service and opportunity description.doc.doc

Service and Opportunity DescriptionApplication Infrastructure Provider Services

March 2001

AIP Service and Opportunity Description v1 1 3/30/01

Executive Summary

The Internet has revolutionized the way business operates throughout the world. One of the most significant changes that the Internet has effected is the net-centric delivery of software applications. Businesses of all sizes are beginning to understand the tremendous advantages of purchasing application services rather than application software, triggering a massive influx of players, partners, and platform vendors into the Application Service Provider (ASP) arena. From desktop applications to enterprise resource planning (ERP), an ASP in conjunction with an Application Infrastructure Provider (AIP) now offers these applications from a centralized facility typically an Internet Data Center (IDC), over a wide area network, at affordable prices. Emerging ASPs have created a new paradigm of application services, answering business needs in the areas of time to market, cost management, and competitive differentiation.

It is clear that the ASP market has tremendous business opportunity for Service Providers (SPs), independent software vendors (ISVs), and system integrators (SIs). It represents a chance to increase revenues, flatten cyclical income streams, address new markets, and get closer to customers. The total market opportunity for ASPs is expected to grow from $300 million in 1999 to as much as $25 billion by 2004, according to various independent research firms.

Service providers view ASP offerings as an efficient way to promote valuable services while decreasing dependence on commodity connectivity. Two major entry strategies have presented themselves for SPs who are embracing application-hosting opportunities. One strategy is to wholesale network infrastructure services to ASPs. Since hosted applications follow a network-centric delivery model, ASPs depend on a robust network infrastructure. Many ASPs do not want to build such an infrastructure, and would partner with service providers instead. This wholesale service is known as an application infrastructure provider (AIP) service. An AIP offers end-to-end network and data center services, and in most cases it also offers the configuration and management of hardware and software platforms for application hosting.

The other strategy for service providers is to move up the value chain and offer hosted applications directly to their business customers. Some of the early adopters are building an ASP business via innovative partnerships. The application hosting market is projected by Forrester Research to be worth US $11.3 billion by 2003. Service providers need to act swiftly to capitalize on these lucrative market opportunities.


There are 7 main sections in this document that address the subject of Web Hosting. They are: Service definitionsService overviewMarket and OpportunityCompetitive ServicesNetwork Equipment RequirementsService Offerings References

Considerations

It is important to underscore that this document is part of what can ultimately form a service provider’s Hosting service and solution set. It is our belief that this generic document provides a sound basis from which a service provider specific offering or set of offerings can be tailored.

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Table of Contents

Service Definitions..........................................................................................................................6

1 Application Service Provider/ Application Infrastructure Provider Service Overview.............8

2 Market Size and Opportunity....................................................................................................122.1 Market Drivers...........................................................................................................122.2 Market Size.................................................................................................................132.3 Segmentation..............................................................................................................162.4 Opportunities and Challenges................................................................................19

2.4.1 Service Provider Opportunities.....................................................................................202.4.2 Service Provider Challenges.........................................................................................22

3 Competitive Services..................................................................................................................243.1 Traditional Computing Service Providers...............................................................253.2 Service-Centric Computing Service Providers..................................................253.3 Product-Biased Computing Service Providers..................................................263.4 NSPs.............................................................................................................................263.5 ISPs...............................................................................................................................273.6 Full-Vertical AIPs.....................................................................................................283.7 Collocation-Enabled AIPs......................................................................................283.8 NOC-Centric AIPs....................................................................................................283.9 Prospective Entrants.................................................................................................29

4 Service Offerings by Segment....................................................................................................304.1 AIP Infrastructure..........................................................................................................33

4.1.1 Customer Segment and requirements...........................................................................334.1.2 Customer Benefits........................................................................................................334.1.3 Pricing...........................................................................................................................334.1.4 Positioning....................................................................................................................344.1.5 Market Delivery and Channel Strategy........................................................................34

4.2 Collocation.......................................................................................................................344.2.1 Customer Segments and Requirements........................................................................354.2.2 Customer Benefits........................................................................................................354.2.3 Pricing...........................................................................................................................364.2.4 Positioning....................................................................................................................364.2.5 Market Delivery and Strategy.......................................................................................36

4.3Managed Application Hosting.....................................................................................37


4.3.1 Customer segment and Requirements..........................................................................374.3.2 Customer Benefits........................................................................................................384.3.3 Pricing...........................................................................................................................384.3.4 Positioning....................................................................................................................394.3.5 Market Delivery and Channel Strategy........................................................................39

4.4 Managed Application Services Providers...........................................................404.4.1 Customer segment and Requirements..........................................................................404.4.2 Customer Benefits........................................................................................................414.4.3 Pricing...........................................................................................................................414.4.4 Positioning....................................................................................................................424.4.5 Market Delivery and Channel Strategy........................................................................42

5 Network and Technology Requirements...................................................................................435.1 Access Network.............................................................................................................45

5.1.1 Cisco AS5300 Series Access Server.............................................................................465.1.2 Cisco AS5800 Series Access Server.............................................................................465.1.3 DSL...............................................................................................................................465.1.4 Cable.............................................................................................................................465.1.4 VPN Gateway & Concentrators....................................................................................465.1.4 Access and Infrastructure Routing Platforms...............................................................47

5.2 Shared Infrastructure: Data Center and Backbone Bandwidth......................................485.2.1 Security Products..........................................................................................................505.2.2 Load Balancing & Switches..................................................................................515.2.3 Content Delivery Network Service........................................................................545.2.4 Basic Web Hosting................................................................................................565.2.5 Collocation Services..............................................................................................575.2.6 Advanced/Managed Hosting and Application Infrastructure Provider (AIP) Services 59

6 Reference...............................................................................................................................60


Service Definitions

ASP: An application service provider (ASP) offers networked-based applications to multiple customers from a data center across a wide area network. Typically, the ASP rents the applications services to customers on a monthly basis, and maintains the data center resources and wide-area networks for service delivery. It is responsible for combining related software, hardware, and networking technologies to deliver the application service in lieu of customer ownership and management of these applications. Using a common infrastructure and pool of IT talents, an ASP offers hosted applications to many customers and thus makes business applications much more affordable and more quickly available than an in-house deployment.

AIP: An application infrastructure provider (AIP) offers end-to-end network and data center services, and in most cases it also provides the configuration and management of hardware and software platforms for application hosting to an ASP who is looking to outsource these functions. An ASP can choose to outsource rather than own or build the service infrastructure, but in all cases they will deploy, manage, and enhance net-hosted applications. BLEC: Building Local Exchange Carrier

ISP: An Internet service provider offers network access and applications services.

ISV: Independent software vendor are key to the success of the ASP model, as they write the software that has the functionality customers want to use and because they currently control the relationship with the end users of their software.

HSP (Hosting Service Provider) An HSP will offer the hosting infrastructure services including data center facility bandwidth, network management, and server/operating system platforms to enable the delivery of Web, e-commerce, and software applications from centralized and networked facilities. A hosting provider may choose to offer only some portions of the infrastructure services.

IDC (Internet Data Center) Often used interchangeably with HSP.

NSP: A network service provider offers the network backbone infrastructure and services

Web Hosting: A service, which includes outsourcing the Internet presence and the operation of computer systems, that holds the Web sites. The service usually includes a domain name, support, security and maintenance.

Website Collocation: A service in which customers locate their own computers at the ISP's site.


Applications Hosting: A service, which outsources enterprise, IS functions.

Service integrators are the providers that end-user businesses recognize as ASPs. They bring together services for delivery as complete, managed solutions. They range in sophistication from enterprise ASPs to Internet portals. This category also includes more traditional types of professional services company, such as e-business integrators and full-service providers.

Application providers create the software and applications from which solutions are assembled. This category encompasses the software developers and independent software vendors (ISVs), whose products ASPs and service integrators deliver. The segment also includes providers who host and deliver their own applications as online services.

Access providers take care of the 'last mile' connection that allows users to access the network. This category includes telecom providers and Internet service providers, many of whom bundle access along with a basic suite of hosted applications. It also includes wireless ASPs, who deliver Web content and applications to mobile telecom users.

Infrastructure operators look after the physical backend elements of the network. They include the telecom providers who act as Internet backbone carriers, as well as collocation and hosting providers, who manage Internet data center facilities. Another group in this segment provide utility-style computing resources, such as pay-as-you-go storage services.

Infrastructure service providers make up the software and services layer of the Internet computing infrastructure. They include application and ASP infrastructure providers (AIPs), who operate hosting centers that are specially equipped for application hosting. AIPs often work with infrastructure ASPs, who deliver specific elements of the infrastructure, such as billing and metering, directory services, or payment processing. Management service providers, who specialize in remote management of IT systems, are another fast-growing group in this category.


1 Application Service Provider/ Application Infrastructure Provider Service Overview

The market for ASP Services is exploding. Many Service Providers, Independent Software Vendors, and high-tech players want to get involved. When IDC research revealed the anticipated ASP spending, the figures are astounding. To effectively compete for their business, it is important for Service Providers to understand the special needs of the emerging market.

Today, ASPs are preparing for the customers of tomorrow with heavy investments in operational components and infrastructure. This challenge is further complicated by the ASP's annuity pricing model. Since they collect incremental fees from customers on a monthly basis, it may be difficult for the ASP to make large cash purchases, particularly at this stage of development. Suppliers that target ASPs may want to consider customizing a payment schedule to accommodate their annuity revenue stream.

The business model of the ASP is still in its early evolutionary stages and often finds them at the beginning of the learning curve. ASPs also face the daunting tasks of simultaneously understanding the market, educating the customer, and building awareness. Application Infrastructure Providers are specialized Service Providers who are seeking to partner with or do business with ASPs and can make their offerings stand out from the competition by complementing their products with additional resources. Cooperative marketing, best-practice knowledge sharing, and access to critical existing partnerships are just a few examples of how to appeal to an ASP.


Before we determine what the Market Size and Opportunity is for the AIP market, we must first understand the AIP/ASP models to better comprehend which group performs what tasks? As depicted by the following image, the AIP performs all services at this time except manage the application itself.

Source: Cisco, 2000


Application

Network

AIP “App-infrastructure” Services

Network Transport/Access

Service Level Agreements

Server & Network Security

Data Center Facilities

Server & OS Management

App and Server Monitoring

Managed by ASP

Data Center

App Service and Support AIP ApplicationOSS and BSS Services

An Application Service Provider (AIP) designs, provisions, and manages the infrastructure over which Applications Service Providers (ASP) provide their application services. The infrastructure can include colocation space, hosting services, server hardware, and network infrastructure. See the Web Hosting SOD for more information on these services.

The complexity of the AIP business model poses challenges to service providers who plan to enter this space. Which segment or segments to enter? What service offerings? How far up the service stack to go? What applications to host? Planning to enter the Web and application hosting business is really a three-dimensional exercise, as illustrated in Figure 1.

Figure 1: Entry Decision Dimensions

It is clear that the Application Service Provider market has tremendous business opportunity for Service Providers (SPs), independent software vendors (ISVs), and system integrators (SIs). It


represents a chance to increase revenues, flatten cyclical income streams, address new markets, and get closer to customers.

Service providers view ASP offerings as an efficient way to promote valuable services while decreasing dependence on commodity connectivity. Two major entry strategies have presented themselves for SPs who are embracing application-hosting opportunities. One strategy is to wholesale network infrastructure services to ASPs. Since hosted applications follow a network-centric delivery model, ASPs depend on a robust network infrastructure. Many ASPs do not want to build such an infrastructure, and would partner with service providers instead. This wholesale service is known as an application infrastructure provider (AIP) service. An AIP offers end-to-end network and data center services, and in most cases it also offers the configuration and management of hardware and software platforms for application hosting.

The other strategy for service providers is to move up the value chain and offer hosted applications directly to their business customers. Some of the early adopters are building an ASP business via innovative partnerships. The application hosting market is projected by Forrester Research to be worth US $11.3 billion by 2003. Service providers need to act swiftly to capitalize on these lucrative market opportunities.

One thing worth noting is that the application hosting market is still evolving, and solution requirements can change rapidly. Many analysts (e.g., IDC, Forrester Research, Giga) predict that the trend is moving toward an integrated portfolio of applications and the capability to manage business processes across multiple companies on the net.

If a service provider decides to offer hosted applications, certain other planning tasks need to be completed, such as:

Structuring the license agreement (revenue sharing and sub-licensing)

Determining application implementation and customization requirements

Determining partnership requirements

Designing customer care operation

Developing a sales channel plan


2 Market Size and Opportunity

2.1 Market Drivers

The Internet has become a business tool for growing businesses to streamline business operations, improve customer service and close sales and is the core business infrastructure for many SMB and Dotcoms. It also enables businesses to strengthen their relationships with their customers, partners, suppliers and employees. Several market conditions are driving businesses to outsourcing their application services:

Market Drivers: Time to market requirements Shortage of IT skills Rapidly changing technology offerings Reduce implementation risks Refocus on core competencies

Market Inhibitors: Enforceable service-level agreements Security issues Ownership and control Availability of high inexpensive speed access Concerns about provider viability

Additional market drivers for ASPs to team up with or partner with AIPs is the amount of CAPEX spending that is required to build-out infrastructure and support services. IDC has reported that people represented the greatest operational cost for ASPs. If the amount that ASPs spend on the help desk (8.9% of total operational costs) and the amount they spend on staff (26.2% of total operational costs) is combined, then people-intensive operations represent 35.1% of an ASP's total operational costs. Network and data center costs (including network equipment, network access/connection, data center, and other network costs) totaled 21.4% of total ASP operational costs. The last major expense area for ASPs is related to servers and storage devices. Combined, these two areas represented 13.8% of total ASP operational costs. In 1999, the average ASP server expenditure per customer was $42,542. This number is expected to decrease in 2000, when the average ASP server expenditure per customer is expected to be $31,320. The average storage expenditure in 2000 is estimated to be $3.0 million. Storage expenditures are expected to range from $90,000 to $24 million, with the median storage expenditure in 2000 expected to be $800,000. In 1999 the average ASP storage expenditure per customer was $14,353. This number is expected to decline in 2000 to $6,727 per customer according to IDC.


Source: IDC, 2000

The final major piece of ASP infrastructure is the network equipment. The average expenditure on networking equipment in 1999 was $3.5 million. Network equipment spending in 1999 ranged from $30,000 to $40 million, with a median of $150,000. In 2000, the average network equipment expenditure is expected to rise to $5.6 million, with an expected range from $75,000 to $52 million. The median networking equipment expenditure in 2000 is expected to be $500,000. The average ASP network equipment expenditure per customer was $12,354 in 1999. In 2000, the average ASP storage expenditure per customer is expected to drop to $5,935.

2.2 Market Size

There are more than 600+ Application Service Providers currently in the marketplace today. You can view the various ASPs at http://asp.thelist.com/user.asp where you choose an ASP based upon service(s) and geographic location.

According to Merrill Lynch research projections for the Global market for Internet access and managed networks for Applications Connectivity (estimated revenue contribution from web hosting and ASPs) to increase from $2.2B in 1999 to $30B in 2004, annual growth of 69%. As illustrated by the Exhibit below, the emergence of managed hosters, co-location providers, and ASPs should spark IP and MDN connectivity services over the next five years.


http://asp.thelist.com/user.asp

ISP & MDN Revenue: Access + Applications (Hosting & ASP)$Billions CAGR

1999E 2000E 2001E 2002E 2003E 2004E 04-‘09Applications connectivity

2.2 4.5 8.3 13.6 21.5 30.5 69%

Merrill Lynch Internet Infrastructure 2000

Application hosting services enable the effective distribution of applications across the Internet or a wide area network (WAN). Existing software applications are becoming net-hosted applications by adaptation or via a thin-client technology. Many independent software vendors (ISVs) are also writing applications exclusively for distribution over the Internet. Primary target customers are small to medium-sized businesses for traditional business applications, although enterprise customers may use an application hosting service for e-commerce and time-sensitive projects. The total application hosting market is projected to be worth $11.3 billion by year 2003, based on estimates by Forrester Research. It will be growing at an annual rate of 91 percent. Beyond typical hosting opportunities, service providers may find another market opportunity in application maintenance or server/application colocation. Application maintenance is an outsourced service where the provider manages a customer’s proprietary or packaged application at either the customer's or the provider's location. The applications have been purchased, deployed, and implemented by the customer by the time an outsourcer takes over the management and maintenance functions. As service providers continue to grow their hosting services, their data centers will be increasingly equipped to provide application maintenance services. Hosting service providers can expect to gain a healthy share of the application maintenance market.


The following chart by Morgan Stanley depicts the U.S. Hosting Market into service segments and their forecasted revenue for each of these segments is shown below.

U.S. Total Hosting Revenues By Service TypeU.S. Total Hosting Revenues By Service Type$M

Source: Morgan Stanley, 2000


2.3 Segmentation

Application Infrastructure Providers must be able to extend their network reach and bring service to their end users. As research will show throughout this document the SMB (Small and Medium Business) market today has a higher adoption rate for ASP services than that of the Enterprise Customers, mainly due to the availability of CAPEX and because of the larger enterprises ability to retain and hire a skilled workforce in a troubled financial marketplace.

AIP service providers enable the ASP to offer applications to the masses. Enterprise Resource Planning (ERP) applications such as PeopleSoft, Oracle, and Supply Chain Management Software often cost more than one million dollars, a good deal of customization, and a full year to deploy. With the ASP licensing this software and the AIP being able to deliver and mange the infrastructure in a secure manner, many of the SMB companies will now be able to afford these applications.

As the U.S. economy moves more toward a service economy, we are seeing a proliferation of new service firms. Many of these firms are expected to be adopters of new services such as those offered by ASPs. Research shows that these business services are expected to grow to $562.6 million by 2004. Financial services, banking, and insurance are expected to be significant


spenders in enterprise ASP services as companies in these industries undergo rapid change. IDC Research projects this set of verticals will spend $507.4 million on enterprise ASP services by 2004. Communications and media is expected to reach $351.7 million by the year 2004. Because this vertical includes many of the dotcoms, we find this a natural vertical for ASP growth, given the fact that many of the dotcoms are early adopters. Manufacturing is expected to grow to $326.5 million by 2004, representing a CAGR of 41%. This vertical includes the high-tech manufacturers, many of which are early adopters of ASP services.

Source: IDC, 2000

Research shows that the application hosting revenues for 2003 are projected to be about $4 billion in the U.S. and about 95% of those companies using application-hosting services will be the SMB and dotcoms/start-up companies.

U.S. Apps Hosting Revenue Segmented by Customer TypeU.S. Apps Hosting Revenue Segmented by Customer Type


Source: Current Analysis, 2000

Varying levels of interest in hosted applications by small, medium and enterprise-size businesses provide a broad spectrum of opportunities for service providers in the hosted applications space. Since the revenues in Figure 6 do not include those of desktop, communication, or collaborative applications, revenue potentials for the complete hosted applications market could be even bigger.


2.4 Opportunities and Challenges

The Internet centric software distribution model for ASPs requires the transformation of the current outsourcing model to that of a computing utility or service model which will present AIPs with a variety of unique opportunities and challenges. In developing a viable business, AIPs must consider integrating the core knowledge and intellectual capital that results from the design and planning of infrastructure systems. Not developing this core competency will leave AIPs vulnerable to competitors or integrators, which have this knowledge based upon experience that is key to developing repeatable services that can be leveraged to support large populations of users and provide utility-based offerings.

Partnerships: By either partnering or integrating a distribution infrastructure that involves the last-mile network, AIPs can enable ASPs with a "digital" channel that can support rapid provision of a large base of end users to enable these ASPs to reach profitability quickly. By the same token, by partnering traditional SPs can maintain their core competency of infrastructure management and rely on their partnership to create the end-to-end managed solutions required by the SME businesses customers.

Distribution: Service providers such as BLECs, DLECs, and Cable Companies that want to provide broadband-based network services to end users at the last mile should be target customers to which AIPs could deliver a broad set of applications. As stated earlier, this process will require building a network distribution infrastructure.

Disaster Recovery / Back-up Services: With high availability a core service needed to support the delivery of applications, AIPs can leverage this core infrastructure to provide recovery services to large enterprises, potentially at much lower costs and higher quality. The reason AIPs could achieve a better price/performance capability is the economies of service, scale, and experience they should achieve by managing numerous systems.

Secure Access: A key customer need is the ability to access systems managed by AIPs in an Internet data center. To do this, AIPs will need to provide both remote and mobile access through services such as secure VPNs and wireless technologies.

Economies of scale: By leveraging the centrality of an Internet data center within an extensive network, AIPs can begin to deliver managed services to smaller customers. However, to gain the economies of service, AIPs might need to provide ASP-enabled services.


2.4.1 Service Provider Opportunities

As evidenced by Figure 7, an end user needs Internet access or another type of network connectivity to reach the data center where applications or Web sites are hosted. Internet service providers (ISPs), inter-exchange carriers (IXCs), Incumbent Local Exchange Carriers (ILECs), Competitive Local Exchange Carriers (CLECs), and wireless service providers are all involved in provisioning access or backbone connectivity, which ranges from Internet access to VPN services.


Figure 7: Web and Application Hosting Ecosystem

Many network service providers build data centers, and dedicated data center providers (such as Exodus and Intel) exist as well. Inside the data centers is the networking infrastructure and the server farms where applications and Web sites are hosted. Most data center providers offer Web hosting and are considering offering the infrastructure required for application hosting. In addition, ASPs who will offer hosted applications may own or outsource the service infrastructure to service providers. System integrators (SIs) and value-added resellers (VARs) offer important system integration expertise and are direct channels for an ASP service. In fact, many of them are becoming ASPs. The end-to-end service delivery chain can be compressed into six service building blocks. These six building blocks comprise the business model for Web and application hosting. As Figure 8 shows, the first four layers (network, data center facility, collocation/Web hosting service, and advanced, fully managed hosting services) are services typically offered by a service provider such as an ISP or a data center provider.


The top three layers (application readiness, implementation, and ongoing management), on the other hand, belong primarily in an ASP’s service domain.


2.4.2 Service Provider Challenges

The Service Provider challenges are dependent upon the AIP Service Provider’s level of managed services in the outsource spectrum. The following criteria are primary guidelines to success for an ASP and will lend support to where you are best positioned within a company. Many analysts have suggested best practices for the AIP business:

Must successfully partner, outsource, and manage all the components of the ASP business, as is required by an ASP's complicated business model.

Service Providers must offer an end-to-end SLA covering network, system, and application performance. Such a comprehensive SLA has yet to be developed, but is crucial to guaranteeing performance at a level equivalent to an in-house deployment

Be able to demonstrate a single point of accountability to customers. Delivering this level of accountability to customers includes perfecting customer service and help desk operation, having the ability to issue and resolve a single trouble ticket, and having an understanding of changing customer requirements

Articulate the ASP value proposition. The proposition should focus on:

o Faster application deployment and competitive differentiationo Customer access to state-of-the-art applications and Internet technologyo Reduced total cost of ownership

Effectively manage relationships with ISVs. Objectives are to obtain net-hosted versions of applications, to negotiate a flexible revenue sharing model or software license contract (e.g., sublicensing, annuity payments), and to manage potential ISV channel conflicts (e.g., commission structure, preferential referral when ISV sales force is used)

Balance volume and quality. Economics of the AIP business improve with volume but quality dictates paced deployment and careful execution.

Co-brand with a known provider or partner in terms of ISVs, systems integrators (SIs), and service providers. Such co-branding will provide the ASP with credibility in a nascent industry

Develop innovative sales channels. All segment players in the ASP space, including hardware vendors, ISVs, SIs/VARs, and SPs can be effective sales channels for hosted applications


Balance standardization and customization. An ASP needs to develop standardized templates that cover a discrete and integrated set of business functions. For instance, a rule of thumb is that 80 percent of application implementation should be standardized.

Build basic application implementation expertise. Such expertise should be characterized as the configuration and integration of applications with limited customization.


3 Competitive Services

The AIP marketplace is increasingly intensifying, with new entrants appearing from a wide range of industries and backgrounds. According to IDC this market can be segmented into three primary competitive categories: Service Firms, Network Providers and Application Vendors, with each category comprising several subsegments. Additionally, a growing pool of vendors is not yet part of this market but clearly capable of entering it.


3.1 Traditional Computing Service Providers

A broad set of players from the community of traditional computing service providers has entered the AIP market. By definition, a traditional computing service provider has historically supported the delivery of discrete outsourcing services for client/server and LAN/WAN environments. Companies such as IBM Global Services, HP, SunGard and Comdisco, are entering the market by leveraging core competencies, which, until now, allowed them to remain somewhat at the periphery of the "outsourcing" market.

3.2 Service-Centric Computing Service Providers Traditional computing service providers, such as EDS and CSC have started providing managed services, or what is more commonly referred to by vendors such as these as managed operations (outsourcing) services, by leveraging their existing data center infrastructures or through internal expansion of these environments. As for the latter strategy, CSC announced early in 2000 that it was launching a new Web hosting service for customers that require custom-architected services or dedicated processors for their applications. Some core advantages both EDS and CSC bring to the AIP market is their product-agnostic service model; ability to deliver an end-to-end service that includes managing core systems, applications, and servers; and supporting end-user needs at the last mile with desktop and desktop-like support. CSC has developed a data center infrastructure that includes four major centers; EDS has developed a much more robust set of data centers that covers a broader geographic reach.

Other traditional computing service providers that have entered this market include Comdisco and SunGard. Widely known for their recovery service capabilities, these vendors have begun offering Web-based managed hosting services. The unique characteristic of both these vendors is their ability to leverage their own data center infrastructures, which are fairly robust and similar in nature to the emerging AIP service model.

In providing recovery services, each of these vendors has developed not only the physical data center infrastructure but also the core knowledge and many of the skill sets to support the design, building, and operations of IT and network systems needed to deliver managed services. They also have the ability to provide the necessary continuity-based services, such as recovery and high availability, to meet customer concern over uptime. In addition, the strengths of both these vendors include their ability to work with more complex application environments such as ERP packages. It is these competencies that should support delivering on near-100% SLAs and managing almost any type and size of application package.

When it comes to geographic reach, Comdisco has a fairly extensive footprint, primarily across the United States and in Europe; SunGard has maintained a presence in the United States only. For both vendors, the need to be more global requires an expansion strategy.


One feature that is common to all these vendors is their ownership and management of a data center infrastructure. This infrastructure should enable these AIPs to control, to a greater extent, the quality of service and SLA requirements.

3.3 Product-Biased Computing Service Providers

Of the product-biased computing service providers, IBM Global Services has developed the most extensive set of service offerings in the AIP space. Core to its delivering these services is to use not only its own existing data center infrastructure, estimated at about 80, but also to leverage Internet data centers through partnerships with key telecommunications vendors and NSPs around the world. Examples of these partnerships include building and managing Internet data centers with Qwest in the United States and KPNQwest in Europe (total of 46) and Telefonica Italia in Italy (10), as well as leveraging collocation space with service providers such as AT&T (several hundred thousand square feet in about five centers) and Equinix. HP's strategy includes developing data center environments in several countries and key relationships with NSPs while providing services and hardware to support delivery of managed services.

For IBM, providing managed services has been part of its core competency for quite some time. In addition, the company has tremendous global reach and a large service organization to support a broad set of customer vertical needs, particularly around key application environments. HP, however, does not have such an extensive service capability, but it has a history of providing many similar IT outsourcing services.

A key issue for all three of these service providers will be the ability to deliver a set of AIP computing utility services in the future. The impediment lies with the product-biased nature of their businesses. Such a bias could prevent these vendors from accessing the best technologies needed to deliver the highest quality of service. Just imagine one of these vendors having to substitute its own products with that of another technology company, whose systems are superior and can meet the SLA requirements of customers.

3.4 NSPs

Of the three major interexchange carriers (IXCs), WorldCom is increasing its ability to provide managed services with its acquisition of DIGEX. AT&T, through its own Internet data centers and through partnerships with companies such as HP, is attempting to move increasingly into the AIP market by delivering higher-value-added managed services. In its recent move to merge its Enterprise Network Service business with its Internet service arm, Sprint appears to be shifting toward providing managed services as an AIP. Also using acquisitions to extend its


telecommunications competencies into the AIP market is MFN-AboveNet with its recent acquisition of SiteSmith.

Other NSPs extending their capabilities into the AIP market range from incumbent local exchange carriers (ILECs) such as SBC and competitive local exchange carriers (CLECs) such as IXC with its Broadwing division. Both these vendors are adding Internet data center capacity and managed service capabilities. Although not as well known for providing managed operations services for IT environments, Level 3's outsourcing division, known as (i)Structure, is making a foray into the AIP market by leveraging its history in providing mainframe and distributed server support services.

The strength these players bring to this market lies in two core areas. First is the ability to provide a digital distribution infrastructure, the network, that can ultimately reach large populations of users and support last-mile customer needs. Second is a core competency in providing rapid provisioning and customer care and billing services that a utility-based AIP will need to compete in this market. These skills have been developed from implementing OSS and BSS services to support customer service requests.

However, and as stated previously, these providers' inability to demonstrate a strong capability in delivering IT managed services will hamper them in moving up the value chain of AIP services. Even though vendors such as WorldCom and AboveNet are attempting to do this through acquisition, the culture needed to advance these companies in this area could require dramatic shifts in their business processes and leadership choices.

3.5 ISPs Two prominent ISPs that are attempting to deliver AIP offerings are PSINet and Genuity. Through its acquisition of Metamor in early 2000, PSINet gained some core capabilities, although limited, in providing needed design and building services for IT environments, particularly ERP packages. However, with the company's current financial position, much remains in question as to its ability to leverage these competencies.

Genuity has extended its hosting capabilities to include more professional managed services with the launch of its new service program, Black Rocket. The ability to provide an IP-based infrastructure should bode well for ISPs such as these as an increasing number of applications are built for Web-based infrastructures, including more complex applications such as ERP packages provided by ISVs such as J.D. Edwards.


3.6 Full-Vertical AIPs

Vendors classified as full-vertical AIPs include such players as Intira, InterLan Technologies, Exodus Communications, Rackspace Managed Services, and Intel. All these vendors own their Internet data centers. Key differences involve the degree of fully managed or utility-based services being offered. Exodus is just beginning to move into providing more fully managed services; vendors such as Rackspace Managed Services have developed more robust models.

Vendors such as Intira and InterLan Technologies own their entire infrastructures, they manage the facilities and own the hardware and software equipment needed to deliver applications and capacity. Whereas Intira is targeting larger businesses, InterLan Technologies is attempting to win market share among smaller businesses with less than $100 million via such services as server and storage on demand.

3.7 Collocation-Enabled AIPs

Collocation-enabled AIPs are leveraging collocation to provide customers with managed services in supporting their network and IT systems. This is by far the largest set of emerging AIPs. The strategy of these players is to focus on investing in the development of a core competency in IT and the necessary infrastructure to support delivery of these services.

As a tactical part of providing such services, this approach alleviates these vendors from having to raise the large sums of capital to build Internet data centers, a cost in the tens of millions of dollars, as well as managing them.

The number of vendors in this space is continuously growing, AIPs such LoudCloud, Cat Technology, Telenisus, Certainty Solutions, SevenSpace, Totality, StrataSource, Data Return, XUMA, LogicTier, SevenSpace, and Logical. A core characteristic of these vendors is a strong focus, if not sole focus, on providing Web-based application services for Web sites or e-commerce sites.

3.8 NOC-Centric AIPs One set of players emerging as part of the AIP market landscape includes NOC-centric AIPs. These vendors are focusing on providing core monitoring services that become the "eyes and ears" needed to support maintaining customer systems. Services provided by these NOC-centric AIPs do not include the design and building of these systems. NOC-centric vendors include NOCPulse, Genosys Technology Management, siteROCK, SiteLite, and GuideComm Systems.


Some of these players, such as siteROCK, provide monitoring services based on the customer's management systems (for example, HP OpenView, Tivoli), but others are introducing the telecommunications OSS approach to providing more robust monitoring capabilities. These players include NOCPulse, Genosys Technology Management, and GuideComm Systems. The strength of this latter group is the ability to support a computing utility service and help streamline the service infrastructure. Although this service model is an absolute necessity in delivering managed services, the value proposition appears to be too narrow to support customer need for a SPOC for a fully managed environment.

3.9 Prospective Entrants

Prospective entrants include pure-play collocation vendors that want to simply rent space and provide bandwidth, such as 360Networks, Inflow, Teleplace, and Globix, as well as vendors providing a pure carrier-hotel service to support the networking needs of telecommunications vendors. Vendors in this market include InterNap/Colo.com, Equinix, and Switch & Data Facilities. Vendors outside the United States that could enter the AIP market include European collocation vendors such as Digiplex and GTS and Asian vendors such as iAsiaWorks, iAdvantage, and DataOne.


4 Service Offerings by Segment

There is a spectrum of outsource features a AIP can provide in a ASP or Web hosting service, including connectivity, hardware management, security, network management, and performance reporting. By incorporating into your architecture content replication and load balancing features, you will be able to offer high-availability, high performance sites. Consider:

Load balanced sites are necessary for sites since bad response times means a reduction in return visitors

Optimized applications and server availability to users Localized traffic means less backbone capacity required by the ISP Content replication and load balancing are crucial for global site management and

performance Eventually, mirroring also will enable content providers to incorporate local languages and to

increase advertising banner usage by selling to local advertisers Premium fees are chargeable


In the spectrum of Hosting services solutions, some are more suited for different types of customer segments. Below is a summary and how AIPs service the sectors and which they service:

Services by Customer Matrix


One of the key requirements for ASPs and their customers is SLAs. Service providers can only offer end-user performance guarantees if they take on overall responsibility for managing the following:

Application layer, comprised of standard, integrated components (e.g., Web servers, application servers, directory servers, database servers)

Systems layer, comprised of hardware (e.g., servers, storage, switches, firewalls, routers)

Network layer, primarily managing relationships with multiple ISPs

Of these three tiers of AIP services (application, systems, network), the most unpredictable is the network tier, due to the inability of any one provider to control the Internet. Currently, most providers only guarantee network performance and availability up to their border routers — the demarcation line for the element of the Internet that they directly control. Carriers will increasingly focus on offering end-to-end guarantees for hosting customers to their on-net users, although the maturity of the access technology (e.g., leased line vs. DSL) will play some role in the level of guarantees extended by the network operator. Non facilities-based operations providers are increasingly multi-homing sites under their management, allowing them to route traffic over the best-performing network, typically by setting up virtual data centers in facilities-neutral switching environments (e.g., Equinix, Colo.com, Switch and Data) or negotiating special arrangements with facilities-based providers (e.g., Exodus, AT&T, Level 3).

SPs Focus on End-User SLAs That Include Multiple LayersSPs Focus on End-User SLAs That Include Multiple Layers


4.1 AIP Infrastructure

Basic service: Offers end-to-end network management Bandwidth and potential secondary storage System monitoring 24x7 support and security Disaster recovery Transfer limits (volume of traffic in GB, incremental charges for overage) Reporting and remote admin tools

Value add: Virtual collocation or alternate colocation facilities Secure transactions

4.1.1 Customer Segment and requirements

The primary target is:Small business who ASPs who can manage and maintain their own footprint, hardware, and applications Are price sensitive Desire minimal complexity, desire packaged solutions

4.1.2 Customer Benefits

Improved service availability Web presence at an economical price Fast implementation

4.1.3 Pricing

AIP generally charge for their services based on the bandwidth and storage space made available to a customer. Pricing is based upon services chosen on the following charts plus cost of IP bandwidth, firewall / security support, and remote access cost structure from dial, broadband, dedicated facilities.


4.1.4 Positioning

Basic web hosting sites are primed to become E-Commerce enabled. Your solutions offer the cornerstone for E-commerce sites: reliability, availability, and scalability.

Your vertical integration, application expertise, and customer support are just a few example dimensions for differentiation.

4.1.5 Market Delivery and Channel Strategy

Bundle with transport services Sell through ISVs and VARs

4.2 Collocation

Collocation-enabled AIPs are leveraging collocation to provide customers with managed services in supporting their network and IT systems. This is by far the largest set of emerging AIPs. The strategy of these players is to focus on investing in the development of a core competency in IT and the necessary infrastructure to support delivery of these services.

As a tactical part of providing such services, this approach alleviates these vendors from having to raise the large sums of capital to build Internet data centers, a cost in the tens of millions of dollars, as well as managing them.

Customer provides server, OS, and applications management. Your service should provide: Space Internet bandwidth Racks, cages, physical security 24x7 support and security Backup Power Network redundancy Network and server monitoring Multiple private peering Remote administrative tools Disaster recovery

Value Add Services: Tape back up


Bandwidth on demand Storage or back-up storage

4.2.1 Customer Segments and Requirements

The primary targets are: Enterprise ASPs and Dotcoms ISPs who are expanding into new markets Steaming and Content Delivery Providers Storage Service Providers

These customer segments are typically: IT Savvy Want to maintain control of applications, but recognize the value of outsourced

bandwidth management and security of physical space Reluctant or cash conscious and cannot afford to build out Internet Data Centers Other AIPs or HSPs who need to expand hosting space quickly

Their Internet demands are typically: Highly available Traffic scaling Security Predictable response

ASP services must be offered in a highly available, scalable, and secure fashion. Availability is generally measured as a percentage of service uptime—usually above 99 percent. Scalability is measured in terms of the ability to not only grow to meet demands, but to also accommodate dynamic “flash crowds,” provide adequate response times to meet user expectations, and support continuous deployment of new managed services in a non-disruptive fashion. Finally, providing a secure service enables safe business transactions for customers and protected content. A satisfying end-user experience is key for successful hosting services. If response times are long or if the user experiences errors or transaction failures, the user will simply move to another site where service is better and his expectations will be met.


Reliability of network Scalability of bandwidth Secure environment


Cost savings on physical environment Quick access to new geography

4.2.3 Pricing

Application Infrastructure Providers generally charge for their services based on the bandwidth and storage space made available to a customer. Collocation service providers typically apply charges for rack space leased by customers and offer Internet access, and will often bundle these services in an attractive packaged solution. According to the Yankee Group collocation Service Providers on average derive monthly revenue of $50 per square foot for basic Telco collocation space. In contrast monthly revenues for hosting collocation revenues average $3,000 per square foot and complex managed hosting collocation monthly revenue averages $10,000 per square foot or more.

The following websites offer an excellent resource for colocation news, pricing, and locations.http://www.colosource.com/

http://www.band-x.com

The CCMI Telview site offers a tariff library, where AIPs can get most of the CO colocation rates. The site requires a userid and password. Contacts are [email protected] or 888-ASK-CCMI.http://www.telview.com/html/login.html

4.2.4 Positioning

By deploying a Content Delivery Network (CDN)within your SP network, you can provide accelerated performance and response times for Web and E-commerce applications. For SPs who interconnect their collocation centers with other carrier hotels in a Metropolitan Area Network ring you could offer enhanced services via a virtual collocation service. Your services provide for scalability, reliability and security necessary for critical applications.

4.2.5 Market Delivery and Strategy

Joint marketing with ASPs, SIs and VARs Bundle with transport - direct sales


http://www.telview.com/html/login.html

http://www.band-x.com/

http://www.colosource.com/

4.3Managed Application Hosting

Fully managed solution including everything but the application management Managed server OS Web software, configuration and management Network management 24x7 system monitoring and support Remote monitoring Storage and backup Security

Value -Add Services Service support for ASPs Back-end network integration Site design Fault tolerance through load balancing Predictable response through web caching Premium service through cookie-switching

4.3.1 Customer segment and Requirements

The primary target segments include: EnterpriseMedium DotcomsASPsTier 2 & 3 ISPs looking to expand portfolio

Who Are in fast growth mode Have increasingly complex Web requirements Have limited or stretched IT experience Need may need to tie-in back office integration in order to expand opportunities

Internet Application demands: Highly available Traffic scaling Security Predictable response

E-commerce services must be offered in a highly available, scalable, and secure fashion. Availability is generally measured as a percentage of service uptime—usually above 99 percent.


Scalability is measured in terms of the ability to not only grow to meet demands, but to also accommodate dynamic “flash crowds,” provide adequate response times to meet user expectations, and support continuous deployment of new managed services in a non-disruptive fashion. Finally, providing a secure service enables safe business transactions for customers and protected content. A satisfying end-user experience is key for successful hosting services. If response times are long or if the user experiences errors or transaction failures, the user will simply move to another site where service is better and his expectations will be met.



Rapid scalability Reliability E-Commerce and other state-of-the-art applications deployed in a timely manner Managed complex network and security requirements Managed Web performance and network bandwidth Controlled costs Quick response times on content delivery

4.3.3 Pricing

Application hosting service providers generally charge for their services based on the bandwidth and storage space made available to a customer. AIP typically apply additional charges for rack space leased by customers. Similarly, advanced hosting providers would set higher fees for hardware integration and complete system management.

Select Application Infrastructure Provider Managed Service Package Monthly Pricing

Degree of Uptime (%)

Number of Servers Used for Basic Configuration*

Monthly Per-Server Price Range ($)

98.0 2 2,500-3,000

98.5 3 Upward of 8,000

99.0 4 2,750-3,000

99.5 6 2,900-8,500

99.9 8 3,000-3,500

* Includes database and Web servers Source: IDC, 2000

The degree of uplift, as defined by an increase in price, between levels of service changes dramatically when providing a more robust SLA. From 98.0% to 99.0% uptime, the uplift registers about 120%. However, to achieve 99.5% uptime, the uplift from 98.0% rises dramatically to nearly 300% and to almost 400% to support an SLA of 99.9%.

Infrastructure Provider Device Monitoring Service Pricing

Monitoring Service Pricing Methodology Range of Prices ($)*

Web servers Per server 150-625


Load balancing Per unit 1,500-3,000

Database Per database 500-1,500

Network Per network device 100-150

Managed firewall Per firewall device 2,500-5,000

* Basic to premium services Source: IDC, 2000

4.3.4 Positioning

By deploying an AIP network, you can provide accelerated performance and response times for ASP, Web, and E-commerce applications. Your services provide for scalability, reliability, security and availability necessary for critical applications.

Your vertical integration, application expertise, and customer support are just a few example dimensions for differentiation


Direct SalesJoint marketing with ISVsJoint marketing with SIs

4.4Managed Application Services Providers

Fully managed solution including everything including the application management Application configuration and management Managed server OS Web software, configuration and management Network management 24x7 system monitoring and support Remote monitoring Storage and backup Security

Value -Add Services


Service support for BLECs, ISPs who wish to offer ASP services Back-end network integration Full OSS & BSS Site design Fault tolerance through load balancing Predictable response through web caching Premium service through cookie-switching

4.4.1 Customer segment and Requirements

The primary target segments include: EnterpriseMedium SMBDotcomsISVsTier 2 & 3 ISPs looking to expand portfolio

Who Are in fast growth mode Have increasingly complex Web requirements Have limited or stretched IT experience Need may need to tie-in back office integration in order to expand opportunities

Internet Application demands: Highly available Traffic scaling Security Predictable responseApplications like e-commerce services must be offered in a highly available, scalable, and secure fashion. Availability is generally measured as a percentage of service uptime—usually above 99 percent. Scalability is measured in terms of the ability to not only grow to meet demands, but to also accommodate dynamic “flash crowds,” provide adequate response times to meet user expectations, and support continuous deployment of new managed services in a non-disruptive fashion. Finally, providing a secure service enables safe business transactions for customers and protected content. A satisfying end-user experience is key for successful hosting services. If response times are long or if the user experiences errors or transaction failures, the user will simply move to another site where service is better and his expectations will be met.



Rapid scalability Reliability E-Commerce and other state-of-the-art applications deployed in a timely manner Managed complex network and security requirements Managed Web performance and network bandwidth Controlled costs Quick response times on content delivery

4.4.3 Pricing

Application hosting service providers generally charge for their services based on the bandwidth and storage space made available to a customer. AIP typically apply additional charges for rack space leased by customers. Similarly, advanced hosting providers would set higher fees for hardware integration and complete system and application management.

Select Application Infrastructure Provider Managed Service Package Monthly Pricing

Degree of Uptime (%)

Number of Servers Used for Basic Configuration*

Monthly Per-Server Price Range ($)

98.0 2 2,500-3,000

98.5 3 Upward of 8,000

99.0 4 2,750-3,000

99.5 6 2,900-8,500

99.9 8 3,000-3,500

* Includes database and Web servers Source: IDC, 2000

The degree of uplift, as defined by an increase in price, between levels of service changes dramatically when providing a more robust SLA. From 98.0% to 99.0% uptime, the uplift registers about 120%. However, to achieve 99.5% uptime, the uplift from 98.0% rises dramatically to nearly 300% and to almost 400% to support an SLA of 99.9%.

Infrastructure Provider Device Monitoring Service Pricing

Monitoring Service Pricing Methodology Range of Prices ($)*

Web servers Per server 150-625

Load balancing Per unit 1,500-3,000

Database Per database 500-1,500

Network Per network device 100-150


Managed firewall Per firewall device 2,500-5,000

* Basic to premium services Source: IDC, 2000

4.4.4 Positioning

By deploying an AIP network, you can provide accelerated performance and response times for ASP, Web, and E-commerce applications. Your services provide for scalability, reliability, security and availability necessary for critical applications.

Your vertical integration, application expertise, and customer support are just a few example dimensions for differentiation


Direct SalesJoint marketing with ISVsJoint marketing with SIs


5 Network and Technology Requirements

Network requirements for Service Providers varies depending upon their level of expertise and partnerships, and whether or not they prefer supporting just the infrastructure (AIP) or completely manage the application (ASP). Various industry players are involved in the provisioning of Web and application hosting services. Figure 7 presents the hosting service ecosystem---an end-to-end service delivery chain representing a multitude of service providers.

Figure 7: Web and Application Hosting Ecosystem

AIP Model 1: SP owns all networking and server equipment

AIP Model 2: SP owns up to the green line


Distribution Layer Application Access Layer

To Core Backbone /Internet Back End

Back-End Access Layer

PIX Firewalls provide stateful inspection of all traffic and allow stateful failover for high

availability

LocalDirector providing “SSL Sticky” SLB support for protected e-commerce activity

Cisco Secure Intrusion Detection System (CSIDS) Sensor (aka NetRanger) provides real-time monitoring of external

network traffic and provides initial alert to potential attacks or malicious activity.

Internal CSIDS Sensors provide real-time monitoring of internal network

traffic to provide alerts of attacks that have made it past the firewalls.

Application Servers

Database Servers

Database Backup Services

Secured Customer access for content

management

Bank\Credit Card Services

Veritas Network Backup

Compatible Systems Intraport series and IPSec client software

As evidenced by Figure 7, an end user needs Internet access or another type of network connectivity to reach the data center where Web sites or applications are hosted. Internet service providers (ISPs), inter-exchange carriers (IXCs), Incumbent Local Exchange Carriers (ILECs), Competitive Local Exchange Carriers (CLECs), and wireless service providers are all involved in provisioning access or backbone connectivity, which ranges from Internet access to VPN services.

Many network service providers build data centers, and dedicated data center providers (such as Exodus and Intel) exist as well. Inside the data centers is the networking infrastructure and the server farms where applications and Web sites are hosted. Most data center providers offer Web hosting and are considering offering the infrastructure required for application hosting. In addition, ASPs who will offer hosted applications may own or outsource the service infrastructure to service providers.

System integrators (SIs) and value-added resellers (VARs) offer important system integration expertise and are direct channels for an ASP service. In fact, many of them are becoming ASPs.


5.1 Access NetworkDial, DSL, wireless, cable, or leased-line configurations are primarily used to access the Web. See companion service catalogs for information on the access mechanisms. Businesses that are running large Web sites or e-commerce applications frequently connect directly with their Web site in the service provider's data center using a leased line for access or maintenance. For application hosting, a VPN becomes a very important access network option since internal business applications are generally restricted to authorized employees. Aside from a leased line or Frame Relay, a VPN is the most secure access option offering high performance---and it is much more cost-effective. Wireless access is also becoming popular as an option to mobile professionals and traveling sales and field personnel.


Secured customer access for content

management

Database Backup Services

Internet

Web Access Layer

Application Servers

Database Servers

Web Servers

Credit Card Services

ASP ASP

AIP

5.1.1 Cisco AS5300 Series Access Server

The AS5300 raises the bar for performance in high-traffic, real world environments by providing the ability to terminate ISDN and 56K Analog Modem calls on the same interface. The Cisco AS5300 delivers near line-speed performance for as many as 240h concurrent analog modem calls and ISDN B channels over a single dial-in telephone number. It incorporates high-performance, reduced instruction set computing (RISC)-based processing with high-density Modem ISDN Channel Aggregation (MICA™) technologies.

More information about the Cisco AS5300 Series Access Server

5.1.2 Cisco AS5800 Series Access Server

The Cisco AS5800 is part of the AS5x00 family of universal access servers, providing the highest concentration of modem and integrated services digital network (ISDN) terminations available in a single remote access concentrator product. The AS5800 is specifically designed to meet the demands of large service providers such as Post, Telephone, and Telegraphs (PTTs), Regional Bell Operating Companies (RBOCs), Inter-Exchange Carriers (IXCs), and large Internet service providers (ISPs).

More information about the Cisco AS5800 Series Access Server

5.1.3 DSL

For detailed information regarding Cisco DSL Access Products please refer to the Cisco JOLT Service Opportunity Descriptions for DSL.

5.1.4 Cable

For detailed information regarding Cisco Cable Access Products please refer to the Cisco JOLT Service Opportunity Descriptions for DSL.

5.1.4 VPN Gateway & Concentrators

For detailed information on VPNs, VPN Gateways and Gateways please refer to the Cisco JOLT Service Opportunity Descriptions for VPN and Remote Access VPNs.


http://www.cisco.com/warp/public/cc/pd/as/as5800/index.shtml

http://www.cisco.com/warp/public/cc/pd/as/as5300/index.shtml

5.1.4 Access and Infrastructure Routing Platforms

5.1.4.1 Cisco 1700

The Cisco 1700 modular access router provides complete flexibility to select the WAN services that suit customers' current and future access requirements. Driven by a powerful RISC architecture and Cisco IOS software, the Cisco 1700 has the features and performance to support secure data access and deployment of new WAN services, including Virtual Private Networks (VPNs) and broadband services, now or in the future. The Cisco 1700 also offers optional integrated firewall, DSU/CSU, NT-1 for ISDN, VPN tunnel server, and other network services functions that simplify deployment and management tasks.

Additional information regarding the 1700 series can be obtained from the following link: http://www.cisco.com/warp/public/cc/pd/rt/1700

5.1.4.2 Cisco 2600

The Cisco 2600 Router is a modular access router designed to support a wide range of local area network (LAN) and wide area network (WAN) requirements. The 2600 is equipped with a Motorola MPC860 40 MHz processor and may have the following components configured for the service provider’s VPDN service offering.

Cisco IOS IP Plus Feature Set One 10BaseT Ethernet module for the LAN One WAN interface supporting 64 Kbps to 2 Mbps data rate

The Cisco 2600 router is designed to support access for a maximum of approximately 124 concurrent remote users.


5.1.4.3 Cisco 3600

The Cisco 3600 Router is a modular router designed to support a wide range of local area network (LAN) and wide area network (WAN) requirements. The 3620 come equipped with an 80 MHz IDT R4700 RISC processor. The 3640 come equipped with a 100 MHz IDT R4700 RISC processor. The 3600 will have the following standard components configured for the Access VPN Service offering.

Cisco IOS IP Plus Feature Set One 10BaseT Ethernet module for the LAN


http://www.cisco.com/warp/public/cc/pd/rt/2600


Up to two (2) WAN interfaces supporting 2 Mbps to 4 Mbps data rateThe Cisco 3600 router is designed to support access for a maximum of 250 concurrent remote users.


5.1.4.4 Cisco 7100

The Cisco 7100 Series VPN Router is a full-featured, high-end, integrated VPN solution melding high-speed, industry leading routing with a comprehensive suite of VPN services. The Cisco 7100 Series VPN Router integrates key features of VPNs-tunneling, data encryption, security, firewall, advanced bandwidth management, and service level validation-to provide secure, scalable VPN platforms to better and more cost-effectively accommodate remote-access, remote-office, and extranet connectivity using public data services. The Cisco 7100 Series VPN Router offers specific hardware configurations optimized for VPN applications and network topologies. Embedded WAN and Fast Ethernet interfaces combined with high-performance routing and rich VPN services provide turnkey VPN routing solutions. Additional information regarding the 7100 series can be obtained from the following link: http://www.cisco.com/warp/public/cc/pd/rt/7100

5.1.4.5 Cisco 12000 Series Gigabit Switch Routers

The Cisco 12000 series Gigabit Switch Router (GSR) is the premier routing product family from Cisco Systems designed and developed for the core of service provider and enterprise IP backbones. The GSR family includes three models: the Cisco 12008, Cisco 12012, and Cisco 12016.

The Cisco 12000 series products are architected to meet the bandwidth, performance, services, and reliability requirements of today's IP core backbones. Additional information regarding the 12000 series can be obtained from the following link: http://www.cisco.com/warp/public/cc/pd/rt/12000

5.2 Shared Infrastructure: Data Center and Backbone Bandwidth

A secure physical facility with 24x7 customer support, backup power, hardware and software infrastructure, and the data center is the home of hosting services. Sometimes referred to as "Internet data centers," data centers for Web or application hosting services are connected to the Internet, to ISPs, and to other affiliated data centers with a large backbone infrastructure. Backbone bandwidth, either self-provisioned or leased, is necessary to offer customers





guaranteed bandwidth, or bandwidth on demand in the distribution of Web content and applications. Efficient management of a backbone infrastructure capable of reliable content delivery is necessary for a hosting service provider.

Inside the data center, a variety of networking requirements must be fulfilled to successfully offer hosting services. These networking requirements are based not only on existing Internet networking technologies, but also on "content networking" technologies.

Security (both authentication and intrusion detection) is a major requirement for successful content networking---so are caching and load-balancing functions. Cache engines store frequently requested content to reduce the traffic load on Web servers, and load-balancing equipment balances the workload across a number of servers to achieve the best performance and response time. Geographic load balancing is performed at the backbone level in order to direct traffic to data centers in different locations. A graphic illustration of these content-networking functions can be found at http://www.cisco.com/go/hosting.


SiSi SiSi

Customer1

Customer2

Customer3

Customer4

Provider Core

Cisco Multi-serviceRouters

Cisco Catalyst Multi-layerGigabit Switch

Cisco Router w/ IOSFirewall Feature Set

Cisco Router w/ IOSFirewall Feature Set

Cisco Catalyst Multi-layerGigabit Switch

Cisco LocalDirectorIP Load Balancing

http://www.cisco.com/go/hosting

5.2.1 Security Products

Security is a key building block for an application hosting service. Requirements to ensure customer confidentiality and content integrity include:

Fast, secure processing of connection requests

Denial-of-service protection

High-performance firewalling and stateful perimeter security

Redundant, stateful fail-over of security components

Real-time, wire-speed intrusion detection system (IDS) and alarming

Dynamic reconfiguration of network infrastructure in response to threats Cisco offers several solutions to meet Internet service provider (ISP) security needs, including firewall, IDS, and private virtual LANs (VLANs). Figure 11 illustrates the positioning of the Cisco Secure PIX Firewall and IDS.

Figure 11: Cisco Security Solutions

5.2.1.1 Cisco Secure PIX Firewall

The Cisco Secure PIX Firewall, the market-leading firewall solution, offers the highest performance with unbeaten security. The PIX Firewall provides up to 250,000 connections at 240 Mbps and is Network Supported Accounts (NSA) and Trust Technology Assessment Program (TTAP) certified. This firewall features integrated appliance packaging, stateful fail-over to guarantee availability, and IP Security (IPSec)-based secure remote management.

Additional information regarding the PIX series can be obtained from the following link: http://www.cisco.com/warp/public/cc/pd/fw/sqfw500


http://www.cisco.com/warp/public/cc/pd/fw/sqfw500

5.2.1.2 Cisco Secure Intrusion Detection System (formerly NetRanger)

The Cisco Secure Intrusion Detection System, formerly the Cisco NetRanger® system, provides real-time intrusion detection through the passive promiscuous monitoring of network segments, routers, firewalls, or Catalyst switch ports. It has active TCP resets and access-control-lists (ACL) modification to respond to attacks. The Cisco Secure Intrusion Detection System is scalable and remotely manageable.

Additional information regarding the PIX series can be obtained from the following link: http://www.cisco.com/warp/public/cc/pd/sqsw/sqidsz/index.shtml

5.2.1.3 Cisco Secure Integrated Software

Cisco Secure Integrated Software (formerly the Cisco IOS Firewall Feature Set) is a full-featured firewall that provides integrated security on Cisco IOS platforms. It features active in-line intrusion detection and denial-of-service protection. Delivering strong security at low cost, Cisco Secure Integrated Software uses a service provider's investment in Cisco infrastructure to advantage.

Additional information regarding the Cisco IOS Software features can be obtained from the following link: http://www.cisco.com/warp/public/732/net_foundation/security.html

5.2.2 Load Balancing & Switches

Figure 5 illustrates an example of LocalDirector used as a collocated FMA and FDA to provide Transmission Control Protocol (TCP)/User Datagram Protocol (UDP) load-balancing services. As an FMA, LocalDirector automatically directs requests to the best available local server within the data center and automatically directs traffic away from unavailable application servers. LocalDirector makes decisions based on server feedback using DFP, Web probing capabilities through LocalDirector CVS, and internal statistical algorithms. A key new enhancement to LocalDirector enables URL-based load balancing, which allows LocalDirector to select the optimum server based on a specific URL. URL-based load balancing enables a user to efficiently locate content on specific servers without creating virtual IP address complexity. Another enhancement to LocalDirector, session persistence, based on session identifiers called cookies, improves the reliability of e-commerce sites by creating an affinity between the client and the server, enabling a user to access a single server for the entire flow---a shopping cart session, for instance.


http://www.cisco.com/warp/public/732/net_foundation/security.html

http://www.cisco.com/warp/public/cc/pd/sqsw/sqidsz/index.shtml

Figure 5: LocalDirector Used as a Collocated FMA and FDA

5.2.2.1 Server Load Balancing on the Catalyst 6000 and LocalDirector

Server load balancing on the Catalyst 6000 was explained earlier and illustrated in Figure 4, where the FDA is contained within the hardware of the switch and LocalDirector makes the FMA load-balancing decisions. When requests come in for a virtual address, the Catalyst 6000 routes the request to LocalDirector, which makes a flow management decision and forwards the packet to the optimal server. The Catalyst 6000 FDA then switches packets for the remainder of the flow. Using these two components, the Catalyst 6000 and LocalDirector can provide wire-speed SLB, delivering connection rates of approximately 45,000 connections per second. The Catalyst 6000 FDA has a packet-switching rate of 15 million packets per second. Figure 7 illustrates this environment.

Figure 7: Catalyst 6000 with LocalDirector as a FMA


5.2.2.2 Cisco IOS Software Integrated Server Load Balancing

Under integrated server load balancing (ISLB) on the Catalyst 6000, the Catalyst 4840G Web switch, and the Cisco 7200 series high-end router, the FMA function supported by the external LocalDirector is directly ported into the Layer 3 processor of these platforms. No external LocalDirector chassis is required because both the FMA and FDA are located centrally on a single platform.

5.2.2.3 Multinode Load Balancing

Multinode Load Balancing (MNLB) is a next-generation server load-balancing solution based on interaction between LocalDirector software and Cisco IOS software. Introduced under the ContentFlow architecture, MNLB offers high availability by eliminating single points of failure while offering scalability through immediate or large-scale expansion of application servers. It also provides dynamic server feedback using DFP to balance the load according to actual application availability and server workload. In MNLB, FDAs can run on routers and switches, and LocalDirector software performs the FMA function. A single FMA residing in LocalDirector can communicate with multiple routers and switches acting as FDAs. As FDAs, the routers and switches can be continually scaled to switch packets on the data plane. MNLB is illustrated in Figure 9.

Figure 9: Multinode Load Balancing


5.2.2.4 Load Balancing Across Data Centers with DistributedDirector

DistributedDirector is a ContentFlow-based geographical load-distribution device that can select specific data centers to enable global scalability of Internet and intranet services. DistributedDirector as an FMA provides transparent access to the closest available data center relative to the client, as determined by client-to-server topological proximity or link latency. It maps a single Domain Name System (DNS) host name to the closest data center relative to the client, eliminating the need for end users to choose from a list of URL host names to find the best server. It automatically directs traffic away from unavailable servers or data centers. In addition, DistributedDirector communicates with either LocalDirector or ISLB FMAs positioned in each data center in order to balance traffic based on data-center capacity or availability. Supporting Hot Standby Router Protocol (HSRP) for high availability and fail-over, DistributedDirector is the only solution that uses data-center capacity and network topology information from routing protocols to direct the client to the best server or data center. In some environments DistributedDirector, acting as an FMA, may select a specific LocalDirector as the server load-balancing device in a specific data center. In this case, using both LocalDirector and DistributedDirector, the Web hosting service is ensured of delivering a client to the server that will deliver the best response times.

Additional information regarding the Cisco DistributedDirector features can be obtained from the following link: http://www.cisco.com/warp/public/cc/pd/cxsr/dd/

5.2.3 Content Delivery Network Service

Content Delivery Network service relies on dynamic caching to replicate server content at the edge of the network. Through Content Delivery Network service, up-to-date content can be served to end-users locally rather than remotely. This service can be deployed at multiple data centers, or it can be deployed on multiple ISP networks to improve response time, and reduce traffic and congestion on a service provider's core network.

5.2.3.1 LocalDirector

Figure 5 illustrates an example of LocalDirector used as a collocated FMA and FDA to provide Transmission Control Protocol (TCP)/User Datagram Protocol (UDP) load-balancing services. As an FMA, LocalDirector automatically directs requests to the best available local server within the data center and automatically directs traffic away from unavailable application servers. LocalDirector makes decisions based on server feedback using DFP, Web probing capabilities through LocalDirector CVS, and internal statistical algorithms. A key new enhancement to


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LocalDirector enables URL-based load balancing, which allows LocalDirector to select the optimum server based on a specific URL. URL-based load balancing enables a user to efficiently locate content on specific servers without creating virtual IP address complexity. Another enhancement to LocalDirector, session persistence, based on session identifiers called cookies, improves the reliability of e-commerce sites by creating an affinity between the client and the server, enabling a user to access a single server for the entire flow---a shopping cart session, for instance.

Figure 5: LocalDirector Used as a Collocated FMA and FDA

Additional information regarding the Cisco LocalDirector features can be obtained from the following link: http://www.cisco.com/warp/public/cc/pd/cxsr/400/index.shtml

5.2.3.2 Cisco Cache Engine and the Catalyst 6000

With the release of the ContentFlow architecture, Cisco announced support for WCCP on the Catalyst 6000 series (see Figure 10). WCCP integration in these data-center or service-provider point-of-presence (POP) switches provides "network-intelligent" load distribution across multiple network caches and allows the Catalyst 6000 to send packets directly to the Cache Engine. Within the concepts of ContentFlow, the Catalyst 6000 is the FDA and the Cache Engine provides the FMA function.


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Figure 10: WCCP Supported in Cisco Routers and Catalyst Switches

Additional information regarding the Cisco 6000 features can be obtained from the following link: http://www.cisco.com/warp/public/cc/pd/si/casi/ca6000/

5.2.3.3 Cisco 11000

The Cisco CSS 11000 series content services switches are Layer 5/7 aware and provide a robust front-end for Web server farms and cache clusters. With unique features for e-commerce, Web hosting, and content delivery, the Cisco CSS 11000 series is an important piece in Cisco's end-to-end content networking solution. Cisco's CSS 11000 series switches, powered by Cisco Web Network Services (Web NS) software, offer unique services such as:

Directing Web traffic based on full visibility of URLs, host tags, and cookies

Enabling premium services for e-commerce and Web hosting providers

Strengthening DoS protection, cache/firewall load-balancing, and 'flash-crowd' management

Additional information regarding the Cisco 11000 features can be obtained from the following link: http://www.cisco.com/warp/public/cc/pd/si/11000/

5.2.4 Basic Web Hosting

For detailed information regarding Cisco Web Hosting Center Products please refer to the Cisco JOLT Service Opportunity Descriptions for Web Hosting.


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5.2.5 Collocation Services

Collocation services offer customers data center space with defined levels of bandwidth and storage capacity. Backup services are also included in the service offering. Customers manage servers, LAN switches, and firewalls through on-premise visits or remote administrative tools. Typically collocation customers have sophisticated IT expertise, and customers include major portals, e-commerce merchants, and large enterprises. Service providers offering collocation services tend to have a high-speed backbone (OC-3 and above) as well as multiple data centers that are national, regional, or global.


Core IP Backbone

Private/Leased Backbone Distribution Layer Access Layer

Internet via ISP#2

Unmanaged Customer Cages

Internet via ISP#1

Multi-layer Distribution Switch • 6x00 w/ MSFC (needed to

keep inter-VLANs routing away from core routers)

• GigE interfaces to Core

Core Router • GSR (+) • OC 3/12/48/192 Core

interfaces • 1/10 GigEthernet Distribution

interfaces Distribution Router

• GSR (+) • 1/10 GigEthernet

Distribution interfaces

Customer-owned

5.2.5.1 Cisco 12000 Series Gigabit Switch Routers

Please refer to section 4.1.4.5 or for additional information regarding the 12000 series can be obtained from the following link: http://www.cisco.com/warp/public/cc/pd/rt/12000

5.2.5.2 Cisco Catalyst 6000 Series

The Catalyst® 6000 family, consisting of the Catalyst 6500 series and the Catalyst 6000 series, delivers high-performance, multi-layer switching solutions for Enterprise and Service Provider networks. Designed to address the increased requirements for gigabit scalability, high-availability, and multi-layer switching in backbone/distribution and server-aggregation environments, the Catalyst 6000 family delivers exceptional scalability and price/performance, supporting a wide range of interface densities, performance, and high-availability options.

By combining superior control-plane and packet-forwarding scalability with a rich set of intelligent services, the Catalyst 6000 family delivers the foundation for new-world Enterprise and Service Provider solutions, such as converged voice/video/data and e-commerce services.

Additional information regarding the 12000 series can be obtained from the following link: http://www.cisco.com/warp/public/cc/pd/si/casi/ca6000


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5.2.6 Advanced/Managed Hosting and Application Infrastructure Provider (AIP) Services

Recently, a wholesale opportunity opened up for managed hosting service providers. Many ASPs do not want to build a network and hardware infrastructure -either for time-to-market or competency reasons---and would instead choose to use a service provider's data center services, network infrastructure services, and many times its hardware and software platform services as well. A service provider wholesaling these services to an ASP is known as an application infrastructure provider (AIP). To create an enriched set of AIP services to ASPs, some service providers will also offer billing, service provisioning, and customer care software packages, and help manage these functions for an ASP.

The entire set of ASP wholesale services is sometimes referred to as an application infrastructure platform service. Many service providers are planning to offer this service soon.

AIP Front End Web Application Access


To Core Backbone /Internet

Distribution Layer

Web Access Layer

Back End

Application Access Layer

Cisco Secure Intrusion Detection System (CSIDS) Sensor provides real-time monitoring of external network traffic and provides initial alert to potential attacks or malicious activity.

Internal CSIDS Sensors provide real-time monitoring of internal network traffic to provide alerts of attacks that have made it past the firewalls.

Web Servers

Private VLAN support ensures Layer 2 security and separation between customers’ web farms

AIP Back End Application Access

6 Reference

Application Service Provider White Paper Cisco Systems 12/2000Application Delivery Management Infrastructure

Business White Paper Cisco Systems 12/2000Web Hosting on the (Service) Meta Group 8/2000e-Business Application Infrastructure Providers:

Market Analysis and Competitor Profile IDC 12/2000Providing Computer Utility Services at the last mile IDC 10/2000The U.S. Collocation Market: High-Tech Real Estate

Heats Up Yankee Group 12/2000A Study of ASP Operational Costs IDC 9/2000Application Service Provider Infrastructure Systems

Software IDC 9/2000The emergence of e-Business Infrastructure Providers Cahners Publishing 4/2000


To Core Backbone /Internet

Distribution Layer

Web Access Layer

Back End

Application Access Layer

Cisco Secure Intrusion Detection System (CSIDS) Sensor provides real-time monitoring of external network traffic and provides initial alert to potential attacks or malicious activity.

Internal CSIDS Sensors provide real-time monitoring of internal network traffic to provide alerts of attacks that have made it past the firewalls.

Web Servers

Private VLAN support ensures Layer 2 security and separation between customers’ web farms

Cisco Product InformationContent Distribution Manager http://www.cisco.com/warp/public/cc/pd/cxsr/

cxdimn/index.shtmlDistributed Director http://www.cisco.com/warp/public/cc/pd/cxsr/

dd/Content Routers http://www.cisco.com/warp/public/cc/pd/cxsr/

cxrt/index.shtmlContent Switches - CSS 11050 http://www.cisco.com/warp/public/cc/pd/si/

11000/prodlit/cs105_ds.htmContent Switch - 4840G http://www.cisco.com/warp/public/cc/pd/si/

casi/ca4800/prodlit/4840_ds.htmCat 6000 series http://www.cisco.com/warp/public/cc/pd/si/

casi/ca6000/index.shtmlLocal Director http://www.cisco.com/warp/public/cc/pd/cxsr/

400/index.shtmlCache Engine http://www.cisco.com/warp/public/cc/pd/cxsr/

500/index.shtmlContent Engines

http://www.cisco.com/warp/public/cc/pd/cxsr/500/prodlit/cds_ds.htm

Cisco 12000 series GSR http://www.cisco.com/warp/public/cc/pd/rt/12000/index.shtml

Cisco 7500 Series http://www.cisco.com/warp/public/cc/pd/rt/7500/

PIX http://www.cisco.com/warp/public/cc/pd/fw/sqfw500/index.shtml

Cisco Hosting Resource Site http://www.cisco.com/warp/public/779/servpro/services/webhosting/

CDN White Paper http://www.cisco.com/warp/public/cc/pd/si/11000/prodlit/cswnd_wi.htm


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