A new e-business hosting centre in Calgary is indicative of a growing market that will be worth $2.5 billion in just five years, according to a recent report on the Canadian Web hosting market.
Earlier this month, IBM Canada announced the opening of its e-business Hosting Centre in Calgary, part of $7.5 million the company is spending in Calgary over the next three years.
The general manager of e-business hosting services at IBM Canada said that despite economic pressures, Web hosting is still one of the fastest-growing segments in the IT services industry, and at IBM.
“It really is an opportunity to address the local Calgary marketplace, the Western Canadian marketplace, and it expands our presence in Canada and complements the centres that we have in Toronto and what we have in Montreal,” said the company’s general manager, Paul Lovell.
The Calgary facility will offer services such as facilities hosting and management, and will aim to play a role in guaranteeing that IBM takes part of the US$1 billion worth of new Web hosting business that arrived on the market during the first half of 2001.
“It’s a hardened, class-A data centre, which means we have power coming into the building by different grids on the system and it is backed up by a diesel generator, which [is] backed up by racks of batter[ies],” he said. “We have uninterruptible power.”
According to a report by Forrester Research Canada entitled “Sizing Canada’s Web Hosting Market”, IBM’s offering is part of a market that will reach $2.5 billion by 2006, with managed infrastructure providers grabbing 53 per cent of the market.
More than 55 per cent of large Canadian firms plan to use Web hosting now and in less than two years, 83 per cent of firms that outsource plan to buy managed Web hosting services, the report found.
“We are seeing more firms get involved in more complex projects involving the Internet, which in turn leads to a need for more complex infrastructure and it is very difficult for firms to keep a focus on their businesses as the demands of their infrastructure go up,” said Jordan Kendall, a Toronto-based Forrester analyst.
“So, to be able to maintain focus, there is an increasing trend towards outsourcing. If you let someone else run it, you avoid the time and effort that you would be putting into that and you can focus on the things that really matter.”
However, that doesn’t mean that firms are blindly handing over business. The report shows that flexibility and reliability are the top demands of users.
“We have looked at the evolution of the hosting market in Canada and we have found that there is going to be growth in the market,” he said. “However, it won’t be in the same places as it has been historically. We are expecting the real growth won’t be in collocation. It is going to be in managed Web services and application hosting.”
The bottom line, Kendall said, was getting “someone who can adapt to new expectations and get it done quickly.”
“Some people still have concerns about offloading their infrastructure to someone else,” he noted. “People are concerned about relying on someone external to the firm when time to market is such a critical market.”
Lovell said opening the centre in Calgary was created in response to customers who had been asking for a western location. The centre will include uninterrupted support, security practices, including “ethical hacking”, and security diagnosis services and facilities security, including a security card system and electronic security-coded key locks.
“We are looking at e-business hosting as a significant business opportunity that is demonstrating a lot of growth,” he said. “Everyone needs to run their Web site somewhere.”