Breadth of Expertise Defines ASP Start-up

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Internet guru at technical book retailer Books24x7.com Inc. in Norwood, Mass., didn't have any hope of meeting the company's two-month deadline for launching a subscription-based e-commerce site with the five other engineers on hand.

Instead of making a swift -- and probably reckless -- personnel expansion, he opted for SiteHarbor, a Web site hosting and consulting service from NaviSite Inc. "They provided me with a lot of engineering expertise that we didn't have in-house," Warren says.

NaviSite is a "ping, power and pipe" managed-service provider with staff consultants and secure data centers in Andover, Mass., and San Jose [Technology, May 29]. CEO Joel B. Rosen says the company's key differentiator lies in its ability to provide more than the baseline locked-cabinet service of an equipment co- location service provider.

One-Stop Shopping

NaviSite rents Web applications and supports sophisticated technologies and processes such as database systems fail-over and e-commerce management. It also hosts events that have one-time peak-capacity needs and consults on scalable site development.

NaviSite Inc.

Location: 400 Minuteman Road, Andover, Mass. 01810

Telephone: (888) 298-8222

Web: www.navisite.com

The technology: Web site hosting and application service

Why it's worth watching: The company offers a wide range of application hosting services, providing one-stop shopping to its customers.

Company officer: Joel B. Rosen, CEO

Milestones: February 1997: Spun off from parent company, Andover, Mass.-based CMGI Inc. October 1999: Initial public offering (IPO) January 2000: Opened two data centers

Employees: 300; 80% annual growth predicted

Burn money: Raised $77 million in its IPO

Services/pricing: SiteHarbor hosting services; price is negotiable

Customers: Books24x7.com Inc., Dress Barn Inc. and AltaVista Co.

Partners: Microsoft Corp., Dell Computer Corp., Sun Microsystems Inc., Compaq Computer Corp., Cisco Systems Inc., Oracle Corp., Akamai Technologies Inc. and others

Red flags for IT: NaviSite has many competitors, so shop around before you buy. Sooner or later, the market will shake out. Will NaviSite's approach give it the edge it needs?

The full-service model was what attracted Warren. In addition to cost, level-of-service guarantees and geographical proximity, he made his decision based on the breadth of services offered.

NaviSite is one-stop shopping, he says. The types of expertise Warren tapped included help setting up a Cisco LocalDirector load-balancing appliance and general advice on using SQL databases.

But Warren acknowledges that if he was in a larger company with more internal skills and less reliance on outside experts, he might not have gone with NaviSite.

A larger company might have chosen Exodus Communications Inc. in Santa Clara, Calif., or BBN Technologies in Cambridge, Mass., which provide hosting services that Warren says he also checked out but didn't feel fit his needs.

In the view of analyst Jeanne Schaaf at Cambridge, Mass.-based Forrester Research Inc., NaviSite's soup-to-nuts services don't distinguish the company at all.

"I don't think they have settled a strong focus and are executing against that focus," she says, calling the company's strategy a mishmash of directions and partners.

Preston Dodd, a senior analyst at Jupiter Communications Inc. in New York, is also lukewarm on NaviSite. With hundreds of competing companies crowding into the hot site development and hosting market, Doss says, everyone needs to find a differentiation.

That's difficult, he explains, when there are "no patents or innovations that no one else can match, because it's a service business."

On the other hand, Dodd says, NaviSite is as good as any other vendor in key areas like customer satisfaction, management vision and employee talent and has decent name recognition.

Branding Needed

But it needs to take that further, Dodd says. The company's main hurdle is branding itself so it gets a shot at bidding on the best jobs, such as being the main project leader for a company like General Motors Corp. "The challenge for NaviSite is that it isn't necessarily on the short list of names that roll off the tongue as the usual suspects [in the electronic-business development field]," he says.

Rosen says he thinks that customers do value NaviSite's blend of services and that they understand how bringing his staff on board can help them get a site up quickly and allow them to create a more complex site when NaviSite is handling the operations end.

Rosen is pushing forward with plans to expand the company's skills list into areas such as application expertise (like the SilverStream eBusiness Platform from SilverStream Software Inc. in Billerica, Mass.), streaming voice and video technologies, and new capabilities in stress-testing sites.

The company is also expanding its facilities, targeting international customers with data centers outside the U.S. and adding to its uptime infrastructure with fail-over technologies across multiple data centers.

The Buzz: State of the Market

Game of Survivor

Clay Ryder, vice president and chief analyst at Zona Research Inc. in Redwood City, Calif., gives NaviSite points for running well-designed data centers in multiple locations. "They're going after this [market] from a very industrial level," he says. But the company's advanced technology notwithstanding, Ryder warns that earning customers will be hard. When it comes to a mission-critical application like a corporate e-commerce site, he says, most companies will think long and hard before deciding to outsource the responsibility.

NaviSite occupies a crowded niche. Hundreds of companies offer similar services, says Preston Dodd, a senior analyst at Jupiter, and most of them aren't unique. The good news for NaviSite and its competitors is that many CEOs are trying the application service provider/hosting option, and there's plenty of work to go around, he says. While that will ensure sales growth in the short term, in the long term, the Web site hosting market will operate like any other market: Only the best will survive.

Eight Questions

Given the competition, how does an IT manager choose the right partner to handle the company Web site? Here are some questions to ask before you commit, according to Ryder and Dodd:

• What are your goals for the site? Know them, and make sure the hosting service understands them.

• Does the vendor have the applications you need, and does its staff really know how to manage them?

• What's the vendor's infrastructure? Visit the network operations center and check into its redundant systems, security and network capacity.

• Has the company met its quality-of-service guarantees? Has it made the deadlines for launching and upgrading sites under its management?

• What is the staff's training and experience? Meet and interview the people who will handle your Web site.

• Is the facility hosting other sites similar to yours? Talk to those customers about their opinion of the facility and staff.

• How eager is the company to earn your business? Will you be just another client, or a partner?

• Does the company have the financial backing to operate? It's hard to move a complex site to another hosting service; don't be surprised by a "going out of business" sign on the data center's door.

This story, "Breadth of Expertise Defines ASP Start-up" was originally published by Computerworld.

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