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Due diligence is key when choosing a service provider. ASP Advisor hed: Ch-ch-ch-ch-changes dek: due diligence is key when choosing a service provider. by Don Fitzwater

The only constant is change. I suspect this old adage is probably just as relevant to the xSP marketplace as it is to the rest of the computer and information technology market. And the rate of change is accelerating. This not only makes managing change itself difficult at best, but it also contributes to the overall difficulty in managing the process of outsourcing mission-critical applications and services to an xSP.

What a long strange trip it’s been

The past year held plenty of prime examples of the dangers and pitfalls facing a company making one of the major decisions in outsourcing–choosing a provider. As I’ve mentioned in previous columns, many xSPs are rethinking their business plans and models in a quest for the right combination of market niche and marketing approach in order to survive and, hopefully, flourish. Others are seeking out strategic partnerships with fellow providers to add complementary services to their offerings or to shore up areas where they perceive themselves to be weak. To accomplish these restructurings over the course of the year, we’ve seen the xSP marketplace go through an incredible amount of consolidation.

The company you may have originally signed up with might no longer exist, or else exists as part of some other bigger fish that swallowed up your xSP during this feeding frenzy. Worse yet, this new entity might have changed its focus, no longer offering quite such a good fit with your corporate needs. If you are already in the xSP marketplace as a customer, all you can do is try to ride the waves and adapt as you go. This might include finding new providers when necessary, bringing things back in house if you have to, or trying to stay the course with an existing provider.

Who can I turn to?

If you’re with one of those companies that’s just getting to the point of outsourcing to an xSP, your provider decision is not only more difficult, but also fraught with more risk than before. After all, the rate of change (and failure and consolidation) has grown so rapidly that it is very hard to know right now which service provider will be there in the next few months.

Take for example Web-hosting company Exodus Communications, which filed for bankruptcy near the end of September. That news was received so badly by the marketplace that the stock market had to temporarily halt trading of Exodus shares when the bankruptcy news broke.

The company’s Web-hosting business has reflected the boom-and-bust cycle of the dot-com sector. At the height of the bubble, its business–which originally consisted of hosting Web sites–thrived. But as its dot-com clients died off, so did much of its revenue, although Exodus had been able to sign up new clients. As part of the plan to acquire these new clients, Exodus has moved away from pure commodity Web hosting toward managing and monitoring clients’ Web sites and Internet-based applications on powerful servers in secure locations. Apparently this plan was not entirely successful (or at least not successful enough), since Exodus did file for Chapter 11 bankruptcy in the end.

So while Exodus CEO William Krause said the actions let the company continue to provide service to its customers, the question remains as to whether you should or shouldn’t go with Exodus as your xSP. I certainly can’t tell you, and I would be leery of any industry pundits who claim they can advise you about this. The truth is that only you know where your corporate comfort level resides after performing all the due diligence investigation you can.

You pay your money and you take your chances

Consolidation and failures aren’t the only issues clouding the decision-making waters. Technology is changing, too, and there is already a war for hearts and minds (and market share) going on over which technologies are going to dominate the marketplace. The players are all familiar-Microsoft, Sun, Oracle, various open-standards groups, etc.-all of which are jockeying for position as the platform(s) of choice in the xSP industry. Choosing the right technology for your applications and services is probably as important as choosing the right provider.

Microsoft’s offering in this area is encapsulated in what it calls its .NET platform. The Microsoft.NET platform includes a comprehensive family of products, built on XML and Internet industry standards, that provide for every aspect of developing, managing, using, and experiencing XML Web services. Microsoft intends for these XML Web services to become part of the Microsoft applications, tools, and servers that they assume you already use today. Many, however, are questioning how well this technology will work on platforms other than Microsoft’s.

Sun Open Net Environment (Sun ONE) is Sun’s standards-based software vision, architecture, platform, and expertise for building and deploying services on demand. It provides a highly scalable and robust foundation for traditional software applications, as well as current Web-based applications, while laying the foundation for next-generation distributed computing models such as Web services. Like Microsoft’s offering, it is built on XML services.

Since both platforms are still very much in their infancy, it is too early to tell which one (if either) will achieve market dominance. What is more important to you as a decision-maker is how well these diverse platforms will be able to interoperate. Early indications say that since both are heavily reliant on XML, they ought to be able to communicate with each other at some useful functional level. However, XML itself is a bit of a moving target, so there are no sure bets.

At this point, the most practical course to take is to judge the fit between .NET and Sun ONE with your company’s existing IT infrastructure, as well as any infrastructures your systems interoperate with regularly. Again, as in the case of choosing the xSP, only you and your company can decide what makes the most sense for meeting your needs.

The more things change…

During the past year of writing this column, I’ve spent plenty of words pointing out the various changes as they have come along. I’ve also tried to explain just how and why these changes impact you and your decisions when it comes to moving applications and services vital to your company to an outside provider. I hope I have done a good job and that at least some of what I have provided has been of value to you.

If all that above sounds a bit like a goodbye, then you are correct–it is a goodbye of sorts. Change also affects the publications that cover this industry. That means publications like COMPUTERUSER have to change along with the industry to better serve their readership as things evolve. You’ll still be hearing from me from time to time in these pages, just not on a monthly basis anymore.

I’d like to thank those of you who have sent me thoughtful comments in the past about subjects I’ve covered here. I look forward to continuing the dialog in new and different ways in the future.

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