The Pain of it All

I'm seeing an increasing number of customers coming to me who are "accidental tourists" in the land of hosting and information technology, suddenly finding themselves trying to operate and administer one or more colocated servers - essentially a data center - in order to grow their business to the next level.

One is a web design firm that was repeatedly asked by their customers not to just design their web pages, but to install and maintain their web sites for them.  They went out and on the advice of one of their employees, leased colocated servers and installed the Plesk hosting application, ending up with over 1000 hosted customers in less than a year.  However, there was a large gap between the skills of their staff and the support their colocation provider was willing to give for the servers, and they experienced long periods of downtime when they tried to increase the power of their servers to match demand.  Can you imagine hundreds of customers calling in, furious?  The web design firm just wants their computer systems to work so their clients will be happy, but they can't find anyone to do it for them.  Their CEO said to me, "how can I run this business without any computers or geeks?"

Another customer is getting ready to roll out a media-rich web2.0 application.  They are expert programmers and visionaries, but have little experience preparing a "factory" of servers and related staff for the large computing loads that are on the way with a successful launch of their web site.  Their existing hosting provider can't seem to explain why their software runs faster on the development servers than it does in their data center of colocated servers.  With time running out until their launch date, this customer was desperate to find a solution, and was considering leasing space in a colocation facility, hiring staff, buying servers, and running their data center themselves.  But they didn't have enough time - or money - to do that.

Another customer had been hosting their web site through an online marketing company that itself has little to no technical expertise.  As long they didn't need any changes to their website, all was well. But now they wanted to add a web store and their host, the marketing company, was unable to help them: each time a change was needed, they would call *their* colocation provider for help.  Not surprisingly, the 3-way connection led to lots of mistakes.  Not being technically savvy themselves, this customer didn't even know where to turn for help.

I have run across lots more examples, but I'm seeing an increasing number of small to mid-size companies that are in the position of needing the services of enterprise-level information technology just to stay in business, and yet are unable to find a way to get it within the constraints of their business, either through their own efforts or from a hosting company or managed services provider.  We even get calls from large enterprises that want to keep the  fixed overhead and startup costs of a new IT project to a minimum while ensuring its success.  As a former director of development at a web2.0 company, and with our founder Dave as a CIO at multiple web-based businesses, we both saw how complicated, expensive, and risky it is to develop a strong in-house IT capability, whether the hardware is purchased or leased from a provider.     There had to be another solution for these companies to get the IT services they needed without this level of risk - which is why we founded ENKI.

What IT Services You Need To Run Your Business 

What capabilities does a web-based or internet-based business really need to have its IT just work? Quite a bit, actually. Here's what we at ENKI have as our collective checklist of essentials:

As you can see, building these capabilities for your small to mid-sized company or department is going to be a challenge.   But what alternatives are there?  There is no one right answer, since the best strategy depends on your business.

Strategies For Meeting Your IT Operations Needs

- Do it all yourself: buy or lease equipment, and hire skilled staff to provide IT services.  This approach is the time-honored one, and was the only one available to small and mid-sized companies and startups until recently.  Today, this approach only cost-effective if your business has specialized needs such as extreme security or performance requirements that a vendor or partner can't address.  However, many companies still choose this path because it's comfortable - even if they can't afford it.

- Hire a consultant, and then do the rest yourself.  This helps to avoid the long start-up times in setting up your own IT services and staffing up, but you are paying for the consulting as well as your own staff and hardware.  In the long run, companies often keep the consultant "on staff" because they can never find staff with all the skills they need.

- Create a stable of partners, each serving one need.  For example, a colocation or hosting partner, a system administration partner, one or more partners for specialized needs such as security or business continuance services, and application programmers as necessary.  The challenge here is coordinating all the services to make sure they work together and there aren't any "holes" of missing responsibility that will interfere with your business' success later.  A requirements document for everything you need and clearly documented responsibilities for each vendor are essential, as well as a software system to facilitate group collaboration among your vendors (document sharing, ticketing, helpdesk, etc.)  Many vendors simply don't want to get into the complexity of shared service delivery, in part because it's not possible to assure good quality of service - nobody is responsible because everyone is responsible!  Companies with good vendor management processes can be very successful with this approach - but it takes work.

- A combination of partners and your own staff.  This works well for many companies.  The partners provide services to you that are difficult for to provide with your own full time staff such as tasks that are infrequent or bursty and would require a large staff that was underutilized, or functions that are generic and have little to do with running your business.  General consulting, data center setup, system administration, 24x7 incident response, and cross-disciplinary strategic planning or systems design are good examples.  Partners - in this case MSPs - are also an excellent way to avoid cost and risk of owning your own hardware, especially if they have a pay-as-you-go utility computing offering.  You retain staff that understand your business and that you can keep busy, such as application programmers or program managers who are also responsible for coordinating your vendors.

- Find a partner who can handle all of your IT operations service needs on an outsourced basis.  Many companies are simply too small or too focused to productively provide their own operations services.  They need a partner who can set up and manage their IT operations for them, yet is invested in personally understanding their business needs so that they aren't giving up the advantages of a custom IT operations solution.  However, few vendors exist to provide this service, for one basic reason: it's very expensive.  If you need outsourced operations, you're going to face a large bill from an operations partner.  Most outsourced IT customers react by stepping back and reconsidering one of the alternatives listed above even if they are more expensive in the long run, since the total bill isn't visible up-front and people tend to assume that they are smart and can figure out a way to provide the service for themselves at lower cost.  My experience from working in both small and large enterprises was that this isn't a correct assumption, but I fell victim to it myself many times. 

Utility Billing For Risk Sharing - A Possible Solution 

Because of the investment a vendor will have to make in serving your business' IT operations needs, they typically charge you up-front for a year of service, producing a large bill that seem even more out of proportion to doing it yourself.   I think this approach corresponds to an unbalanced sharing of risk between them and you: you're taking a year's worth of risk, and they are taking none.  A small number of vendors, including ENKI, are finding that utility billing (paying for what you use on a monthly basis with only an installation or setup charge up-front) is a more equitable sharing of risk in what is expected to be a successful partnership between you and your vendor.   Whether you fully outsource your operations, or just a few tasks, asking for utility billing is a way to enter into a relationship of equality with your vendor that builds collaboration because you both have skin in the game.

In creating and providing our Computing Utility and Operations as a Service offerings, which roughly correspond to the two columns of the table above, we've had to ask ourselves many of the same questions I've discussed above.  Since ENKI itself isn't on the scale of a large corporate IT department, we've chosen to only develop critical capabilities in-house, and build relationships with trusted partners for our customers' remaining requirements.  A unified CRM system ties us together with our partners to provide seamless service to our customers.  I don't claim that we have canned solutions for any new customers' needs - whether covered in the table above or not - but I do have confidence that between ourselves and our partners, we can rapidly determine the best solutions if we do not.  And as an additional benefit, we don't keep resources on hand to meet every possible need, which allows us to beat the competition - including our customers' previous solutions - on cost.  This approach corresponds to negotiating utility billing with our own vendors, and passing the savings on to you.

Finally, ENKI has virtual data center grid-based computing technology that allows us to deliver computing services to our clients with automatic reliability that avoids the need for us to have a large staff.  Because our grid-based computing is scalable, as our customers' needs grow we simply turn up a knob and they recieve more computing power in one or more virtual servers, paying only for what they use each month. 

I would be very interested to hear from you about the challenges you face in meeting your company's IT needs, and what you need from an outsourced IT provider to meet those needs.