Hybrid hosting services could be a path forward for providers that are waiting for their cloud service offerings to take off while struggling with managed hosting services that have become low-margin commodities. With hybrid hosting services, providers can invigorate their service lines by integrating cloud computing with traditional managed hosting services.
Hybrid hosting services combine and integrate the dedicated resources of a managed hosting environment with the elastic and scalable resources of a cloud computing environment. These services allow customers to integrate applications within these two environments automatically without ad hoc connectors like VPN tunnels.
Two service providers in particular, GoGrid and Rackspace, are differentiating themselves by offering customers a simple model for purchasing, deploying, operating and managing cloud and managed hosting services as a single integrated offering. GoGrid claims it was first to launch hybrid hosting in 2008, while RackSpace unveiled its integrated hybrid hosting service in 2010. A number of other hosting providers offer customer hybrid hosting services upon request, but few have introduced truly integrated hybrid hosting services.
“Hybrid hosting will become the norm,” said John Keagy, founder and chairman of GoGrid. “Somewhere in the order of 85% of computing is still done in-house. There is a huge wave of outsourcing coming that will transition to managed services and fully automated cloud services.”
Why offer hybrid hosting services?
Hybrid hosting services are fertile ground for growing revenue, according to Toby Owen, senior manager for hybrid cloud solutions at Rackspace.
“Our customers who move from just cloud or just managed hosting to hybrid hosting buy more services from us overall, and they move out more from their own data center. We’ve experienced a big increase in cloud revenue [as a result],” Owen said.
GoGrid, which has been offering a hybrid service for four years, claims that half of its “tens of thousands” of customers worldwide purchase hybrid hosting services and predicts that number will climb to 100% within two years, Keagy said.
“Hybrid hosting is fantastic for our business because so many customers are ready to embrace cloud computing with the combined advantage of a managed service and the flexibility of an automated service,” he said.
Hybrid hosting services open a path for a managed hosting provider to expand its overall engagement with a customer. By integrating existing managed hosting services with cloud computing services, a provider can encourage customers to expand their existing engagement rather than seek cloud services from a third party. With integrated hybrid hosting services, a provider can also expand its managed hosting revenue. For example, Rackspace has found that hybrid hosting customers are more receptive to purchasing value-added security services such as managed firewalls, intrusion detection and DDoS prevention to front and protect cloud services. Also, the more complex the services purchased, the more likely a customer will remain in the fold -- so well-delivered hybrid hosting services should help service providers reduce customer churn.
Hybrid hosting services: What’s in it for customers?
Flexibility is the biggest draw for hybrid hosting customers. Interconnecting dedicated physical server resources and cloud-based computing resources enables enterprises to match the right workload or application to the right platform. It also allows fast scalability, management and labor efficiencies, and lower costs.
Developers can determine which platform best suits which piece of an application, and they can design the application with both cloud and dedicated resources in mind to improve performance, cost and utility. In addition, hybrid hosting provides a path for an enterprise to move a legacy application to the cloud by modifying and moving code piecemeal from a managed hosting environment.
Building hybrid hosting services
Automating the management of physical resources is the primary challenge in developing hybrid hosting services. Pioneering hybrid hosting providers are building homegrown solutions to this problem.
“Virtualized services are easier to automate because they usually already have an API. Things that are set up by their nature to be multi-tenant are easier to automate,” said GoGrid’s Keagy. “What is difficult is to automate things that exist in the physical world and are dedicated to individual customers. If it’s not programmable, it’s hard to automate. We built our own tools to do that.”
Keagy said GoGrid is building its own “orchestration” capabilities for automating its physical infrastructure. He said no commercially available software can automate the full range of the network, computing, storage, backup and monitoring capabilities encompassed by GoGrid’s service. Nor can any commercial software manage all of those components through a single pane of glass using a single API.
Rackspace found it challenging to connect dedicated computing resources to the public cloud, according to Owen.
“We had to create most of the tools ourselves, and we worked with F5 and Cisco. We used F5 Big-IP load balancers and Cisco firewalls, and we created our own automation engine to do the business logic to configure the network devices to attach to a cloud account and add or delete servers and to automate software firewalls on those instances. We automated the management of rules so you can manage hybrid service from one place.”
Owen said Rackspace will embed hybrid capabilities into its network to achieve “a default state in which hybrid hosting is available to all of our customers.”
Rebecca Wetzel is a principal with NetForecast and is also president of the marketing consulting firm Wetzel Consulting LLC. She provides data communications industry insight and helps vendors and service providers craft successful marketing strategies.
This was first published in November 2011