Outsourcing Will Replace Internal Web Hosting, Reports JMM Mike Drach

📅 August 16, 2001 - By hosting their Web sites and technology infrastructures internally, over one-third of U.S. businesses are overlooking a chance to save 30 to 40 percent on their costs, according to a study released by Jupiter Media Metrix (jmm.com) on Wednesday. Over the next three years, these costs could add up to between US$6 million to $12 million.
"Companies that continue to host their own sites will gain littlecompetitive advantage and spend more money on staffing and technology thanthose that outsource these functions," said Jupiter research director DavidTaylor. "Those that act and act now will be saving millions in the longrun."
The most highly trafficked sites stand to derive the greatest savings fromoutsourcing hosting responsibilities, according to the report. Forinstance, analysts found that an in-house staff of 18 to 25 costs over threetimes as much per yea, while management tools and expenses run an additional$2million over a three-year period. In addition, recurring costs such asbandwidth, co-location services and vendor management can easily add morethan $1 million dollars in costs during the same period.
Jupiter predicts that an increasing number of business will choose tooutsource their hosting needs over the next three years, as the availablesavings become more apparent. Currently, some executives have been slow tomake these changes because of concerns over security and control issues, aswell as poor customer service by outside vendors.
Along with these findings, Jupiter also reported that over 80 percent ofcompanies undertake Web development projects before their site hosting andtechnology infrastructure design is built. According to Jupiter analysts,nine out of ten of these ventures will face some form of avoidablerebuilding as a result.
"Companies engaged in Web development projects must select a technologyinfrastructure provider simultaneously with an application developer," saidJupiter. "Doing so will cut implementation delays by 25 to 30 percent byeliminating wasted development time."
The report advised companies to consider a range of criteria when choosing ahosting provider, including reliability, scalability, security, provensuccess, accountability, response speed and customer service.
Additional key findings will be presented in full at the Jupiter WebEnterprise Forum on September 12-13, in San Francisco. The forum willexamine the planning, development, and management problems affecting allbusinesses that embrace Internet technologies. For more information, seeJupiter's Web site.