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Outsourced IT moves to next level
Nov 17, 2008 (The Knoxville News Sentinel - McClatchy-Tribune Information Services via COMTEX) --
In the early days of Blue Ridge Companies, founder John-David Roddy served as his own IT guy, cobbling together the software and hardware needed to run the startup real estate development firm.
As the West Knoxville company grew to more than 20 employees and contractors, he realized the in-house system needed upgrading.
So he got rid of it altogether.
Blue Ridge Companies is one of a growing number of businesses that is outsourcing not just maintenance of its information technology system, but the entire system. All of the company's servers, storage and software exist offsite at a data center operated and maintained by Claris Networks, the company from which Blue Ridge buys the hosted service.
At Blue Ridge's office, employees log in to the system and via the Internet access necessary applications and documents hosted at Digital Crossing in downtown Knoxville. For a monthly fee, Claris Networks maintains the network, upgrades software, renews licenses and otherwise serves as the IT department for clients that, like Blue Ridge, don't want to mess with it themselves.
"I do not have to worry about system crashes and server crashes now," Roddy said. "It's less front-end cost. You're on a monthly pay basis versus all the cost of your hardware and software up front" -- a serious consideration in tough economic times, he said.
The idea of Internet-based IT, some believe, will transform the industry from an ownership model in which investments are made in computers, servers and staff to a utility model in which hardware, software and processing power are served up via an outside vendor just like phone service or electricity.
So-called cloud or utility computing envisions the Internet as a vast repository of applications, storage and processing capability that allows businesses and consumers to loosen themselves from the latches of their in-house server bank or desktop computer.
The notion was born nearly two decades ago when researchers first began connecting computers together via the emerging Internet to link the power of remote processors, said the University of Tennessee's Jack Dongarra, who with colleagues at Emory University, Oak Ridge National Laboratory and other institutions, nurtured the early seeds of cloud computing.
"Here in Knoxville, we had a system in the early days which allowed users to tie together computing resources," Dongarra said. It was known as the parallel virtual machine and was used to tackle research problems that one computer could not handle on its own.
"As time progressed, I always think there's a trickle-down effect," he said. "(Early research) warps into something different and ultimately it gets spread across and everybody gets to us it."
Today Amazon is selling processing capability it doesn't need through a product called EC2. Google Apps offers the ability to create and store Word documents or spreadsheets and access them anywhere online. And companies including IBM, Microsoft, AT&T and Staples are entering the cloud computing realm, crafting offerings of their own in an effort to capitalize on the new trend.
With Internet-enabled cell phones, wireless cards and a host of other devices "we're connected to the network in a way that's persistent," Dongarra said. "No matter where you go, no matter what you do you'll always be connected to the network."
Software is increasingly being sold not as a product, but as a service -- that's software as a service or SaaS -- that customers access via the Internet and pay for on a per-user basis. And, more businesses are adopting technology as a service, shedding computer hardware in favor of simple PCs attached only to the Internet.
Once Internet connections become fast enough and the bandwidth large enough, the computer itself becomes less important, Dongarra said.
"I just want to have a stupid keyboard and screen that's connected to the Internet, and my data is somewhere and the software is somewhere and when I want I use & #8230; the Web to access these resources," he said.
The technology to enable this is still developing.
Paul Sponcia, CEO of Claris Networks, said the company entered the "technology as a service" arena nearly three years ago and now more than 50 percent of his customers have adopted the hosted model. But bandwidth issues still exist and the "dumb keyboard" product Dongarra envisions has yet to emerge.
Because most customers' Internet connection isn't fast enough to accommodate the flow of very large files, Claris installs a server on-site to replicate the data found on the home server.
The company is working to install AT&T Metro Ethernet service in key office buildings around the city (eight are already wired), although a business model for the service is still emerging. And Sponcia said the company eventually wants to be able to rent that "dumb keyboard" product to customers, but a suitable product has yet to emerged in the marketplace.
"Really our vision is that we'll be able to provide down to the desktop on the person's desk," he said. "We're not there yet. We're providing everything except that final piece."
Security is also a big concern, as cloud computing brings data and networks into central server banks inherently more vulnerable to both natural calamity and intrusion.
If industry is to adopt cloud computing on a global scale, better encryption methods and more secure means for accessing information and applications as well as retaining the information must be deployed, Dongarra said.
"This is not new technology, but it requires users to be in a situation of using the technology correctly," he said. In addition, he said, "We need some kind of replication & #8230; so your data is not in one place but in many places."
In the case of Claris's customers, many of them small- to medium-sized businesses, Sponcia said the firewalls, intrusion prevention and customer isolation measures the company puts in place often represent a greater level of security than the customers themselves had employed. He said the company is starting to move data back-ups to offsite locations each night and is working to set up an alternate data center a few hundred miles away.
Sponcia said the company has also beefed up background checks on the employees it hires and set up a strict protocol for who can access which customers' information.
"We're constantly reevaluating and thinking (about) what's the best way," he said.
Even when they're sold on the concept, not all companies are ready to throw out their IT departments entirely.
At East Tennessee Heart Consultants, also a Claris Networks customer, CEO K.C. Frescoln knew outsourcing made sense for a network he said had been described as "duct tape and paper clips."
The company evaluated a variety of potential solutions, from adding expertise to their own IT staff of four to outsourcing the department entirely.
What emerged was what Frescoln termed a "hybrid" model in which the medical practice's servers and applications were contracted to Claris while the company retained three technicians to handle help desk queries -- keeping the "personal touch," as he put it.
The health care provider, with eight locations, 36 physicians and 250 employees, uses a variety of applications, including, traditional Microsoft Office Suite applications, pacemaker software, a practice management system and a custom electronic medical records program developed in house.
Frescoln, who became the group's CEO in January, said hosting the company's entire network wouldn't make sense for all medical practices.
"In the past I had an IT system in-house and they performed well," he said. "We had already deployed paperless (electronic medical records) and we had a Microsoft exchange server operating. The problem here was there were so many disparate operating systems. & #8230; I think part of it was just the practice and the environment."
On the cost side, Frescolm wouldn't divulge exact figures, but said the practice would save considerably over the investments that would have been necessary to bring the network up to speed in extra staff and in capital expenses.
Sponcia estimates that the monthly charge for a business is $50-$200 per user depending on the services required.
He said 90 percent of the Claris Networks' new business is using the hosted model in some form.
"We do see a lot of customers now, especially in today's climate where credit is very hard to come by," he said.
To see more of The Knoxville News Sentinel or to subscribe to the newspaper, go
to http://www.knoxnews.com. Copyright (c) 2008, The Knoxville News Sentinel,
Tenn. Distributed by McClatchy-Tribune Information Services. For reprints, email
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