IBM hosting on demand points to offshore trend

IBM has broadened its remote Virtual Server Services, which had been offered only on its zSeries servers, to include the rest of...

IBM has broadened its remote Virtual Server Services, which had been offered only on its zSeries servers, to include the rest of its eServer line - iSeries, pSeries and xSeries servers - with support for Windows, Unix and Linux.

The company is also adding applications to its on-demand computing services under an application service provider model. Officials said IBM had inked an agreement with Siebel Systems to offer CRM services in this manner.

An IBM data centre in Colorado houses the systems, which users can access remotely on a pay-as-you-go basis. The service will gradually be expanded to other IBM facilities around the world, and US companies could eventually have their day-to-day business applications residing on servers outside the country.

Mike Riegel, manager of IBM's e-business hosting services, said that outside of regulated industries such as healthcare and financial services, the use of offshore data centres can work.

"There is a lot of fear, uncertainty and doubt about cross-border delivery," said Riegel. "But when you really dig into the regulatory environment, there aren't many impediments to it."

Multinational companies run data centres all over the world. But the idea of turning part or all of a company's data centre operations over to an offshore provider is still in its infancy.

Some companies are beginning to use offshore service providers to manage and monitor their data centres remotely in low-cost countries while keeping the hardware and data in North America and Europe.

Early adopters of offshore outsourcing of IT systems, as opposed to application development, are focusing on remote monitoring, database administration and other systems administration functions.

But analysts and offshore service providers say they have not seen firms relocating data centre hardware offshore. Companies maintain that although such a move probably is not worth the migration expense, they may use hardware located offshore through an outsourcing supplier.

But there are many elements affecting a decision to outsource infrastructure operations offshore, including network reliability, geopolitical concerns and security. It remains "more of a niche and still a slowly evolving process", said Richard Matlus, research director at Gartner.

But offshore aside, infrastructure outsourcing is growing in the US, and offerings are expanding. Last week, Sun Microsystems Incstruck an agreement with SchlumbergerSema for outsourced, pay-as-you-go services.

Schlumberger will use Sun servers to provide services targeting the energy, finance, telecommunications and government sectors. The servers can be hosted at the customer's site or Schlumberger's data centre.

While these data centre services can be provided anywhere, "the barrier is the customer comfort to sending something offshore", said Ashif Dhanani, director of utility computing at Sun.

Meanwhile, Kumar Mahadeva, chief executive officer of offshore services provider Cognizant Technology Solutions, said he is seeing business processes such as claims processing go overseas, resulting in the creation of offshore data centres to support those operations.

Patrick Thibodeau writes for Computerworld

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