Randy Fougere, Vice President of Marketing at Fusepoint (www.fusepoint.com), says:

There are two distinct categories that organizations usually fall into and each presents unique challenges and opportunities. The first category includes companies that have already invested in their own data centre space. Many of these are facing costly upgrades needed to maintain the integrity of their infrastructure. The question on the minds of executives in this scenario is “should we use our cash and credit to upgrade our data centre, or should we use those funds to increase sales or improve efficiencies?” Most companies asking this question would consider outsourcing as a way to leverage the resources and expertise offered by a Managed Service Provider (MSP). For companies requiring significant investments in technology or facilities, this option eliminates the need for a large capital expenditure and offers a predictable monthly cost model instead.

The second category includes start-ups and existing SMEs rolling out new applications. Building highly available infrastructure from the ground up involves significant capital costs and energy. If companies go that route they also need staff with the skills and certifications needed to ensure their mission-critical applications keep running. This is a key reason most small to mid-sized companies are prime candidates for outsourcing. These companies also face many of the same security challenges as larger organizations but often lack the resources to stay ahead of the threat curve. So how do they level the playing field? Many choose to leverage an MSP that employs leading security and network talent and spreads that cost over hundreds of other customers. This provides smaller organizations access to those resources and skill-sets at a much lower cost than doing it in-house.

What are the advantages of co-locating?

There are many variations and definitions of co-locating but the typical industry reference of “ping, power and pipe” refers to a Managed Service Provider (MSP) provisioning data centre space, power and the required bandwidth. In this scenario, the client manages their own hardware, bandwidth, security, backup and operating systems. Many MSPs also offer a menu of additional services to augment the client’s needs. A key benefit of co-location outsourcing is that depending on the robustness of the facility and its network architecture, high-availability can be achieved. The other reason companies co-locate is to gain the advantages of a more redundant and secure facility while leveraging previous investments in their own technology and people. An alternative offered by more advanced MSPs is known as Fully Managed Hosting. In this arrangement, the MSP procures and manages the entire infrastructure including hardware, operating systems, security, bandwidth and backup, all supported with the guarantee of a Service Level Agreement or SLA. All the client needs to do is remotely manage their business-layer applications.


If a small to mid sized company is running a business that does not depend on technology to significantly support its operation, provide revenue streams or build brand value based on its web presence, outsourcing to a top-tier provider may be more than is needed. If the answer to the question “how long can I be down before I really feel it?” is “days”, then home-built solutions or low-end shared hosting may be adequate. In addition, when outsourcing to a Managed Service Provider, your organization will be bound by their acceptable code of conduct in terms of how you use their network and what passes over it, but for most companies this is not an issue.

Will they save any money?

If a business relies on IT infrastructure to survive, the organization will need to make heavy investments building redundancy within their server, security and network technologies. Resiliency also needs to be addressed at the facility level in areas such as power and cooling. This entails significant costs for backup systems such as Uninterrupted Power Supplies (UPS), diesel generators, backup cooling systems, and so on. On the human side, managing mission-critical infrastructure involves 24×7 staffing of high priced and often scarce talent. In addition, you need to have best-practice process in place to ensure continuous operations and deal with the inevitable technical issues that arise.

In comparison to the costs, companies can definitely save money by outsourcing since the service provider can spread their costs over many clients over many years. The other savings often overlooked is opportunity cost. Outsourcing saves a tremendous amount of capital and energy that companies can redirect towards their core competencies. An important cost savings applies to companies processing online credit card payments. Increasingly, these organizations will need to be compliant with stringent Payment Card Industry – Data Security Standards or PCI-DSS. By outsourcing to a provider that is compliant themselves, a client can leverage the provider’s audit to save significant expense. Some businesses in this scenario have saved over $100,000 by outsourcing their infrastructure to a qualified Managed Service Provider.

Examples of types of enterprises that should seriously consider Leasing/Co-locating.

Enterprises running truly mission-critical applications should always consider outsourcing their infrastructure. Unless you are actually in the data centre business, achieving an “always available” and “always secure” environment is extremely costly and very distracting. Given this, small to mid sized companies in particular should look to leverage the resources and expertise offered by a Managed Service Provider (MSP).

Although a natural fit for smaller companies, enterprise-class customers who manage their own data centres will also “selectively” outsource some of their critical applications to an MSP as part of their business continuity strategy. In this scenario, the “primary” site is managed in the clients own data centre with a “secondary” site in some state of readiness at an MSP’s facility. The other reason an enterprise client may outsource is if the MSP has some unique strengths in fully managing the infrastructure that the client does not. Skills in managing the infrastructure layer of products such as Oracle, Linux and VMware are good examples.

A particularly strong fit for outsourced infrastructure is the “Software-as-a-Service” or SaaS business. Companies that develop and serve “killer applications” using an on-demand model have readily embraced the concept of outsourcing. These companies understand that downtime means a direct hit to their bottom line and they also need to be highly scalable as their business grows. This is a good example of how companies leverage outsourcing to focus on what they do best.

Technology provides tremendous opportunity for companies to increase revenues, improve productivity, and reduce costs. Organizations continually struggle to answer the question: “how can we maximize the impact of our applications, when we are so focused on the infrastructure?” After all, the real benefits of IT are derived from leveraging innovative software, not running hardware and operating systems.

Leveraging the resources and expertise of a Managed Service Provider (MSP) provides a viable way for companies to save money, time, and effort. Co-locating the infrastructure at an MSP is a good starting point given the cost and management required at the facilities level. Engaging other “enhanced co-location” services such as bandwidth management, security, and backup provides even greater peace of mind and allows increased focus on your core business. At the high end of the spectrum, choosing an end-to-end Fully Managed Hosting solution offers the technology and management of all components including the hardware, bandwidth, backup, operating systems, web and database infrastructure, all at for fixed monthly fee.

Once, you have made the decision to outsource, choosing the right MSP is another important exercise. There are variances in the level of service you can expect and all MSPs operate differently. Key factors to consider are:

• The quality, physical security and redundancies the MSP has built into their facility
• The diversity of bandwidth providers and redundancies built in the MSP’s network architecture
• Standard operating procedures used by the MSP and the third-party audits and certifications undertaken to ensure they adhere to industry and regulatory best practices
• The technical certifications and expertise of the MSP’s operational staff and the ability to provide complete 24×7 support
• The level of focus the MSP has on the hosting business – typically, the level of focus correlates to the level of responsiveness and customer attention