Is Utility Hosting Right for Your Business?

Is Utility Hosting Right for Your Business? ‘Computing Outside the Box’ Allows Organizations to Quickly Adapt to Changing Needs Executive Summary If y...
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Is Utility Hosting Right for Your Business? ‘Computing Outside the Box’ Allows Organizations to Quickly Adapt to Changing Needs Executive Summary If you ever wonder whether you have the right level of computing capacity to support your business needs cost effectively, you’re in good company. Organizations have been faced with two equally challenging options in attempting to match IT capacity with variable or unknown demand: over build or under build. A solution that arrived on the scene in the past couple of years is utility computing, in which you pay for the capacity you use – computing, storage, network – much like you receive water, electricity and natural gas from public utility companies. In today’s volatile economy, a great benefit of utility computing is that you don’t have to try to predict the amount of computing and networking power your business will need – and thus buy too much or too little. You also avoid the huge upfront costs of purchasing equipment and instead can pay for utility hosting services over time. Compared to traditional dedicated hosting solutions, utility hosting is: • Easily scalable, either by “bursting” in real-time to accommodate sporadic upticks in usage or by adding or removing virtual servers when you need a longer-term adjustment. • Standardized as a turnkey package, with everything needed to effectively run an application “right out of the box.”

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Utility Hosting: Right-Sizing Your Capacity If you ever wonder whether you have the right level of computing capacity to support your business needs cost effectively, you’re in good company. You can’t answer this question with certainty because any number of situations can change your computing requirements. Demand may naturally ebb and flow, be seasonal, or be completely unpredictable. The number of users can expand exponentially with an acquisition or drop drastically with a divestiture. And a competitor’s move could alter everything about what is expected of your system. (See Fig. 1.)

Figure 1: Companies Face Varying Demands on Computing Capacity

The most innovative utility offerings are based on a virtual IT infrastructure that can easily be scaled up or down to synchronize IT capacity with demand. You get a level of capacity that matches your needs without being locked into an inflexible architecture. This pre-built, flexible platform can be accompanied by management services and dedicated support. In today’s volatile economy, an added benefit of utility computing is that you don’t have to try to predict the amount of computing and networking power your business will need – and thus buy too much or too little. In lean times, “right-sizing” is critical. You also avoid the huge upfront costs of purchasing equipment and instead can pay for utility hosting services over time, as you do with any utility. And you may be able to categorize utility hosting as an operating expense, which, when purse strings are tight, lets you tap a more accessible bucket of funds than is true for a capital expense. How Utility Computing Works In the traditional dedicated approach, a hosting provider allocates to each client a fixed amount of computing resources – calculated to accommodate the highest anticipated spike in demand. With utility computing, resources are allocated according to a base level that meets day-to-day business needs, but can quickly expand and contract. The fluidity of utility computing translates into a pay-forwhat-you-use billing model rather than one that charges a flat rate based on what might be necessary in a worst-case scenario. Utility computing is made feasible, in part, by a “virtualized infrastructure” in which the physical resources of an entire IT environment are treated as a common reservoir of computing capacity. A thin layer of software rests on top of the hardware, turning the physical processors, storage devices and networks into virtual machines and liberating, or “abstracting,” them from the software they run. Thus, no hardware component is dedicated to running any one application, and multiple applications can share a single hardware host, each being given its own highly secure “slice of the box.” (See Fig. 2.)

Organizations have been faced with two equally challenging options in attempting to match IT capacity with variable or unknown demand: over build or under build. • Over building ensures adequate performance when demand is higher, but almost certainly means that excess capacity goes unused. By some estimates, companies’ IT infrastructures are underutilized 85% of the time, on average. • Under building may save some money initially, but has the potential to be very expensive because of lost productivity and revenue if your system performs poorly or fails when demand spikes. A good solution that arrived on the scene in the past couple of years is utility computing, in which you pay for the capacity you use – computing, storage, network – much like you receive water, electricity and natural gas from public utility companies.

A data center with a virtualized infrastructure can direct the right amount of capacity wherever it’s needed. Later, the capacity is returned to the general fund and repurposed to support the next demand. A virtual machine manager, called a hypervisor, automatically controls how the resources are allocated and reallocated to make efficient use of the system and meet users’ continuously changing demands. All of this is done behind the scenes according to pre-determined business rules; users are unaware of the virtual nature of the hardware that supports their computing requests. The infrastructure itself is made up of modular components that are activated as needed for each client request; subscribers do not access or pay for parts of the infrastructure that they do not need. This modular structure also makes it easy to increase the base capacity of existing virtual servers or to add new ones if needed.

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Figure 2: Example of a Virtualized Infrastructure Client Connectivity

AT&T Global IP Backbone Virtualized Firewall High Speed Low Latency (HSLL) Network Connectivity



Dedicated Virtual Environments Client Production

Client Production


Web App

Virtual Computing Power [CPU & RAM]

Client Testing



Utility Print Services



Utility Mail Services

Utility Directory Services



Features and Benefits of Utility Hosting Compared to traditional dedicated hosting solutions, utility hosting is distinguished by two key features: • Easily scalable. As your needs change and demands on your system fluctuate, your computing environment can adapt in two ways. Either way, users can keep going and technology does not limit the ability to meet business goals. You can: – Rely on the system to “burst” in real-time to accommodate sporadic upticks in usage, expanding the normal processing and memory capacity. – Add, upgrade or remove virtual servers as needed in a matter of days when you see a usage trend that requires a longer-term adjustment. • Standardized. Solutions are designed, implemented, and delivered as a turnkey package, with everything needed to effectively run an application “right out of the box.” These solutions use repeatable processes for deploying new applications, upgrades and service changes in days (instead of the weeks it can take in a dedicated environment).

Virtualized Storage

• Reduced time to market. Because utility hosting supports faster application deployments and upgrades, it allows you to respond to changing business needs in near real-time. Rolling out new products and services, launching new promotions, taking steps to improve the customer experience, and keeping up with the competition all are accelerated. And speed of delivery can become one of your competitive differentiators. • Cost efficiency. Because your virtualized operating environment is right-sized to match your business demands, you avoid a bloated infrastructure that goes underutilized most of the time. Having a highly efficient utility infrastructure and pay-per-use delivery model reduces the overall cost of your IT operations (both in terms of data center/infrastructure costs and human capital), improving the return on IT investment. • Improved productivity. Utility hosting solutions can help ensure that employees are able to interact effectively with customers, suppliers, vendors and business partners, even when demand spikes on front-office or back-office business applications. By providing additional capacity where and when it is needed, utility computing helps prevent potential bottlenecks or outages that would otherwise cause significant performance degradation or downtime.

These qualities translate into the following benefits for enterprises: • Opportunity for growth. By allowing your business to capitalize on immediate market opportunities that might otherwise be missed, utility hosting can help you attract and retain more customers, gain additional revenue and increase your market share. With tremendous flexibility built into a turnkey solution that is fully managed by a computing partner, you can cut through the complexity of IT and focus instead on the key drivers of your business.

When to Consider Utility Hosting Your business objectives and computing requirements should dictate your choice of service delivery model. The type of applications that take best advantage of the features of utility computing with a virtualized infrastructure are Internet- or intranet-oriented applications that are accessed remotely by users in multiple locations and are very performance

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sensitive. The technology will help you realize cost savings and operating improvements if you are experiencing any of the following: • System inefficiencies. Very likely, you’re not getting the best return on your computing investment if you’re working with an outdated legacy system or platform, if you need to upgrade your current platform, or if you need to consolidate or improve your existing infrastructure. • Issues with stability, reliability, availability, or performance. Such problems can arise when demand spikes erratically or is generally unpredictable, when business changes spring up unexpectedly, or when a company grows rapidly. • Fluctuating demand. For example, you may have a seasonal sales cycle that requires extra capacity for part of the year, run a campaign that directs increased traffic to your website, need to support an open enrollment period for employee benefits, or go through a phase of heavy sales force recruitment that increases demand for your customer relationship management application. • Fairly static applications that generate low usage with little change. Low usage within a dedicated environment could mean that you are paying for resources you are not fully using.

Evaluating Utility Hosting Approaches When considering competitive offerings, you should look under the covers at what is actually being delivered, as well as at the strength and scope of the providers. The following list of industry best practices may help you evaluate the relative merits of various providers and their approaches to hosting. • The ability to mix and match different hosting models. In some situations, it makes sense for your entire hosted environment to reside on the virtualized infrastructure and to run in full utility mode. In others, it’s better for your hosted environment to include virtualized servers combined with one or more physical servers. Having this flexibility is important to the cost-effectiveness and practicality of your solution. • Service guarantees of at least 99.9% uptime. Steps that companies can take to keep your system available include having a high-availability configuration for all guests, a reliable network and a robust data protection plan so there is no single point of failure in the system. • Real-time visibility into the health and performance of your system. Outsourcing the hosting function should not mean giving up oversight of your system. The best solutions present feedback in real-time, giving you the control you need to manage capacity, track the status of support requests and monitor performance.

Should You Change to Utility Computing? It certainly doesn’t make sense to change for the sake of change, unless the return on investment will be compelling. A good time to move to a utility computing solution is when change is already in the offing – when you are planning to enter a new market or an adjacent industry, intending to roll out a new application, or planning to refresh your existing technology, for example. All represent opportunities to address the challenges in a new way with a holistic, turnkey solution, provided, of course, that your application is compatible with virtualization technology.

• Uncertainty over future usage patterns. If you’re breaking new ground with a new offering or entering a new market, you probably have no way of predicting what the demand will be on your system. • A fluctuating test and development environment. As applications go through development and testing, they draw on varying levels of capacity. Utility hosting allows capacity to be resized quickly and can be used to simulate a true production environment with realistic loads. • Customized needs across multiple internal groups. The bane of every CIO is trying to meet the idiosyncratic needs of various user groups that do not warrant a dedicated infrastructure. A utility service platform provides a cost-effective answer and allows you to implement standards and processes that apply across business uses.

• Ongoing capacity and trend management. It is not enough to ensure that your initial level of provisioning is appropriate; how your network, servers and application are being used needs to be monitored on an ongoing basis so you can authorize adjustments if critical thresholds are being met. The best methods for monitoring usage within a utility hosting environment combine automatic surveillance tools and alerts with professional oversight and recommendations. • A holistic (rather than component-based) service level agreement. Separate service level agreements for each individual component within a hosted environment are of limited value. If one component fails, the hosting provider is only on the hook for the guarantees around that component, even if its failure disrupts the availability of your environment. In contrast, a service level agreement based on overall system availability holds the hosting provider accountable for any system failing that prevents users from accessing applications and carrying out tasks. • Layered levels of security, from physical to logical. (See Fig. 3.) Your provider should have documented security procedures specifying the measures taken to prevent lost data and security breaches. And, particularly in a virtualized environment, you should be satisfied that your data will be isolated from that of other clients, securely partitioned and held in a separate, dedicated file system and database instance with specific routes to the network.

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Security Standards for protecting credit card data, and ISO 9000 for meeting quality management standards) can go a long way toward assuring you that your vendor will apply industry best practices to providing a standard, stable environment for your application.

Figure 3: Recommended Security Layers Policy Development

Operations / Enforcement

Ÿ Audits, Certifications and Compliance

Authorized User


Visualizer Tool Incident Response Management 24 x 7 Monitoring/Management Disaster Recovery

M erability anagement Vuln e curity S b e W

ation / DB Secur plic ity Ap work Security Net

• The benefit of extensive experience. Administering a virtual platform is complex, and experience will manifest itself in all the above best practices, not in a provider practicing with your infrastructure.

Unauthorized Users

ation Secur orm ity Inf S sical ecurit y y Ph

Physical access to your system should be controlled by multiple means such as identification badges, biometric identification systems, and man traps that prevent access until authorization is granted. Similarly, data access should be restricted and attempts to gain unauthorized access to system resources should be thwarted with overlapping safeguards such as:

An Overview of AT&T Synaptic Hosting AT&T Synaptic HostingSM is a scalable, fully managed IT infrastructure that employs virtualization technology to meet fluctuations in demand and is supported by dedicated teams of specialists. Delivered via a utility-computing model, Synaptic Hosting provides network, server, and storage resources on a “pay-for-what-you-use” basis. (See Fig. 4) The term “synaptic” reflects the service’s ability to change and adapt, similar to the way the human brain processes information via networks of neurons interconnected by synapses, which continually reconfigure themselves in response to new stimuli and experiences.

• Anti-virus protection on every server

Figure 4: The AT&T Synaptic Hosting Model

In a hybrid model, your hosted environment includes dedicated virtualized servers combined with one or more dedicated physical servers. Typically, dedicated physical servers are retained for processing-intensive databases that have specific hardware or performance requirements or that must meet strict regulatory requirements.

• Third-party credentialing. Recognition from enterprise software vendors and regular audits (such as SAS-70 Type II audits of hosting controls, as well as certifications from SysTrust for availability, security and data integrity, Payment Card Industy (PCI) Data

Tech Assessment & Consulting

Database Management

Hybrid & Dedicated Architectures

Business Continuity/ DR Planning

Synaptic Infrastructure-on-Demand Support Services

Named Account Support Rapid Provisioning Pay-per-use computing

• A dedicated account team. The people supporting your solution should not only have experience with the latest hosting technologies, but should also become familiar with your unique business problems, challenges and successes. The support you receive should extend from advice on day-to-day operational activities to the ability to respond to issues and implement changes 24x7x365.

Performance Testing

Extended Services Application Awareness Services

When a Hybrid Model is the Answer

Client Application Application Management

• Proactive monitoring and alerts about suspicious activity

AT&T Responsibility

• Redundant firewalls that are continuously managed

Client Responsibility

• An intrusion detection and prevention system

The Synaptic Hosting platform provides security, reliability and scalability and taps AT&T’s experience and track record as a hosting market leader. When you subscribe to the service, you don’t need to buy hardware, configure it, secure it, or plan capacity. We provide a holistic service level agreement to accommodate the performance levels you want.

Technology Stack Managed Storage & Backup Virtual Burstable Servers Managed Security Solution OS Management & Maintenance Hardware Management & Maintenance Network Connectivity AT&T Data Center Facilities

Change Management Monitoring & Reporting SLA Management Fault & Issue Management

AT&T Synaptic Infrastructure

Enterprise-Class Utility Hosting Synaptic Hosting has been used successfully by clients since 2006 and is one of the few utility hosting offerings in the industry to be architected as a true enterprise-class service, delivered from sites around the world. Five regional “supercenters” have been established to offer AT&T Synaptic Hosting (in North America, Europe and Asia) and others are in the planning stages. Synaptic Hosting is built to be:

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• Reliable. AT&T has spent more than a decade meeting missioncritical computing needs and has an overall record of more than 99.999% facility availability in its data centers. On top of this reliable infrastructure, Synaptic Hosting adds robust redundancy at the network, compute and storage layers, as well as secure backup mechanisms and data retention policies. Tying it all together is AT&T’s proven operations model which serves the highly demanding IT requirements of some of the world’s largest global enterprises. • Secure. AT&T Synaptic Hosting is protected by intrusion detection, redundant firewalls, vulnerability management and control, environment hardening, access controls, virus and patch management, data encryption, and other proprietary systems, processes and tools – all delivered from data centers that undergo regular SAS 70 Type II audits and have achieved successful PCI DSS evaluations. • Transparent. A suite of client tools on our award-winning BusinessDirect® web portal lets you keep an eye on your environment, which can improve your capacity planning and budgeting and reduce your system management costs. The tools let you monitor performance, generate reports, track the status of changes and trouble tickets, communicate with your support team and check documentation and event history. AT&T Synaptic Hosting includes the following: • Virtualized “pay-for-what-you-use” computing platform that supports capacity on demand. We manage the network, computing capacity, security, and storage. Four service classes are designed to meet your specific recovery time objectives. • Designated account support by a Client Executive, Client Technical Lead and Client Service Lead who proactively manage your infrastructure and application performance. • Application awareness capabilities, an optional service through which we proactively monitor and report on your application. Available for most software. • Integrated service level agreement that covers availability and response time for the entire service, up to 99.9%. • Monitoring and management of the network, servers, operating system, web and database layer. • Portal and reporting for access to detailed information on the service, 24x7x365. Real-World Examples of AT&T Synaptic Hosting Topping the Charts: Record Label Opts for Total Package Business Challenge A major record label sought a hosting solution to deliver recorded content over the Internet. It required significant computing power and network bandwidth because it spanned over 400 websites and needed to satisfy artists, record labels and consumers. The company also wanted: • A standardized, reliable IT infrastructure platform • The ability to scale on demand and rapidly add new servers • Visibility into how its applications are performing

Solution AT&T provided a mix of dedicated and utility-based managed services, including security and storage, with a service level agreement covering the availability of the entire solution. Support is provided by a named account team that understands the company’s business and application requirements. Business Value Delivered “Burstable” bandwidth and computing resources satisfy online music consumers’ demands while easing the burden on the company’s internal IT department. Taking a Spin: New Business Unit Self Sufficient in 60 Days Business Challenge A consulting firm’s new business unit needed a standalone IT infrastructure that could be up and running within two months, since the firm’s centralized IT infrastructure would no longer be able to support it. The challenge was to reconstruct everything in the corporate solution from scratch and quickly aggregate the spin-off unit’s 300 websites onto a new domain. Solution Because AT&T Synaptic Hosting has the necessary hardware already in place, within nine business days of signing the contract the client’s new unit was standing on its own with “burstable” servers, operating system management and backup every four hours, Internet bandwidth, LAN management, load-balancing services and managed security services. The entire environment is backed by a service level agreement for 99.9% availability. Business Value Delivered The new unit met its deadline for independent operation and saved money by avoiding the capital expense of hardware and switching to an on-demand model with a lower cost of ownership than the legacy corporate solution provided. Because the platform is flexible and extendable, it allows the customer’s commercial business to expand over time. Sporting a New Platform: International Athletic Organization Copes with Seasonal Demand Business Challenge An international athletic organization looked for a utility computing solution to handle floods of website visitors expected during a major 2008 competition. The site needed to accommodate streaming videos and broadcast replays. But because activity on the site would plummet after the competition, the organization preferred a money-saving service that expands and contracts as needed. Solution In less than a month AT&T migrated the organization’s system onto the Synaptic Hosting platform, with the capability to burst on demand to twice the capacity of the base configuration when usage peaks. Business Value Derived The athletic organization, a nonprofit, was able to control hosting costs.

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20 Questions to Ask When Evaluating Utility Hosting Providers As you evaluate the merits of different utility computing providers, ask questions that will help you get beyond understanding the technology and tools to appreciating the experience, skills and involvement of the people behind the system. We suggest asking: • What savings can I expect? What will be the return on my investment? • Does the service provider have the flexibility to support architectures that include virtualized and physically dedicated components? • How do you ensure against unauthorized access to my data? Are you managing this proactively? • How will you help me with data encryption? • How will my applications and data be isolated from that of other subscribers? • What level of availability can you guarantee, and what steps do you take to ensure high availability? Is the infrastructure redundant? • How do you manage latency? Are you implementing acceleration technologies to speed download time? • Do you guarantee service levels for each component individually, or on the entire environment holistically? • How – and how often – do you monitor my usage to make sure I have enough capacity (servers, network, storage) allocated to my environment? How often will you discuss the status with me? • Will I have visibility into the performance and health of my system whenever I want through a portal or control panel? • How many years have you been managing, hosting and supporting enterprise applications? Have you done this globally? • How many years have you been offering utility computing? Is your solution “business grade” and already proven? • How much experience do you have with virtualization technologies? • What industry certifications do you hold? • What organizations audit your performance? Is your facility SAS 70 Type II compliant? What are the results of the latest audits? • Do your processes conform to Information Technology Infrastructure Library® (ITIL) standards? • How long would it take you to implement utility hosting for me? • What procedures do you follow in making changes to my environment? • Will I get to know the people handling my account and be able to reach them easily, or will I call into an 800 number with each question? • What level of investment are you making to keep up with the pace of technology?

For more information contact an AT&T Representative or visit

02/26/09 AB-1546 © 2009 AT&T Intellectual Property. All rights reserved. AT&T and the AT&T logo are trademarks of AT&T Intellectual Property. The information in this document is provided by AT&T for informational purposes only. AT&T does not warrant the accuracy or completeness of the information or commit to issue updates or corrections to the information. AT&T is not responsible for any damages resulting from use of or reliance on the information.

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