By Andy Sullivan
Associate editor
This material originally appeared in CityBusiness, Volume 16, Number 50, May 7, 1999; p 5. © 1999 CityBusiness/Twin Cities, Inc., 527 Marquette Ave., Suite 300, Minneapolis, MN 55402-1302. All rights reserved.
As the millennium looms, Al Angen likes to show guests his diesel generator. Shrouded in a cage of hurricane fencing behind a downtown office building, the orange metal box will be able to power Angen's compound for up to 24 hours without refueling in the event of a blackout.
"The generator provides backup power, there's absolutely no glitch," Angen said. "The equipment doesn't see any response in the change from house power to diesel power."
Angen's not selling real estate to Y2K paranoiacs. The president and CEO of Minneapolis-based Internet service provider (ISP) Visi.com is pointing out one of the features of his "co-location" room, which will house clients' Web servers when completed June 1. In addition to a backup power supply, the room boasts four separate, five-ton air conditioners; a moisture-free fire-suppression system; and two separate links to fiber optic loops. A raised floor safely stows all necessary cables out of the way. Additional servers will be available for rent to clients who anticipate extra traffic, during a sales promotion, for example.
The new facility is a marked step up from Visi.com's current co-location room, a dimly lit office space stuffed to the gills with servers and routing switches, snaked with cables. Demand for co-location services at Visi.com has ballooned beyond expectations, to the point where dropping $300,000 on a specially designed facility five times the size of the current one makes sense.
As the Internet becomes more integrated into the daily life of much of the business world, it's easy to forget that "virtual" reality is still dependent on old-fashioned reality to work. If an e-commerce firm's server crashes, the company is as good as useless.
Although co-location has been available at many ISPs for several years, demand has picked up remarkably over the past six months.
"We are selling out capacity as fast as we can build it right now; we're just buzzing right along," said Mike O'Connor, co-founder of gofast.net, an ISP in St. Paul.
Katie Croxdale, Web hosting product manager for MRNet, an ISP based in Minneapolis, has seen a surge in demand as well, particularly in the last six months. Croxdale expects MRNet's co-location business to experience "probably 100 percent growth this year."
And at Visi.com, Angen expects colocation services to bring in $10,000 to $15,000 per month after the new room is completed, up from $3,000 per month in 1998. The trend is expected to accelerate to $40,000 per month in 2000.
In the previous two years, Visi.com saw a lot of customer growth, Angen said. In 1999, the company is seeing much of its growth from existing customers adding services. Co-location is a natural step for ISPs as they look to move away from simply providing access to more profitable services such as Web site design and hosting.
When pitching co-location options to local companies, ISPs highlight three basic advantages: security, speed and outsourcing.
"It's expensive, dangerous and difficult to locate a machine on an internal network," said Angen. Backup power supplies, heavy-duty air conditioners and beefed-up fire systems create a more secure physical environment, minimizing risk of an accident.
Redundancy, or duplication of facilities, is a major selling point as well. Gofast.net's facility in St. Paul is hooked up to three separate fiber optic loops, which enter the building at different points. "You'd have to backhoe all the way around the block" to sever all the connections, O'Connor said.
Also, keeping the Web server in a separate location from the internal company network makes it more difficult to access information that the company might not want to make public. "If I'm an MIS [management information systems] director concerned about security, I'm not interested in putting out a huge beacon to draw every hacker," O'Connor said. Keeping the Web server physically separate draws attention away from the internal network.
Placing a server in an ISP's central office allows direct access to the company's fiber optic connection, ensuring faster access. "Hooking up to the backbone of the Internet is a very expensive affair; it's like drilling a great big well in the desert. It costs a lot of money to drill the well and take water to surface. Rather than drill the well, it's easier to just buy water," from someone who already has a well drilled, said O'Connor.
Furthermore, as many companies struggle to maintain adequate staffing levels, they may choose to let ISPs handle tasks such as server maintenance. "At many companies, the MIS staff is a staff of one guy--presumably this person wants to sleep," said O'Connor.
Co-location also makes sense for many companies in the process of expanding their online capabilities. Simple Web sites often share space with other companies' Web sites on a single server; as a company adds features to its site, such as interactivity or e-commerce capabilities, it may find it needs a server of its own.
Co-location offers A "nice growth path - [clients] start out leasing space on our servers, then reach the break-even point where it makes sense to buy their own server," said Michael Usrey, founder of Protocol Communications Inc. in Minneapolis. "It's a next step, an intermediate step for leasing space."
Usrey said many of Protocol's larger clients co-locate on a temporary basis while in the process of moving their offices, to ensure a consistent Internet presence. Once the move is complete, the clients move their servers back to their own facilities.