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Virtual Hosters: 10 Ways To Find Success Beyond Datacenters

Being a hoster has been a phenomenal business model for many years. The concept was easy: You built a datacenter in your own building or rented colocation space elsewhere, and then you bought hardware and expanded as needed. It was a simple way to earn good money when you did it right with a structured, industrial approach.

For many years, I ran my own hosting company and it was the best of times. But times are changing! With the adoption of megascale cloud computing provided by Microsoft, Amazon Web Services (AWS) and Google, many local hosters are becoming obsolete and losing their customers. Some local hosters will still make a decent living for years to come, but they might benefit from special requirements in a certain vertical or geography.

One good thing is that thanks to the cloud, customers are more likely to accept the concept of moving away from owning and operating their own hardware, so the market for outsourced computing is growing at a rapid pace that should continue. But the odds are against traditional local hosters that are competing with, or duplicating, what Microsoft, AWS and Google are doing.

I have always made sure that my own companies have never been in competition with Microsoft. Instead of trying to play catch-up and come up with odd reasons for a customer not to use Microsoft Azure, it is far better to work with Microsoft and offer something that adds value. Let's be brutally honest: There is no way that a local hoster can keep up with the massive investments that Microsoft (and others) are making. Azure is great today; tomorrow it will become even better and further differentiate itself from the efforts of a local hoster.

If you're a traditional local hoster, what should you do? I think that you should become a virtual hoster and fully embrace the cloud.

Look at what needs your customers have besides just renting capacity. When you do it right, you will realize that the real value is in taking care of workloads, not just providing capacity. At that point, you don't need your own datacenters. When you understand where the real value lies, you can start to decommission your own hosting with little regret and instead use capacity in Azure.

Change your perspective to view Azure as your own datacenter that can offer massive scale, a large number of locations, top-notch connectivity, redundancy and outstanding flexibility when you want to expand or reduce your footprint.

What are the characteristics of a successful virtual hoster? Here's the checklist:

  1. Owns no datacenter and rents no (or very little) colocation space/hardware.
  2. Takes responsibility for the application layer and for all dependencies between servers and systems.
  3. Has written standard operational procedures (SOP) for everything so that tasks are performed in the same way regardless of who is involved.
  4. Knows advanced networking inside and out.
  5. Monitors 24/7 and is ready to engage in incident management anytime and anywhere.
  6. Is a master of prescriptive maintenance and, when systems go down, is best-in-class in incident management so that systems come up in a jiffy (and always does a "post-mortem" and delivers a written incident report).
  7. Knows how to migrate workloads.
  8. Knows how to mix virtual machines, containers and software-as-a-service (SaaS) in order to maximize ROI for the customer.
  9. Has deep knowledge in a few verticals (optional).
  10. Constantly seeks ways to optimize based on the needs of the customer.

When you see Azure as your best friend and not a competitor, you can become a virtual hoster that is fit for the future. Your people will still be key to your success, as their knowledge is also needed in the era of the cloud. With this approach you will also be able to discover new ways to successfully partner with Microsoft that can elevate your business to new heights.

Per Werngren is an RCP contributor who has held many roles at the worldwide level of the International Association of Microsoft Channel Partners (IAMCP), including chairman and president.

Posted by Per Werngren on September 17, 2019