Virtualizing services

OUTSOURCING CAN help fulfill a company's IT needs while keeping a lid on costly resources such as manpower and square footage. However, it isn't a panacea. Experience has provided us with some valuable lessons about the risks of outsourcing.

Free IT resource Virtualization Insights from Top Experts - Learn how virtualization gets real! Sponsored by Dell Free IT resource TechNet: More ways to know it, share it, and keep it running. Sponsored by Microsoft

Chief among those risks is becoming too dependent on a single service provider. Handing off too large a share of essential services to one outsider creates exposure to risk; the company can lose direct control of availability, scalability, security, and costs. If the contracted provider goes under, cuts corners on equipment, raises its fees, or changes its terms of service, its customers are stuck. If the provider comes under attack, it becomes an attack on all of its customers.

Good service providers monitor their networks carefully and use redundant equipment and locations to mitigate the risks, but many outsourcing problems could be eliminated if outsourced services were virtualized.

In a virtualized model, a company distributes its workload across multiple providers. Service requests from users and applications come into a service router that consults a directory of providers. The router chooses the best provider based on cost, performance, and availability, then connects the client to the preferred end point. Providers get paid for each completed transaction. If a provider raises its prices or takes too long to respond to requests, the router lowers the provider's priority, sending it less work. And, a provider can go off-line or be removed from the directory without affecting clients, who will simply be routed to another.

This isn't entirely science fiction. Technologies developed to enable Web services and grid computing make this kind of large-scale virtualization possible. But there are a few hurdles to jump before virtualized services are viable.

For one, the company's data must be replicated across multiple providers, or those providers must pull data in real-time from the company's own facilities. Either approach requires costly high-speed data lines, one of the expenses companies use outsourcing to avoid. Ideally, providers would maintain fast links to each other and make replication part of their service. Another solution would be using satellites to multicast data from the company to its list of providers.

The other hurdle is more cultural than technical: Businesses are wary of piecework billing. IT is more comfortable with flat recurring fees or broad usage metrics -- for example, gigabytes of data transferred -- than with per-transaction arrangements.

To ease that anxiety, companies could operate their own service routers or hire impartial third parties to manage service routing and check providers' billing. A third party could also gather provider statistics across multiple customers and publish rankings that help customers choose the best services.

For me, Web services, grid computing, and related technologies represent more than a set of new protocols for moving data around. Their promise will be realized when applied globally, increasing competition and freeing companies from dependence on individual providers.