Good article on Fortune web site:
pathfinder.com
Webware for Rent
A new generation of companies wants to run your software and systems. Here are the ABC's of outsourcing for the dot.com crowd.
Eric Nee
Outside, the building could not be more ordinary--it's indistinguishable from hundreds of other offices dotting Silicon Valley. You'd never suspect that inside are computers running services, like Hotmail, Lycos, and Corio, that are helping turn the business world upside down. Step through the front door, and the contrast is even more striking. Where is the boldly colored corporate logo, the svelte young receptionist with the pierced navel, and the ultramodern furniture that every highflying Internet firm displays? Here, you find only a grim-faced uniformed guard seated behind a shabby desk, a nondescript sign reading exodus, and a few uncomfortable-looking chairs. The place may as well scream Go Away.
Isolation would suit Exodus Communications just fine. The company doesn't give out the street address of its Santa Clara, Calif., Internet data center--one of 12 it operates in the U.S. "Security reasons," says co-founder and chief technology officer B.V. Jagadeesh. Only after you pass a second guard desk and a locked door do you get at the heart of Exodus. You hear it first: the loud hum of powerful air conditioners, laboring to keep the room full of computers from overheating. Then you see row upon row of 84- by 19-inch metal racks, each holding as many as seven computer servers--some 2,500 servers packed into the 55,000-square-foot data center. Fiber-optic cables from six companies (including AT&T, MCI WorldCom, and Pacific Bell) connect to these servers, providing redundancy should any cable go down. Three backup diesel electrical generators, each capable of producing a megawatt of power, stand ready should the power fail. Proprietary Exodus software monitors the computers and networks.
The racks of computers are secured in locked, black chain-link cages. Each cage powers a different company. Lycos, the Web portal company, has a 2,700-square-foot cage. Every time a user hits lycos.com, he taps one of the computers racked inside Exodus. Customers of Lycos' archrival Hotmail are routed to computers in an equally large cage just across a three-foot aisle. On the second floor, Exodus is building a cage that at 5,800 square feet will be its largest yet--for Microsoft. What sort of software will reside there? "It's a secret," says Jagadeesh.
Certainly Microsoft could replicate all this on its own. Instead, it and other Web-savvy businesses are using the Internet to eliminate the burden of buying and running expensive, hard-to-maintain computer systems. They're turning to outsiders like Exodus for a wide range of services, from playing host to corporate accounting, personnel, and payroll programs to gaining quick entree to the world of e-commerce.
The Internet liberates businesses from doing their own computing in much the same way grocers free households from baking their own bread and churning their own butter. Capitalizing on the fact that millions of employees, customers, and suppliers now have access to the Internet via their Web browsers, whole new classes of companies have begun to emerge--along with a thick alphabet soup of acronyms for the kinds of computing they supply, including ASP (application service provider), BSP (business service provider), and CSP (computer service provider).
The differences between the three types of providers get pretty convoluted, as companies attempt to straddle more than one area. But here's the idea:
ASPs license, maintain, and rent software systems--such as accounting and human resource programs--written by other companies, for a broad range of business clients.
BSPs are a new breed of software developer providing a suite of services for rent, often tailored to one industry, like airlines or banking.
CSPs (like Exodus) are essentially server farms that house equipment for ASPs, BSPs, and e-commerce businesses. They supply computer power in much the way that a utility supplies electricity, allowing customers to "plug in" their software. Think of it as outsourcing for the dot.com crowd. |
