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October, 2001 MANAGING IT |
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CIOs today contract their e-commerce solutions from specialised Web hosting firms. Soon they might outsource telecom services too. By G.B. Kumar With the boom in the Internet usage and in the rush to exploit the new medium with new products and technologies, we find ourselves working in "Internet time". That means it's more important than ever to be first to market with ingenious designs. And both dotcom start-ups and brick-and-mortar incumbents face growing pressure to create innovative, highly differentiated e-commerce solutions. When you are building your e-commerce solution you have two choices: The traditional approach of hiring a dedicated IT staff, or looking for outside help. Today, the second choice, Web hosting, is becoming increasingly attractive. Behind the boom Since it is built on open computing principles, the Internet adds a new dimension to your solutions: choice. You can independently decide everything-from who should build your e-commerce application to who should support your e-commerce infrastructure. You can purchase and manage Web servers in your dedicated data centre, or lease them from a Web hosting company. In fact, the Web's architecture uniquely enables your application to be built without regard to whether you build or lease your Web server.
Web hosting is becoming an increasingly popular choice. According to market research firm IDC, the industry for Web hosting is projected to reach $16 billion (Rs 76,497 crore) by 2003. Companies now offering Web hosting services range from start-ups like Exodus, Digital Island, Qwest to traditional professional services and telecom companies like AT&T, MCI and IBM. The benefits of hosting extend beyond simple staff and capital cost advantages. A hosting centre can provide lower-cost Net backbone access and service-level availability agreements. It can economically make the investment to support redundant network access, backup dial-up access for maintenance and backup battery-based power and industrial fire control. Hosting facilities also provide 24x7 monitoring of all applications. Hosting is also opening up increasingly sophisticated possibilities. It no longer means just managing Web servers. Hosting now includes managed database software and managed e-commerce application servers. In fact, it now provides a complete environment for every type of IT application. The next step is integrating with telecom. Telecom-enabled e-business As corporations moved to e-business the separation between IT and telecom organisations ceased to exist. E-commerce is quickly expanding to become more than just accessing a Web server through a browser. Today, it means a complete customer relationship management (CRM) solution, which includes e-mail, voice mail and synchronised browsing capabilities. This stress on creating an overall telecom solution is shifting the focus of an enterprise from simply converging voice and data for lower costs to complete computer telephony integration. This has fuelled the industry's interest in the emerging "standard" telecom application program interfaces (APIs) like ECTF S.100, Microsoft TAPI, Java, JTAPI or Voice XML. Each API has its merits, but so far no one API dominates. The latest launch has been a new set of telecom application servers providing application integration for open APIs. Dialogic calls this server the computer telephony (CT) server. The CT server manages telephony functions very much like the Web server manages Internet functions. It performs two basic functions: Providing an open API for application control and managing telephony calls, resources and station sets. As a CIO decides how to move to e-business, he should have the flexibility of not only choosing who hosts the IT infrastructure but also who hosts the telecom infrastructure. This is very much like the role Centrex played in traditional public-switched telephone networks, except with the advantage of being built on enterprise technology. With this solution, the CIO is in an ideal position to choose both a vendor and a hosting service provider. Making telecom hosting work A simple business model for pricing and cost of entry are the two most important factors responsible for the success of the Internet. For a consumer, the Internet has a plain structure: A simple client (the browser) connects to a local ISP through a backbone Internet protocol provider, terminating on a Web server data centre. As a residential consumer in the US, you connect to your local ISP and pay about $20 (Rs 940) a month for unlimited low-bandwidth access to the Internet. (You pay about $40 (nearly Rs 2,000) per month for unlimited DSL or cable modem access.) A business contracts high-speed connection to the backbone and pays based on the peak number of bytes per month, anywhere from $500 (Rs 23,500) to $1,000 (Rs 47,000) per peak megabyte per month, depending on total usage. The US model is quickly being adopted around the world. Telecom has similar network architecture, but the business case is very different. Like the Internet, telecom has a simple client (the phone) connected to a local service provider (PTT or LEC), optionally through a long-distance network connecting to a business telecom server (a CT server, PBX, or possibly Centrex solution). Unfortunately, the business case is much more complicated. As a residential consumer in the US, you get service from the local exchange company for between $10 (Rs 470) and $20 (Rs 940) per month depending on your services. Long-distance service can cost between 5 cents and 20 cents per minute, depending on the solution. Businesses must contract with both local service providers and long-distance providers to leverage local calling rates versus long-distance calling rates. Next-generation carriers are leveraging the economics of voice and data convergence and changing this complex telecom model. Voice makes up only a small fraction of the bandwidth becoming available in both backbone networks and at the edge through new fibre, cable and DSL technologies. Voice, however, is still the preferred mechanism for communications. Analysts predict that by 2002 the world will have more than twice as many phones (close to 2 billion wireless and wireline) as PCs. This is driving the convergence of the Web and phones in multiple ways, which will include integrating browsers onto wireless phones through a new technology called Wireless Application Protocol (WAP). Emerging technologies Today, telecom hosting is an infant industry compared to Web hosting. As integration of telecom with e-business matures, a clearer form of telecom hosting must emerge. If the industry interest in open telecom APIs is any indication, this should be coming soon. Next-generation service providers like Level 3 and Qwest are very close to providing a business model to enable a telecom hosting solution. Level 3 modelled its network architecture similar to the Internet solution. It enables telephony applications to control calls in data centres by interacting with their Softswitch services, which are essentially a network version of a CT server. Other network service providers are following similar business models through their networks. Today, many voice portal start-ups are providing integrated Web and telecom services that leverage a close relationship with a telecom provider creating a business model very much like the Web model. As the industry matures, business will drive for a model that allows a choice between owning and hosting without tying the customer to a specific service provider. Like the open Web server, the industry is driving towards an open CT server model to enable this shift. G.B. Kumar, General Manager, Business Programs, Intel Asia Electronics, Bangalore |
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