide.