Rackspace - hosting of virtualized systems

Rackspace announced that the company was going to add hosting virtual servers to its list of services for those needing access to a physical server without having to acquire the server, necessary software and hire an IT administrative staff. It will be interesting to learn how successful this offering is.

Here's how Rackspace describes their new offering

Rackspace®, a leading provider of hosted IT services, today announced its virtualization initiative, starting with the enterprise-class support of dedicated virtualized servers. Virtualization is the newest service offering signaling Rackspace’s shift to IT hosting, transforming traditional IT functions into consumable services via the web. As more enterprises transition from purchasing in-house computing assets to leveraging service providers, Rackspace now offers a suite of hosted IT services that are more reliable and provide better value, including virtualization, hosted mail, custom applications, back-end IT and storage.

Rackspace’s virtualization platform, built on VMware’s third-generation virtualization software suite, pushes virtualization to the next level in order to support mission-critical, production systems. Customers using virtualization can gain flexibility and scalability in their infrastructure, as well as simplified infrastructure management with new data protection options and on-demand provisioning. Additionally, server consolidation can be a benefit with the Rackspace virtualization offering.

Why hosting?

In many cases, the core reason organizations consider purchasing services from a hosting company rather than acquiring their own IT resources is cost reduction. While other reasons, such as increasing the organization's IT agility, might be mentioned, cost reduction often is the reason behind the reason.

IT decision-makers have had to deal with conflicting goals and organizational imperatives for the entire history of computing. On the one hand, the organization must reduce its cost structure. On the other, the organization still must be able to:

• Focus on their core value and reduce investment in non-core functions
• Offer better products, services and overall solutions in the face of an ever-competitive market
• Improve customer satisfaction by being more responsive to ever changing customer needs
• Increase revenues by making it easier for customers and partners to do business with the organization
• Providing staff members, customers and partners with the same or better service even though they're always on the go

Typical approaches to IT cost reduction

After an organization has determined what its core value to customers really is, they often ask others to help with the other portions of the IT infrastructure. Here are some typical approaches taken by many organizations.

• Deploy low-cost industry standard systems whenever possible to reduce hardware-related costs.
• Contract with a services provider for system administration, operations and security-related functions.
• Contract with a hosting company to host non-core functions. This allows the organization to treat those functions similarly to the way they treat expenses for telephone service, power and the like.
• Once an organization has become comfortable with the service levels and the responsiveness of their selected hosting company, it may host some of their core functions elsewhere as well.

Will organizations see hosting companies as a safe harbor for their virtual systems?

Although virtual systems have some different characteristics than physical systems, whether an organization feels safe using the services of a hosting company often revolve around the same things. Does the organization feel that its data will be safe? Will the service levels meet their needs? Will the total costs actually be lower than if they take on the burdens of hosting their own systems?

Rackspace clearly believes that its current customers are happy enough with their physical hosting services, that they'll adopt the same sort of service for their virtual systems. I've had the opportunity to speak with several companies who use Rackspace's services. I've yet to hear a complaint about service, support or their cost structure. I suspect that means that these organizations will strongly consider hosting virtual systems there as well.

Would your organization consider hosting virtual servers, business critical or not, using a hosting company, such as Rackspace?