1 Comment

By Mark Hill, Chairman,

As server technology becomes
more and more important to the health of a company, we are seeing a shift to
moving a company’s servers to outside buildings designed specifically to house
servers.  These are known as
co-location facilities.  These
facilities have security, power, cooling and Internet access to keep them safe,
secure, and running at high availability.

Co-location facilities are
evolving and many businesses are offering additional services such as changing
backup tapes, shared firewalls and routers, and operating system patching.  By providing these managed services,
co-location facilities offer more value to customers.

It is natural for the
successful co-location businesses to continue to improve their service
offerings and offer more value to their customers.  Co-location companies are moving to owning their servers and
renting out access to compute power and data storage.  The key to the change in the co-location business is that
they manage these compute and data storage resources for a large number of
customers.   As the number of
customers increases, the management of servers becomes dramatically more
efficient due to the scale and centralization of expertise.

The service of renting out
compute power and data storage is known as Infrastructure-as-a-Service, or
IaaS.   It is part of the “Cloud”
phenomenon that we hear about today. 
Even the traditional computing players such as HP, IBM, Microsoft, and
VMware have initiatives around cloud computing, evidence that the market is at
the front of a major shift.

IaaS also offers the promise
of proper allocation of resources to manage peak loads and disaster
recovery.  Many companies need to
over-allocate resources to ensure peak load performance and then replicate the
expense off-site for disaster recovery. 
This can make the cost of the compute and data resources four times more
expensive than what would be typically needed under normal operating
conditions.  IaaS can also lower
the total cost of infrastructure by centralizing the expertise of managing
increasingly complex systems.

Where IaaS shifts to what we
now call “cloud” is where standardization and virtualization converge. I’ll
talk about that convergence in my final blog post (part 3) coming shortly. Stay


Mark E. Hill is Chairman of BlueLock’s Board and
Managing Partner of Collina Ventures. Mark co-founded Baker Hill® in 1983.
Focusing on the banking industry, the company built software solutions focused
on small business lending. In 2005, the company was acquired by Experian®
(EXPN.L), a global information company. In addition to his roles with BlueLock
and Collina Ventures, Mark serves on the board of numerous companies, including
Interactive Intelligence, (Nasdaq:ININ),  Cantaloupe TV (, and T2 Systems (