For Small Businesses, Heft on Call
Oct. 23, 2003 was a banner day for MobilTravelGuide.com. The Web site, which runs a hotel and restaurant ratings service, publishes travel information, and books reservations, was prominently featured in an article in USA Today. Traffic to the site spiked by 500% in a matter of hours. That was enough to crash its Web server computers and send out nasty error messages to prospective customers.
But MobilTravelGuide Chief Information Officer Paul Mercurio didn't break a sweat. A year earlier, Mercurio signed a deal with IBM (IBM ) for the hosting, care, and feeding of his databases, Web servers, and back-room computers. It was one of the first contracts Big Blue signed for its on-demand, or utility computing, service, which was unveiled with much fanfare in May, 2002.
So how did tiny MobilTravelGuide avoid turning opportunity into disaster? IBM increased the capacity of its Web servers and database software as needed to absorb the traffic surge. Mercurio won't say how much the five-year contract he signed with IBM costs, but he claims that this utility-like flexibility has proven crucial when Web surfers flock to the site after mentions in national newspapers or appearances by the company's hotel inspectors on the Today Show.
It's an easy lesson learned: No small company can grow if it has bad technology that winds up turning away business. "If customers are coming to you for the first time on the Web because they saw something on the Today Show or read something in USA Today, you have to make sure they can get to you easily," says Mercurio. "It's the most important time to make sure you have enough capacity to handle them."
All of this sounds like a textbook argument for utility computing right from IBM, Hewlett-Packard (HPQ ), Sun Microsystems (SUNW ), or any other company jumping on the utility computing bandwagon. No doubt, it is.
What's different is the size of the customer. Most people think utility computing is something for big banks or multinational corporations. But in this era of tech-savvy small businesses, utility computing has made surprisingly rapid inroads with the little guys. IBM execs say 15% to 20% of their utility computing customers have less than 100 employees.
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Take MobilTravelGuide, a Park Ridge (Ill.) site with 30 employees. Oil behemoth ExxonMobil (XOM ) is a minority shareholder, but the travel site operates as an independent company. Mercurio is one of many small-business IT executives who have begun to embrace utility computing as a way to get more computing for less money.
"Your average small business doesn't understand what utility computing is. But there are a lot of small companies that are at their core technically competent. They are fascinated by the promise of being able to share a resource rather than own it," says IT consultant Rob Enderle, principal of Enderle Group, a tech consulting firm in San Jose, Calif.
MobilTravelGuide's data sits in a center owned by Big Blue and is monitored by IBM's tech support employees. With a software management system built for IBM's hosting service, they check to make sure the site is functioning properly every three seconds. It's something Mercurio could never do on his own. "Some of the [engineers] they have working for me would cost $100,000 per year to hire if I had to add an employee," he says.
What's more, MobilTravelGuide's business tends to go up in the summer -- an ideal fit for utility computing's flexibility, says Mercurio. "I don't care what business they're in. No company can size their online infrastructure for the peak minute of the peak hour of the peak day of the year. It's not economically viable," he says.
While he declines to disclose exact numbers, Mercurio says MobilTravelGuide is three times bigger than it was a year ago, both in terms of visits by Web surfers and monthly sales. With the right utility tools in place, his site's technology won't hamper that torrid growth.
By Alex Salkever, Technology editor for BusinessWeek Online
Edited by Jim Kerstetter