Web Site Outsourcing Strategies Gain Momentum

The speed at which the Internet evolves continues to outpace the best efforts of many IT organizations. To keep up with rapidly changing technologies and the increasing sophistication of e-business, many companies are beginning to outsource a greater share of their Internet, Web site and network responsibilities

"Customers are moving [to outsourcing providers] because they realize that the Web is an immature technology that requires a lot of effort, and they don’t necessarily have the skill or technological capability in-house," says David Cooperstein, a telecommunications strategies analyst with Forrester Research (www.forrester.com). "Companies are looking at this a little bit differently than they would look at traditional outsourcing. The difference here is that there is more of a strategic effort to get on the network quickly and look for expertise that will enable one to do so.

According to Cooperstein, more organizations will turn to Web site outsourcing in the coming years. Forrester indicates that Web-site-hosting organizations did $440 million in business in 1997, and projects the market could increase more than 1,000 percent to $5.5 billion by the year 2000. Cooperstein adds that these numbers have the potential to change as the demand for content-hosting services and support escalates in tandem with ever-evolving Web technologies and the demand for increasingly sophisticated Web expertise.

Cooperstein named a number of significant players in the Web-site-hosting space. The most significant is MCI WorldCom Inc. (www.mciworldcom.com), which offers Internet, Web-hosting, and network services under the aegis of its MCI WorldCom Advanced Networks service. The unit is an amalgam of once-autonomous ISPs or online services that WorldCom acquired, including CompuServe Network Services, ANS Communications, GridNet International and the Web-hosting business unit of UUNET Technologies.

"Two years ago companies were looking for simple shared or dedicated Web sites. Now they are creating mission-critical applications to support online commerce or intranet/extranet communities," says Dave Foster, vice president and general manager of MCI WorldCom Advanced Networks' hosting and e-commerce division. "Through the combined resources of MCI WorldCom Advanced Networks, we offer companies experience and expertise in the creation and management of these complex sites."

Not to be outdone, GTE Telecommunications Inc. (www.gte.com) positioned itself as a contender to WorldCom in the high-end, Web-site-hosting space by acquiring BBN Planet and Genuity, two ISPs.

Even with such competitiveness, Forrester’s Cooperstein believes Web-site-hosting services cannot be considered robust or mature. "These services are definitely still evolving, and maturity in the service profile will take years and not months," Cooperstein maintains. "But it is happening, and a lot of the movement is taking place because the telcos are becoming more active. AT&T owns CERF Net. WorldCom is now creating a new hosting operation out of a number of other companies called the WorldCom Advanced Networks."

Opportunities still exist for smaller, more nimble outsourcing vendors to carve lucrative niches of their own, even as telephone companies try to edge into the Internet, Web and network outsourcing fields and huge conglomerates such as MCI WorldCom and GTE Telecommunications go up against one another. Conxion Corp. (www.conxion.com), for example, has a reputation of near-flawless site management coupled with high-performance data delivery over the company’s global digital delivery system.

"The managed services is what customers want, but you need to have the underlying technology and capacity for these kinds of customers," says Antonio Salerno, CEO of Conxion. "The key element is not that we were superbly high-bandwidth, high-volume to begin with -- we grew the company to that -- but that we were superbly managing [the outsourcing experience] from end to end."

Conxion provides site management and high-performance download bandwidth for companies such as Microsoft Corp., Network Solutions Inc. (www.nsi.net) and Seagate Technology Inc. (www.seagate.com). According to Salerno, the greatest value-add that Conxion brings to the table is its dual focus on end-to-end site management and high-volume, high-performance data delivery.

Conxion’s philosophy appears to be winning outsourcing converts. Microsoft Corp., for example, indicated that it will be moving most of its high-volume downloads away from its traditional FTP site (ftp.microsoft.com) to a site maintained by Conxion. Conxion has traditionally hosted downloads of Microsoft products such as Internet Explorer 4.0 and the Microsoft Windows updates. The company claims to deliver close to 3 TB of Microsoft-specific data per day.