Outsourcing site operations is a popular option

To outsource or not to outsource — that’s the question network managers have been asking in reference to their Web sites.

It seems most are opting for the former choice. According to data from IDC Canada Ltd., more than 70 per cent of businesses outsource their Web hosting operations, and Chapters Online is no exception. The Toronto-based company has run its 36 servers out of AT&T Canada’s data centre facility in Markham, Ont. since its Web site’s inception in October 1998.

Nick Jones, e-commerce evangelist at Chapters Online, said it was a no-brainer decision to outsource because a service provider could offer better redundancy, bandwidth, robustness, scalability and security. At AT&T, Chapters Online servers sit on an OC-3 connection, which provides 100Mbps connection to the Web-hardly something that Jones’s staff would be able to hook up on their own. “You can have the greatest servers in the world but if the pipe connecting to the Internet is tiny, that’s effectively how many people can get through,” he said, noting that AT&T staff also monitor the servers on a 24×7 basis.

Besides, technology is not the primary focus of Chapters Online, Jones adds. “Our business is not running servers and participating in huge bandwidth pipes that connect to the Internet,” he explains. “It just doesn’t make sense for us to do it when it’s somebody else’s business. Let the service provider do it because there’s enough for us to focus on as a retailer.”

Jones can see smaller businesses being more successful in keeping Web site operations in-house. “I know quite a few companies who just have one or two servers sitting in the back room somewhere. They’re connected to the Internet and it works,” he says. “But when you have so many servers (like us) and you want the best Internet connection, you go to a service provider.”

But turning to a service provider for Web hosting

assistance is also becoming a priority for small businesses. Bill Reddy, president of Brewery Lane Ltd. in St. John’s, Nfld., outsources his two Web sites — www.clickabrew.com and www.brewerylane.com — to NetNations Communications Ltd., a service provider in British Columbia. “I don’t have the experience to host my own Web site,” he says. “To host a decent Web site, you need fairly robust equipment and I’d have to spend a lot of time on maintenance.”

Reddy decided against using a service provider in Newfoundland because of the price point. He estimates that his current service was more than 10 times cheaper than similar services offered in his home province. But rather than having his own server — very expensive for most small businesses — the server and maintenance are shared with thousands of other small businesses, and that can make for disadvantages.

“You get into periods where there is high traffic and your server is going to slow down,” he says. “That’s something that small businesses just have to deal with whereas it’s not an issue for larger companies. They can afford their own servers and maintenance people.”

But many companies overlook an even bigger outsourcing pitfall, according to one industry observer. “There’s always risk when the service you provide is not in your control,” said Audrey Apfel, vice-president and research director at Gartner Group Inc. in Stamford, Conn. “Service providers don’t always keep to their service level agreements. Web sites are not stand-alones anymore and increasingly, these Web sites need to connect back to interact with your applications and that adds a level of complexity now that you’re intimately tied to the hosting centre. Do you trust that?”

The control and trust factors are what concern Jeff Williams, chief technology officer at Indigo.ca in Toronto. He acknowledges that special expertise is involved with Web hosting — whether you make that happen internally or outsource. Indigo’s Web site is currently managed in-house but Williams is looking into outsourcing opportunities. However, he has certain criteria that must be met by the service provider. “When you let a third-party in, they’re holding your heart in their hands,” he said. “So whoever we choose, there has to be an extremely high level of trust and we’re looking for a first-tier partner who can provide 24/7 service.”

For companies looking for

a service provider, Apfel recommends a detailed service level agreement. “SLAs are the key to the kingdom because that’s where you set the expectations of the service that your site requires,” she says. “You also have to put in things like penalties for non-performance to incent the service provider to keep the service levels up.” She also suggests that the company buy extensive reporting tools in order to monitor Web site performance.

Joe Greene, vice-president, Internet and telecom research, for IDC Canada Ltd. in Toronto, advises that companies investigate the different kinds of hosting services available. For example, a company may be interested in a more complex Web hosting arrangement, which would include outsourcing the overall network management system as well.