Hosting and Internet Service Providers in e-Business

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Access to Internet applications arid others are provided by companies
with lots of computing resources, high performance connections to
the Internet, and secure computing facilities known as data centers.
Data centers are often built to withstand significant natural weather
disasters, have their own generators as hack-up, and are often "duplicated" in a huge network to provide a failsafe recovery means for data
in the event of the power failure. The large ones such as America Online
have huge membership (50 million as of July 2001 ). Suppliers known as
Internet Service Providers ISPs) deliver general Internet access. These
groups supply e-mail service, Web page hosting, FTP access, and, of
course, external access to the Internet. Most companies reaching a
certain size will opt for an Internet Service Provider to support their
Internet access for a variety of reasons:
1. It's cheaper,
2. No need to deal with security of firewall issues internally:
3. Limited system maintenance required (lowering operating costs):
4. Screens junk mail:
5. Provides a hosting service for domain names (specific to the company
6. Provides support for the company's Internet users:
7. Can host e-mail services: and
8. Offers e-commerce services and storefronts on a turnkey basis.

As the Internet continues to expand the range of services offered in
the marketplace, and the range of companies and their activities are in
constant flux. Despite these changes, there is still a continuous need
to have access to the internet. In the early stages, leading companies
wanting to be on the internet purchased bandwidth and internet access
from a telecom firm offering these services and then hosted their own
system in-house, with a dedicated communications link to the facility.
In early 1995. the market began to change. Many more firms and
individuals wanted Internet access, but they either could not afford it
or did not know how to do it themselves. (Setting up your own system
in-house system requires significant knowledge of security and firewall
systems to avoid unauthorized external access to internal computer
Consequently. two types of services emerged in the marketplace.
Service Providers primary focused on the individual user, who needed
to browse the Internet and have access to on-line information services.
and a new breed of firms emerged known as internet Service Providers.
This second group focused on providing e-mail, Web hosting, FTP and
other services to small- and medium-sized businesses. This allowed
firms to establish a Web presence and have relatively high-speed
access (better than dial-up services) without having to install dedicated
software arid computer systems to host their Websites or manage
their Internet e-mail. Firms and services such as America Online,
CompuServe. Prodigy, and MSN grew quickly and a "marketing war"
was declared for users and their service fees. Today there are still thousands of Internet Service Providers in the United States alone, despite
more recent consolidation, and the market remains very competitive.
However, the range of services offered continues to change fast.

One decision many of you will have to make early in your e-Business
strategy is how much of this is going to be brought in-house. In some
cases, where security is critical, there are few choices. We do not
expect banks or financial trading institutions to outsource the hosting
of their systems any time soon. However. many other businesses
are outsourcing many of their important internet-based information
systems, and we expect this trend to continue.

In 1997 and 1998, another breed of firm entered the market. These
dedicated high-end hosting providers provided some of the same
services as the traditional ISPs, but with a twist. They focused on
mission critical applications that needed a lot of network bandwidth
and reliability - the sort that previously could only be obtained by
individual companies setting up their own data centers and hack-up
systems. Many applications such as voice and video needed huge
network and computing resources. These firms became known as
Application Service Providers. Now with a dramatically improved and
mature technology infrastructure in place, many have become very

This Application Service Provider segment is now quite mature.
In these systems, the Service Provider hosts the application on their
computer systems, providing support and maintenance. Other features
include back-up and high performance features such as mirroring.
replication, and access to on-demand bandwidth increases at peak
times. Some of the application service providers also offer e-business
features as part of their hosting offerings for companies of all sizes.
The serious user will often opt to use a dedicated hosting provider.
These companies provide the facilities that an organization might have
to build for itself (such as the data center), shared with others, along
with support for the applications that the company wants them to host.
Many companies like this option, as it can save up-front costs for the
internet connection and reduce maintenance costs over the life of the
system. Companies such as NaviSite grew rapidly as this segment of
the market expanded. More recently, large ISPs have started to acquire
the ASP and hosting services to extend their offerings, creating global
networks with services to support clients in many locations. UUNet
is one such example, having acquired Digex in 2001 to provide this


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