Special Reports

Flip the IT Switch: From In-House to Hosted

Why hosted IT services makes sense, especially during a recession.

Entrepreneur and tech enthusiast Lewis Schrock, swears by the book the Big Switch by Nicholas Carr.

The book chronicles the evolution of computing from mainframes to the cloud, a jaunt through which Schrock has both a hobbyist enthusiasm and vested financial interest in seeing through.

"What I've learned change can be an uncomfortable thing. People love that data is sitting right outside their office but from a network redundancy, power redundancy and even branding you want to make sure you're up all the time," said Schrock, who is manager of channel marketing for hosting service provider The Planet.

Schrock, like many others advocating managed or hosted enterprise services and cloud computing, thinks that if Web 2.0 brought about social networking, file sharing and amalgamated computing, then certainly Web 3.0, the cloud and virtualization will bring equally potent change.

The Change Involved in Change
At the turn of the century, in the tempest of an economic storm and at the outset of a new decade, change is constant. But at no time is this word more frightening than during a recession where there is equal fear about changes in the technology marketplace that could bypass the disadvantaged and about just how much change – meaning dollars – it will take to keep pace.

Notwithstanding the uncertainty, some research suggests that the winds of change, in anticipation of big switches that are expected and unforeseen are, are drifting towards operational expenditures that will position IT functions for an eventual turnaround.

A recent survey by Forrester Research Inc. indicated that global IT spending is expected to increase 8.1 percent in 2010, representing a significant turnaround from an 8.9 percent drop in 2009.

A separate report by BT Global Services and Datamonitor found that innovation has continued despite financial malaise. The research revealed that many enterprise IT functions and the service providers they work with, still must contend with obsolete systems and streamline workflow to stay competitive even in the worst of times.

"The challenge, then, becomes examining the type of thinking and initiatives that will streamline a processing environment, looking at the things that are needed," said Schrock. "The message that we're bringing is that in tight times, companies -- whether they be partners or end users -- they should all look at their core competencies: 'what's my differentiation of my business, be it intellectual property or customer services?' "

Hosted Services a Necessary Switch?
Examining partial or fully hosted services can, in some cases, be uncomfortable especially when cost savings could mean sacrificing human capital. However, from a business perspective considering such initiatives is at the very least necessary, as demand for software hosting and managed services increases.

In this vein, as businesses seek to cut IT infrastructure maintenance costs and streamline IT internal departments, such a proposition as hosted or completely outsourced IT functions become options.

The main question for enterprise IT functions, channel partners and managed service partners, according to Schrock, now becomes, "with Internet resources and the efficiency that hosting can bring, does it make sense to have staff and capital expenditures for a client-sever environment?"

Sometimes, even in this perilous time, it still makes sense to have in-house staff and additional capital expenditures, Schrock admitted. "But hosting means companies can tap into infrastructure maintenance skills as and when they need them without having to employ full-time specialists," he added.

The fundamental principle that both Schrock and technologists such as Nicholas Carr espouse is that switches in efficiency, inventions, moods and spending culture happen all the time and the key is to be ready.

For instance, in the heady tech days of the late 1990s, with a lot of growth on the horizon, the business world found out that massive growth can offset inefficiency. But this is only for a time.

In leaner times a predictable level of service always wins out and endures as booms come and go, Schrock said.

"When I ran a software company I would have rather had my in-house developer not also managing infrastructure and being administrator," he said. "I would've rather not have had to get out of bed to go help him, I would have rather focused the business on the business."

As an example of where things are going, Schrock said programs such as Microsoft's Hosted Mail are already as standardized as "office stationary."

"In some key horizontal areas, in the world of enterprise IT," he said, "you're already seeing the switch. It's important to be ready either way."

About the Author

Jabulani Leffall is an award-winning journalist whose work has appeared in the Financial Times of London, Investor's Business Daily, The Economist and CFO Magazine, among others.