Intira provides the platform for enterprise applications

by Michael Vizard

March 13, 2001 —

AS A PROVIDER of an application hosting service for Internet applications, Intira has created an infrastructure that companies such as Emerson Electric and Armstrong Tile use to run mission-critical applications. Accounting firm Deloitte & Touche is another fan; it bought a 10 percent stake in Intira last week. In an interview with InfoWorld Editor in Chief Michael Vizard, Intira CEO Bernie Schneider talks about what it will take to survive in this space as well as how he sees pricing models beginning to evolve.

InfoWorld: What does Intira focus on as its core competency?

Schneider: We are essentially outsourcing all of the infrastructure required to run applications. We build everything underneath the application -- the servers, the storage, security, and the network -- and we engineer, implement, operate, and manage all of that on an ongoing basis. Our focus is what we would call mission-critical applications, so we don't have shared servers, shared firewalls, or any of that type of stuff. We tend to attract those customers who feel very strongly that their applications can't go down.

InfoWorld: There's a lot of concern about the long-term profitability associated with companies in the Web-hosting space. What makes your approach different?

Schneider: We are private, and we've raised just a little under $400 million. Customers can't tell us to use this firewall or use that storage platform. We do all of that. They can pick the application software, but we're going to drive the platform. So we get a lot of scalability out of the people and some of the processes we put in place. And we're actually seeing the number of man-hours to implement applications come down quite a bit. The key thing in the typical Web hosting company is that most of their revenue is coming from bandwidth sales and floor-space sales. That has absolutely seen a lot of pricing pressure. I think our model looks more like IBM and EDS, but it's for people who need to move faster. We don't deal in the mainframe world.

InfoWorld: How do you see pricing models evolving?

Schneider: I see them moving toward the pay-as-you-go model. If you look out 18 months, 24 months, I think we can even get it down to a transaction basis, meaning for a certain level of application availability, say 99.95 percent, we're going to charge you a penny a transaction. The other thing that you're going to see is that we're working with software vendors so a customer can say they are going to use an Oracle database, IBM WebSphere, and these other packages, and then Oracle, IBM, or whoever can electronically bill the customer for the software.

InfoWorld: What is pushing customers to adopt your model?

Schneider: One of their biggest issues is how they size the infrastructure to support the application. People are trying to target within an order of magnitude how much capacity they need -- and they don't know. The other thing is that people want to pick the software because that is what's key to their business. The other stuff required to run the application is something they are much more [indifferent] about. They really like the idea of getting out of that side of it. They want to focus on which applications they're going to run and then integrate them into the legacy systems.

InfoWorld: Do a lot of customers match their internal costs to your service as a point of comparison?

Schneider: A lot of people talk about total cost of ownership, but the real focus is whether they have the staff with the requisite technical skills to support the application. They don't know if they need to support 1,000 transactions an hour or 20,000 transactions an hour. To the extent that we can provide them a platform that allows them to double or triple capacity in a matter of days, the benefit is much larger than whether we run a given set of applications at a cost that is 20 percent less than they can. Very few people actually go through and take the time to compare the cost of doing it themselves versus outsourcing.

InfoWorld: How much work goes into integrating the applications that you run and the applications that people already have running in their IT shops?

Schneider: We have what we call focus teams, which are made up of engineering and implementation people who work with the customers and walk them through the applications and what they have to interface back to. They can't give us the specifications for an application and then just expect everything to work smoothly. There's a lot of back and forth. One of the things we do is every month we have service managers sit down with the customer and review the performance, because you're constantly tuning, changing, making adjustments to all the components running the applications.

InfoWorld: How do you manage the SLA (service-level agreement) process?

Schneider: We measure application availability. Any downtime, unless it was the application, is going to be Intira's issue. Customers can buy anywhere from a 99.0 [percent] to a 99.95 percent availability. If it's security, a network, a server, whatever, that's all Intira's issue. Then for every 15 minutes of downtime that we exceed that [SLA], they get a day's credit. God forbid someone was down for six hours, because we'd lose an entire month's billing. But there will be instances where it's hard to tell what happened. As much as I'd like to think the technology is there to clearly segment what's the application issue and what's the infrastructure issue, there will be instances where something didn't seem to work quite right and it then cleared up. Or you end up rebooting a server because you had an operating system problem or you had a database lock up or an application-related issue. What we do is send the customer After Action Reports on every trouble item, and we then sit down and review them.

InfoWorld: What criteria should customers be using to judge a hosting service provider?

Schneider: Ask to see what we call a Run Book, which is the set of procedures for implementing a customer. If they start telling you how they have tremendous flexibility and they're going to find a bunch of people and they're going to work with you, but they can't show you a Run Book with documented procedures, that should be a big red flag. You don't want somebody making this stuff up on the fly. The most important thing is to ask to see the set of reports that you're going to get daily, weekly, and monthly that will tell exactly how well your application is running. As a customer you have to assume that if your hosting provider can't show you these reports, that means they don't have them. And if they don't have them, how do you know how they're really doing?

InfoWorld: What do you think will ultimately happen in this space given the current economic trends?

Schneider: I think that over the next 12 months you're going to see a fair amount of consolidation. The companies that are heavily leveraged toward the dot-coms are really struggling, and as customers realize the level of service that can be provided, they're going to raise their expectations. We just landed a San Francisco Bay area company that's been in business for a long time. We're their fourth hosting provider. They gave us an application that wasn't real critical, basically just to test us. They're noow moving their major applications to us and talking about moving their financial packages to us. They clearly see what is available through some very different service levels out there. And not everybody's going to make it. I'm not convinced everybody's going to get bought; I think you're going to see some just go under.

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