Covisint outsources entire infrastructure to Exodus

Like many online exchanges, Covisint has been hosted by a service provider since its September launch. But last week, the massive...

Like many online exchanges, Covisint has been hosted by a service provider since its September launch. But last week, the massive automotive industry exchange set itself apart by outsourcing the rest of its infrastructure to its host, Exodus Communications.

Users from several prominent business-to-business exchanges said they have given only a sliver of their operations to Web hosting firms because of concerns about escalating costs, lack of application control and unpredictable service.

"I'm surprised at the extent that Covisint is relying on Exodus," said Dana Tardelli, an analyst at Aberdeen Group in Boston. "Most businesses are rooted in internal technologies and they don't want to relinquish that much control."

Officials at Covisint said they have been pleased with the service so far and will extend the contract to include global hosting operations, as well as disaster recovery, security, storage and network services for three datacentres.

But gaps in the quality of infrastructure management services have prompted other businesses to sign more restricted service contracts.

FuelQuest, a Web-based catalogue for oil and gas distributors, falls into that category. It uses Level 3 Communications for disaster recovery and broadband services. But while its production servers are kept at a nearby Level 3 facility, FuelQuest's staff handles application monitoring and problem fixing, said Scott Cilento, director of operations.

Given that the applications are critical to the business, it's important to pay close attention to maintenance, he said.

"We're basically just using their facility," said Cilento. If there's a problem, "a [FuelQuest] stockholder employee is driving out there to fix the issue right away," he explained.

Oracle hosts GlobalNetXchange's procurement platform, and the exchange's collaborative planning and forecasting services applications are hosted by Manugistics Group. But GlobalNetXchange manages security access rights and services internally.

"One thing that our customers expect is privacy of their data and confidentiality, so we take that aspect very seriously," said Bharat Popat, vice president of product management at GlobalNetXchange.

Costs also affect the extent to which business-to-business exchanges outsource hosting and other services.

Michael Ereli, chief technology officer at in Houston, decided on a hybrid approach to support the online petroleum-based product exchange. Instead of renting hardware and software, CheMatch spent about $1m on separate servers for development, staging and production applications. The staging and development hardware are kept in-house, but the production machines reside at Digital Island's datacentre in north Texas.

"It was cheaper than renting in the long run, if you own the equipment for more than two or three years," said Ereli, adding that having exactly duplicated environments also made it easier to change or move applications.

Crane Canada, a manufacturer of industrial pipes and valves, launched its e-commerce operations in October but found that it was cheaper and easier to set up its hosting infrastructure in-house, said Helene Zonana Cohen, e-commerce director at online unit

"Exodus was too expensive for the type of volume we were expecting," said Cohen of the site, which posts about $400,000 worth of transactions each month.

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