Originally Publilshed - Feb 2015
I was having a conversation with a very good friend of mine who happens to be the CEO of a small, but successful, Technology Company in MD. He made this statement while we were discussing how to add value to his company.
As someone that has worked in the Managed Hosting business with 3 different organizations over the past 15 years I would say "perhaps".
Compute resources, whether they are real or virtual, storage resources, network components such as firewalls & IDS and many of the other building blocks are indeed commodity. I believe that his opinion was based on these nuts & bolts that comprise a managed hosting environment, and in that way I would agree. I would contend too that the job of the Managed Hosting provider is to make these components and plumbing them together all look effortless. Consequently, from his perspective, it would certainly appear that he could search for Managed Hosting and find 200 companies capable of providing those pieces.
So here's where I would disagree. Saying "Managed hosting is a commodity" is somewhat like saying "I'm moving to the cloud". It's not until you start digging into the details that you realize that managed hosting, like the cloud, is nuanced.
The following are typically reasons to forget "commodity hosting".
Regulations and Compliance
Does your business require you to meet some kind of commercial (PCI/SOX/HIPAA) or Federal Regulations (FISMA) ?
If you answer yes - you have just moved yourself out of the "Commodity business". Why ?
Because auditors are human and have opinions. In my experience no two auditors have exactly the same interpretation of the rules. If you find yourself in this position, a Managed Hosting provider must be able to work with you to tweak processes and technology so that you can pass your audit.
Turn on a dime flexibility
Commodity does not equal the ability for the provider to evolve as you do.
See a huge rise in the number of mobile device connections and need to move servers out from behind a firewall & connect them directly to the internet, all in the space of a weekend ? A good provider will be able to help you pull this off - a commodity player will not.
Want to have the ability to shoot yourself in the foot?
From time to time we have all thought, I must be able to do it better, after all this is MY business right ? I must know what I want and how to get it ?? Believing that you can do it better, you hire a new "network ninja" to take over some management of your own network gear....Against all best practices the ninja makes changes in the middle of the day, breaks your business and you need immediate skilled help to recover ?
As much as they may want to say I told you so, a good, non-commodity managed hosting provider will be willing to help you out and get your business back up and running.
Congratulations, it's Graduation day!
As your business has evolved and grown, you have reached several "graduations". Hiring your first employee, adding your second web server, building your 10th product, making your first million. At some point the needs of your business will force you to graduate from your first commodity hosting provider. When that day comes, celebrate !!!