Web Hosting Services

TeleCity Provides Web Hosting for Ernst & Young

By Philbert Shih, theWHIR.com

October 6, 2005 -- (WEB HOST INDUSTRY REVIEW) -- During the dot-com boom, data center operators built out facilities in anticipation of the many communications carriers, ISPs and Web hosts they expected would soon become tenants. But when the bubble burst, these companies were left with vast quantities of unoccupied space and a glaring lack of potential customers.

As a result, colocation service providers began to look at larger corporations, many which have opted to outsource their IT infrastructures rather than handle it themselves. Putting this strategy into action, pan-European data center operator TeleCity (telecity.com) announced last week that international accounting giant Ernst & Young would consolidate three of its European data centers – in Eschborn (near Frankfurt) and Stuttgart, Germany and Rotterdam, Holland - into TeleCity's facility based in Frankfurt, Germany.

TeleCity will provide colocation services while Ernst & Young will continue to handle the network infrastructure, hardware, software, data and applications. The deployment occupies a 600 square meter suite in the facility.

Ernst & Young had previously managed its own IT infrastructure, but it decided to turn over the hosting tasks to TeleCity because it could not accurately project its hosting requirements 10 to 15 years into the future, explains Dr. Béla Waldhauser, managing director for TeleCity. And not being able to do this would make building out a facility, which it was considering, inherently difficult.

"[They said] there are so many uncertainties in IT," says Waldhauser. "Data centers are a project that should last 10 to 15 years and they could not judge all influences. That was one of the reasons why they decided to outsource the colocation part, because I will give them the flexibility with respect to space and power and cooling per square meter."

An outsourced colocation arrangement also brings cost advantages over in-house deployments. Operating three different facilities in three separate cities not only presents a variety of operating problems but also multiplies costs.

"While a dedicated new-build, in-house data center requires high initial investment, and the full benefit of the investment is not achieved for several years, a consolidation in TeleCity's data center allows us to realize considerable savings, because we only pay for the area being utilized at any particular time," Siggi Hauer, chief information officer for Ernst & Young Central Europe, said in a statement.

The Frankfurt location made even more sense financially. Waldhauser says that while other Eastern European locations may be priced even lower, they don't have the networks and carrier presence that Frankfurt offers. "The point is that the demand in Frankfurt is much less than the capacity which was built," he says. This keeps prices down in comparison to places like London, and to a similar extent Amsterdam, where high demand puts strong upward pressure on prices.

The Frankfurt facility's recently acquired BS7799 certification was another important selling point, especially for a company like Ernst & Young, which deals with massive quantities of financial information. Issued by the British Standards Institute, BS7799 is a security standard for benchmarking information security management systems within an organization. In order to be certified, an organization must demonstrate to an external auditor that its security systems comply with ten aspects of the standard. TeleCity prepared four months for its ultimately successful audit.

"Certification to BS7799 was one of the key reasons for choosing TeleCity as the IT service provider with whom to consolidate our data centers," Dr. Harold Klein, chief technical officer of Ernst & Young AG, said in a release.

Waldhauser notes that in Europe, demand for security is growing - with July's terrorist attacks in London serving as a grim reminder. TeleCity's London-based data center has the same certification and the company plans to have all its nine facilities certified in the near future.

While TeleCity is currently providing Ernst & Young with only the essential infrastructure hosting pieces, the two sides have discussed adding managed services such as backup and storage into the arrangement, says Waldhauser.

Managed service is an area of focus for TeleCity and Waldhauser says the company will continue to introduce new managed services to complement its conventional colocation offerings.

With the competition getting tighter, it is a good bet these trends - targeting the corporate market and the addition of more managed services offerings - will continue to shape the competitive landscape of the Web hosting and communications industries on both sides of the Atlantic.