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  1. #1

    Starting a Hosted Services business

    Hi everyone

    I wonder if I could pick your brains - I'm in the process of starting a Hosted Services business with a colleague of mine.

    We're planning to provide Hosted Desktops, Exchange, SharePoint and CRM targeted at small to medium sized businesses.

    We're looking into our infrastructure hosting options and at the moment we're torn between buying and co-locating either Blade servers or a few of the multi-node servers (e.g. Dell C6220) and installing/maintaining the infrastructure ourselves, or alternatively, partnering/reselling with/for another company, e.g. Nasstar or ChannelCloud.

    The team of people including myself and my business partner hold MCP certifications for all products that we plan to deploy, so we are technically able to run it ourselves, however if reselling is a flexible enough method for us, we'd definitely consider that route as it would allow us to get to market quicker.

    Our key requirement is flexibility to customise the solutions that we offer to our customers so that we can cater for any unique requirements.

    Do any of you have any experiences/wisdom that you'd be willing to share to help us reach a decision? If there are any Nasstar/ChannelCloud/equivalent resellers that frequent the forum it would be great to hear from you!

    Thanks in advance,


  2. #2
    Join Date
    Oct 2002
    Langley, BC
    We've managed our own servers - hundreds of them while collocating in a data center before. Now we are using cloud through Amazon Web Services and StormOnDemand.

    I personally think it would be more efficient if you go with a cloud based services as their pricing now are very competitive and you can scale your infrastructure on the fly right from your own computer.

    No need to go back and forth to the data center, plus you don't have to worry about upgrading your hardware and throwing away your old servers when they become obsolete.
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  3. #3
    Join Date
    Jan 2014
    United Kingdom
    Quote Originally Posted by jrianto View Post
    I personally think it would be more efficient if you go with a cloud based services as their pricing now are very competitive and you can scale your infrastructure on the fly right from your own computer.
    This is a very good point. Cloud based services will give you the scope and flexibility that you require. It will also be a lot quicker to service and administer. Co-locating comes with a lot of problems (logistically and management). I would advise that you compare the two methods you mentioned and see which is more cost friendly in both the short and long term.

    Hope this helps!

  4. #4
    Join Date
    Jul 2005
    Milton Keynes, UK
    Each have pros and cons just compare pricing and expandability.

    Also remember with colo its your hardware and if it fails your problem. But the other way around if the hardware inst yours and it fails will the host deal with this as quick as you would like. If your hosting critical services ensure you have a good SLA on everything.
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  5. #5

    There are so many factors to look at. Blades are good and bad at the same time. They are just monsters for power and power and rackspace are your true expenses. Not to mention they age pretty fast and only really good way for them to make you money is at extremely high density. However, power that is the hidden nightmare as no matter where you are it's expensive just varying degrees.

    Blade Chassis will eat up power whether they are doing anything or not. Plus Blade Chassis require 208 for the most part. I would look to do smaller more flexible units C series could work. This way you can control your expenses and recoup your initial investment faster. Also, you can look to the blades once you see the value in getting that level of density per rack.

    When running a hosting business I would suggest you either do some cloud to start as others have mentioned to get your feet wet or go with a managed host to help guide you in the beginning. This way if at a later point you've built up a client base that is large enough you can then switch to colo to further reduce costs and gain full control but even then it still may be more beneficial to keep renting.

    We own and manage all our own equipment here and looking back if I could do it all again I would have started with renting from an existing provider until I built up enough business to make financial sense to take it fully in-house. Hosting is a very capital expensive business and dealing with even some of the more annoying aspects live SPLA with Microsoft can be an ordeal.

    When you own everything your the one that is going to need to swap drives, swap procs, swap ram, update/swap raid controllers, image every node, manage your switching/firewall/routing, and somehow make a profit.

    All in all I would rent in the beginning to keep your operating costs low and maintainable. If your MRC is X and your MRR is Y you make money. If you buy and build you start getting into rackenomics where just because you win a new client doesn't mean you make money you may lose money until you get more.
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  6. #6
    It all depends on how are you going to make your money. If you want to just specialize on enterprise software consulting, than it will be better for you to go with fully managed provider or some sort of cloud. For sure this will be more expensive than just co-locating directly your own hardware.

    Alternatively You can always find people who will be renting bare hardware for you for cheap and you may build your own cloud. - dedicated servers for your business
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  7. #7
    Join Date
    Nov 2012
    Rob, I think you are in for a very fun but tiring ride here. Here is my advice/thoughts on your services:

    Hosted Desktops:
    Unless you are providing VDI using a terminal server, its very tough to sell to small/medium businesses. If you are providing a single dedicated virtual machine to a customer as a "Hosted Desktop", you cannot share hardware between customers. Customer A must have a dedicated blade/server/node, it cannot share with customer B. Thus, making the solution very expensive for less then 100 users. Those are the licensing rules from Microsoft. Nothing stopping you from breaking them but its a risk you take. Microsoft has all the power in the world here, they can bend the rules in their favour and release a VDI solution tomorrow, crushing all the players. FYI, Amazon has virtual desktops for $50 that includes Office 2010.

    This market is killed by Office365. Unless you are in a very niche market with strict security polices, Microsoft will ALWAYS beat you on pricing. You didn't mention your location but here in Canada, there is a very good market for people who don't want their data in the US. That being said, the few hosted exchange players here in Canada own a large market share. If you purchase hardware, your ROI is going to be when you have 5000+ users, which just requires you to buy more computing and storage.

    Much as the same as above. Unless you are Sharepoint developers, very tough market.

    Great spot to be playing. People generally want a lot of support for CRM systems, outsourcing it to Microsoft isn't always the best solution.

    As for the hardware....

    This is what is going to kill your business as you scale or suffer a major outage. User's can pay $4/month for hosted exchange that is NOT effected if one site goes down. That is hard to compete with! You didn't really mention a budget so it's hard to recommend anything. If your just starting out, I don't recommend a blade system. The power you will spend will outweigh the money you save in rack space. HP has a nice TCO calculator on their website:

    Right off the start, you are looking at 8U just for the blade chassis. Your going to need 208 which often involves a separate contract for power, which can be a lot to take on as a start up. Another 4-6U for networking gear and 6U for storage (you need at least dual SAN's). You just easily filled half a rack, which leads you no choice other than to buy the entire rack so you can expand without creating a mess.

    In short......
    If you are Microsoft folks, you really need to talk to Microsoft about how to resell and make the most of the services they provide. The money isn't in selling a Hosted Exchange Mailbox, its in selling the administration fee you tack on. Same goes for the other services. There are so many great reseller programs out there that you need to take advantage of before even thinking of buying your own hardware.
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