Today, more senior IT executives are asking whether they should create their own infrastructure to host their Web site, or contract with third-party Web-hosting services. Demand for such third-party services is growing: The Web-hosting industry, according to IDC researcher Melanie Posey, is forecast to grow from $3.9 billion in 2000 to $24 billion by 2004 despite the slowing economy.
Why the strong growth? The dilemma facing Old Dominion Electric Cooperative in Glen Allen, Va., reveals why the market is expected to increase. The cooperative, composed of a dozen electric utilities serving mostly rural customers, had originally outsourced its Web servers in order to quickly get on the Internet. It began hosting its own Web site when its executives decided that managing its site should be a core competency. Now, however, hosting one's own site has become more complex thanks to such tasks as online bill payment and new demands from customers who can now buy electricity from other suppliers. This complexity is leading Daryl Jaschen, Old Dominion's top IT executive, to reconsider the Web-hosting option. The firm's Web strategy "requires another level of core competency," he says. "The comfort of knowing the system is secure comes at a cost."