Technology Selection Steps (Part 3 of 3)

[Laila Q. Deles]

Continuation...

STEP 5: OFF-SHORE DATA CENTER VS LOCAL DATA CENTER

The hosting service is big industry today with a large number of hosting service providers to choose from. There are numerous hosting services that have data centers in the US and other far away countries. There are a few that have data centers here in the Philippines.

There are large off-shore hosting services that are apparently less costly (due to economies of scale). However, there are also compelling advantages in locally hosting mission-critical applications, as listed below:

• Speed: It’s a simple matter of geography. The further the end-user is from the data center, the slower is the speed with which the application will load pages and save transactions.
• Sensible Server maintenance times: Another advantage of being in the same time-zone is that ‘off-peak’ hour (when server maintenance is normally scheduled) of the host coincide with the ‘off-peak’ hours of the end users.
• Touch and Feel: The MFI can actually meet and talk to a local hosting service provider, if something goes wrong. Communication with the offshore host is normally accomplished through impersonal, templated emails or costly, long-distance telephone calls. Also, the offshore service may not be in a position to appreciate local issues and concerns.

STEP 6: SHARED SERVER VS DEDICATED SERVER

Hosting services normally provide two types of server options a) Shared Server and b) Dedicated Server. In the former, a number of sites share the same server. In the latter, dedicated server space is allotted to only one site.

Here again, the issue is one of costs versus benefits. For mission critical applications, a dedicated server environment offers the following advantages:

• Stable Performance: Numerous sites share a single shared-server machine. If a neighboring site experiences extreme traffic demand, other sites on the server are likely to slow down. A dedicated server environment provides a more stable hosting environment. Fixed server-resources are reserved for users and hence not affected by the activity/behavior of other sites hosted under the same roof.
• Data Security: In a dedicated server environment, it is not possible for one account to view/edit the files of any other account.

STEP 7: GENERIC HOSTING VS MANAGED HOSTING

Hosting with a generic hosting service provider that provides hosting services for mission critical web applications has certain benefits like:

• The Service Provider is in the Data Center/Hosting business for quite a while and has the required capabilities and infrastructure
• Offers data security and maximum uptime (normally established data centers offer more than 99% uptime)
• May offer prices that are apparently low

However, generic hosting will have the following implications:

• The MFI still needs to hire experienced systems administrators, data administrators, and a team that also includes software specialists, technical/helpdesk support personnel. From time to time they may still need to hire the services of programmers to customize additional features, reports etc. All this may be a bit too much for Medium to Small MFIs and even those Large MFIs that want to keep their team lean and mean and not get diverted from their core business focus.
• The apparent cost advantage may be negated by hiring the IT team as explained above and also in getting additional customizations etc. done.

Given the above, a Managed Hosting option seems to be a good alternative. In this concept, the Hosting Service Provider develops its data center facilities only for hosting MFI sites. Besides, the Provider also has the full team of microfinance specialists, technology personnel and help-desk team to provide a complete range of services such that the MFI does not need to hire an internal IT team and can outsource all server-side activities. The Managed Hosting provider may follow the ‘telco’ pricing model whereby the initial pre-deployment and deployment services are minimally priced (thus making technology adoption very affordable, even for the Small MFI), provided the MFI agrees to a ‘lock-in’ for the hosting services, which is paid for on a per-borrower-per-year annual recurring basis



(Excerpt from Sumit Bagchi's "Getting IT Right." This document identifies the critical decision points and the pros and cons at each step in the process of ‘getting IT right’.

PART A outlines the Technology Selection Steps that a MFI would logically expect to undergo and PART B examines the Total Cost of Use (TCU) framework that could be used to evaluate various technology options.)