Free Users from Hosting’s Ball & Chain

Residual commissions from Internet
bandwidth and voice continue to decline, despite a steady, if not growing, amount of usage those services experience, prompting telecom agents to look to additional income opportunities. One answer is to sell Web hosting.

A company needs Web hosting when it has too small a staff to oversee its Web site full-time, when it wants to augment that staff without increasing payroll costs or when it does not want to invest in the necessary equipment to host its own Web site. These are the hot areas and agents must make sure to qualify a potential customer, says Mike Mazure, national director of channel sales for the viaVerio Partner Program for Verio, a subsidiary of NTT Communications Corp. For example, the end user has either a Web site with basic information and a contact form or it maintains a more complicated site that facilitates e-commerce and requires secure transactions. “All we really need [agents] to be is good project managers. We supply the engineering and technical expertise,” says Mazure. “Learn enough to be dangerous, then help coordinate the right people to help get the job done.”

Verio offers large commissions for selling Web hosting in an effort to entice agents to sell managed services, which might be outside their comfort zone. “It’s very easy for [agents] to double the amount of commission they would get on an individual T1 sale [by adding managed services],” Mazure says. The company is running a promotion until the end of this year, offering partners an additional 10 percent per month, residually, for any managed services customers they bring to Verio.

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Verio encourages its agents to ‘solution sell.’ That way, an end user funnels several services through Verio and cannot change providers without notice. The approach also gives the end user one, carrier-neutral entity that manages its needs - from Web hosting to VPNs, firewalls and more. Solution selling, for Verio, also means agents do not need to know all the details of a technology; that’s what the company’s sales engineers are for, Mazure says.

Qwest Communications International Inc., too, offers Web hosting through its Qwest Business Partner Program. Laurel Burton, senior product manager for hosting, says the company this year relaunched its managed services offerings “to where we have the ability to monitor and manage over 80 different applications, databases and operating systems.”

Burton says more than 50 percent of its managed service customers tiptoe past operating systems and extend into Web, database or other applications. “What we are seeing is a trend toward outsourcing to a provider like Qwest that can take the routine and mundane services … off the DBA’s (database administrator’s) plate and thereby leave the DBA to do the development of databases,” she says, adding that Qwest also provides comprehensive services.

Qwest operates 10 CyberCenters that centralize monitoring and management. End users may choose to have hosting services provided on their premises or at an alternate site. The company offers only dedicated hosting services.

Burton says putting more than one customer on a load-balancing or firewall device is a trend in the Web hosting and managed services spaces. “That customer now pays less for a management firewall or managed network device because the cost is shared,” she says, predicting the idea will take off during the first quarter of 2005.

The growth of Web hosting, predicted by analysts last year, has come about. Probe Research Inc. forecast the U.S. market would grow approximately 30 percent during 2003, mostly in the fully managed services and shared hosting spaces. “Shared hosting will lend itself well to small businesses needing a basic Web presence; whereas large enterprise and government customers will begin to increase spending on hosting and related managed services as driven by cost issues - staff reductions, decreased capex - as well as increased security and functionality,” the firm wrote in a report.

Meanwhile, Gartner predicts that by 2007, 85 percent of North American Web hosting revenue will come from managed services, dedicated hosting and colocation, with the remaining 15 percent coming from shared hosting.

Web hosting has transformed the industry by encouraging IT managers to let go of the server box, Verio’s Mazure says. “It used to be that IT managers wanted to have their box right there so they could hug it,” he laughs. “But with the advancement in monitoring tools and the ability to manage systems remotely, it doesn’t matter if the server is on the desk or halfway across the country.”


Probe Research Inc.
Qwest Communications International Inc.

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