Hosting Services | SERVERS

Analyze the impact of running applications on hosted external servers or doing the opposite and bringing hosted services in-house. With the competitive pressures of on demand services like software-as a-service (SaaS) and cloud computing as well as decreasing infrastructure costs, the cost of hosting services are expected to decline considerably over the next few years. Consider the following cost reduction possibilities relative to hosting services:

• As outlined in cloud computing, have requirements documented in SLAs with penalty clauses for noncompliance. Renegotiate if there are constant service shortcomings.
• If allowable in the terms of your contract, renegotiate your contract for lower costs. To realize a lower price, you may need to sign a longer contract, include broader services, have a lower SLA, or use of offshore resources.
• A strong and close partnership and relationship with your provider is also helpful when renegotiating a win-win solution given your cost reduction goals.
• Include a clause for annual rate review in order to obtain reductions in market rates.
• Carefully review baseline volume commitments given a decrease in business volume.
• Include a business downturn clause in the contract to account for layoffs or the sale of a division.
  Top Tip: Hosting

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  "We were able to save a significant amount of money by changing hosting partners. We did this by taking advantage of virtualization, using cloud computing for non-production environments, and restructured the landscape using the QA environment for our disaster recovery environment. We also kept multiple players in the mix to get favorable pricing."
  —Lina Shurslep
  Navarre Corporation

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• There continue to be changes and increased flexibility in how hosting, application, and managed service providers charge for services. For example, some providers are moving to utility-based pricing model with charges per user per month over a three-year period rather than fixed costs over the three-year period. Review options on a regular basis and determine the most cost-effective option given your business needs.

Linux and Open Source | SERVERS

Open source has come a long way toward being strong enough for enterprise-wide mission-critical use. Many good open source alternatives save upfront costs, development effort, and on-going support costs. You must evaluate if open source software is right for your organization. It depends on several factors, such as:

Top Tip: Open source

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"Open source is not as easy as it looks at first glance. You trade license and maintenance costs for in-house staff to support the application."

—Samuel J. Levy
University of St. Thomas

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• Compliance and security requirements
• How broadly the application is used
• How widely you support the application
• The activity and size of the user community
• How much risk the organization is willing to absorb
• How much cost savings would result

Of course, the Linux operating system has grown in popularity as many companies have significantly reduced costs while addressing security and reliability issues and avoiding single-vendor environments. There are several different flavors of Linux. Although cost comparisons vary from environment to environment, the following are ways that some companies have reduced costs and total cost of ownership using Linux:

• Free, open-source systems with advanced versions still significantly less expensive than the Windows server operating systems
• Fewer administration, maintenance, and support costs and a quick learning curve
• Increased flexibility and adaptability with open source
• Fewer hardware costs, improved performance
• Less system downtime, improved reliability, higher end-user productivity
• Fewer security and virus attacks, less security holes, free online security updates

Many companies start in the open-source area for noncritical applications and expand their use as they gain more comfort and experience.

Consider open source for a variety of areas. For example, there are lightweight components such as Spring, Jetty, and Tomcat that are options to JEE application servers like Weblogic. There are also alternatives such as MySQL rather than expensive database licenses. Many integration solutions (for example Jitterbit) can lower costs and development time.