In 2010, managed hosting services exploded, and they will continue to gather steam throughout 2011, say industry observers. To adjust to increased customer demand, many managed hosting providers have changed their business models and expanded their teams.
Last year the cloud was a thought process, but now it's a to-do process.
The terms managed hosting and server hosting refer to the ability to provision a ready-to-use IT stack, which includes hardware and software for the deployment of applications. A provider houses this infrastructure in central data centres that customers can then access over the Internet.
Greg McCulloch, a managing director at Interxion, a provider of managed hosting services, has seen new customer demand for managing data centre services.
According to McCulloch, originally customers wanted a secure environment that allowed them to back up and store data. But today, customers want to be in close proximity to their key markets and have access to high bandwidth and ultralow latency.
"Critically, they are also looking for strong communities, which they can colocate in and reduce costs, increase revenue, and form strategic partnerships," he added.
Managed hosting services on the rise
Managed hosting services, in particular those based in the cloud, are set to spike, analyst firm IDC reported in May. Research from IDC revealed that over the next four years, the enterprise cloud server hardware market is expected to be worth $12.6 billion (or £8.4 billion). Between 2009 and 2014, server revenue for the public cloud is set to grow from $582 billion to $718 billion, whereas revenue in the large private cloud market is set to increase from $7.3 billion to $11.8 billion.
UK managed hosting services can be attractive; they enable companies of all sizes to acquire IT infrastructure at a controlled cost. The debate on the merits of in-house versus outsourced data centre services is long-standing. But some businesses argue the service levels offered by a managed hosting provider are better compared with those provided by internal IT departments, as customer demands are changing.
Kevin Goosman, the interim head of IT at crime prevention charity Nacro, said the company has expanded its network of regional-based sites since outsourcing its data centre to Warwickshire-based colocation hosting specialist UKSolutions.
Nacro operates from 180 regional locations across England and Wales, and since starting work with UKSolutions in April 2009, it claims to have added 60 new sites to its network. Nacro specialises in projects that steer young people away from crime in the community. The charity works with more than 85,000 people but plans to further extend its outreach with the help of UKSolutions.
Following a re-evaluation of its existing LAN data centre in London's Brick Lane, the charity decided to outsource its data to a more local provider. "Thanks to the service offered by UKSolutions, we are looking forward to helping even more people in the future and taking one step closer to our vision of a safer, more inclusive society," said Goosman.
New IT requirements, fewer in-house servers
Daniel Lowe, the managing director of UKSolutions, said customers are not buying single servers anymore but are going instead for larger hosting projects for both storage requirements and live data.
Because customers now opt for larger projects, Lowe explained that UKSolutions has had to expand its team this year. According to Lowe, it is necessary to expand the company's team because the UK server hosting market is booming, especially in the financial sector.
"Financial-sector customers have been working with us a lot recently by moving their data out. Cloud is definitively growing in this area, too. Last year the cloud was a thought process, but now it's a to-do process. Security concerns with the cloud are still there but they're being set aside," he said.
In the finance sector, AssureWeb, a UK insurance company, uses UKSolutions for its claims process. GAB Robins, another insurance company, uses the company for hosting and networking.
According to Lowe, customers now move business intelligence, live data, claims data and content management tools. Previously, they were more concerned with moving data for archiving and storage purposes.
Lowe said that the apprehension associated with handing over data to a third party mostly stems from customers' concerns over disgruntled employees of the service provider and not the security of the technology itself.
It's not just enterprises that have caught the managed hosting bug; SMEs are getting on board as well. UKSolutions customer Talis, which provides library services by indexing books and periodicals, is one such example.
"Talis isn't a huge company, but they recently picked up our cloud services," Lowe said. "So now, when there's a spike in students wanting to check out books at the beginning of the year, this can be dealt with on a seasonal demand.
"This is instead of having to manage this infrastructure all year, and only needing the extra capacity at a certain time. We deal with the spike in services for them, so they don't have to find the extra resources themselves.
Kayleigh Bateman is the Site Editor of SearchVirtualDataCentre.co.UK.