Hosting of applications – the inevitable future?

I’ve been musing over some medium term IT trends lately and one idea that keeps coming back into frame is the seemingly inevitable trend towards hosting of applications. Take Exchange, as just one example…

Hosted Exchange* has been available for years, from lots of different providers all around the world. The basic concept is that instead of buying the software, you just buy the service from a hosting company much like you buy line rental on your phone, or internet access from your ISP. Why not just have your company’s email sitting somewhere else, and save yourself the hassle of managing it?

*Hosted Exchange is not to be confused with the somewhat confusingly named Exchange Hosted Services, which is all about hosting the route to get mail into and out of your own email environment. EHS was formed by the procurement of Frontbridge, who had established a good name in hosted filtering… ie the MX record of your domain actually delivers mail to their datacentre, they scan it for spam and viruses, and the remaining “hygienic” mail is delivered down to you.

So what’s stopped everyone from adopting Hosted Exchange before? I suppose the cost is one thing – if you had 500 users and it cost, say, £10 a month to provide each of them with a mailbox, you’d be seeing £5k going out the door every month, and might think “surely I can provide the same service, in house, for less than £60k a year?”, and you might well be right. But start to dig into the detail, and it could be a lot closer… Think about buying:

  • the hardware (maybe £10k worth of servers, and any amount of money could be spent on storage, but let’s assume £15k),
  • the software (at full price, this could work out at something in the order of £30k for that kind of user population)
  • additional software, like anti-virus, anti-spam (if you didn’t want to just use what’s in the box in the shape of the IMF etc), backup software, archiving systems etc etc

… and then add in the time and expertise required to set it up and keep it healthy long-term, then maybe it is less expensive to do it all in house. But by hosting the application, you could free the time to do other stuff, or just have one less thing to worry about… especially in times when security threats can sap administrator time, and compliance requirements could mean lots more red tape and requirements for recoverability, let alone high availability.

I’ve seen various analyst reports which reckon that 70% of an average IT budget is spent just maintaining the status quo and keeping existing systems running.

As connectivity gets better and better, it seems almost inevitable that a “normal” Exchange deployment in a few years will actually be hosted by someone else. Of course, there are several models which could be adopted:

  • Hosting company just operates your own servers/software for you. I’ve seen this lots of times already, in the shape of IT outsourcing where the “hoster” is just a drop in replacement for an in house IT operation, and maybe even takes servers that were previously operated in house and moves them to their own datacentre for ongoing management
  • Hosting company provides your servers for you. This is a little less common, but growing – namely, the hoster has their own kit but they dedicate a given server/bank of servers just to you.
  • Hosting company just provides “service”. In other words, you get a mailbox of a given size, but don’t need to care how it’s provisioned. This is going to be more appealing to smaller businesses, maybe.

So what else? Sharepoint? Yep, you can do that too, as part of the snappily-titled Microsoft Solution for Hosted Messaging & Collaboration v4.0.

And what about after that? I could see the day when some companies want IT as a turnkey service just like they look at other utilities – you buy the bit of cable and down that comes whatever services you’re subscribed to, and you can add and remove services at will, just like you can with satellite or cable TV.

Want your phone system to be hosted and connected to by the same bunch of ethernet cables? No problem. Intranet applications and portals? Sure… I wonder where it’ll all end? Hosted desktops?

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