They might be giants

[NewsDesk]

Author: Irwin Soonachan - HostingTech Magazine

With DataCenter discipline, savvy marketing, and a monster merger, Digex has earned it's place among the hosting giants of the post-new economy era.

When Digex?s Chief Executive Officer Mark Shull was starting his career at EDS, he heard a story from gray-haired office mates that he didn?t forget. It took place in late 1960s through the early 1970s, when the mainframe world was exploding. EDS?s competitors were building datacenters as quickly as they could. EDS, though, was having none of it.

?There were quite a number of companies who EDS was competing against, who were, in fact, simply building mainframe datacenters for companies, and that?s how they were competing,? Shull says. ?EDS took a different tack, which was that yes, it had datacenters, but it focused on doing the computing for customers and very quickly on consolidating datacenters into regional, centralized models. People said, ?How could you possibly do that? You need to be focused on customers.? But those old-timers emerged as the winners.?

Flash forward to the late 1990s. Digex customers, potential customers, and investors all wanted to know why the Laurel, Maryland-based company wasn?t building more datacenters. Competitors such as Exodus were building them as fast as they could, and Digex, which has never had a colocation offering, looked like an overly conservative laggard.

?We were under incredible pressure,? Shull remembers. But Shull, with the support of his staff, held his ground.

?The situation seemed analogous to me,? he says. ?That?s why I felt so strongly about it, even though some people made an awful lot of money, if they got out early enough. There was a tremendous amount of low-hanging fruit, or near-term opportunities to grow a hosting business very rapidly, simply by building out datacenters. But someday, supply would exceed demand.?

?Someday? has come crashing down on Exodus, which once considered buying Digex. Digex, meanwhile, has set its sights on becoming the king of the ring in Web hosting.
While its competitors were building as fast as they could, Digex was spending money on finding less expensive ways to run its managed hosting offerings. The company has devised proprietary tools to remotely manage datacenters. Talk to someone from Digex and expect to hear the same mantra: ?Our competitors use people to solve problems. We use automation.?

Think global, act local
When WorldCom acquired Digex earlier this year, Digex established a presence in WorldCom datacenters internationally, yet still keeps most of its 1,400-person staff at home.

?We run a centralized operation,? says Rebecca Ward, Digex?s president of engineering, marketing, and product development. ?We have space in WorldCom datacenters in the U.K.; France; Germany; Tokyo; Somerset, New Jersey; and Ashburn, Virginia; which we run centrally from our NOC [network operations center] facility here in Laurel. We can do all the systems administration here. We have a fail-over facility, and we make sure that we have out-of-band access for networks, so that we can do the administration of servers. That enables you to have a concentrated pool of talent that you can leverage, and you can do things very consistently for customers.?

Many of Digex?s remote network management projects focus on Compaq and Microsoft, both equity investors who pumped $100 million of funding into the company. That isn?t the only focus of R&D efforts at Digex, though.

Digex employees have another mantra: ?We?re not vendor specific, our solutions are best of breed.? The company has developed Web platforms that integrate products from hardware providers such as Compaq and Sun with software from companies including IBM, Oracle, and, of course, Microsoft. Products are stress tested in various combinations in Digex labs, so that when a customer comes to Digex with a given set of needs, the company can quickly identify a set of products that will meet them. According to IDC analyst Melanie Posey (www.idc.com), this approach has worked for Digex.

?Digex?s approach is a little bit different because you have these different pieces that you can mix and match to make your own solution,? Posey says. ?They have people in their lab whose job it is to play around with this stuff. They?ve tested all the iterations of how the modular parts work with one another in different situations. It gives them a body of knowledge [enabling them] to standardize certain things and to categorize what will be required when a certain customer comes in. They can put things together a lot faster for companies this way.?

The result, Posey says, is that Digex successfully walks the fine line between too much customization, which can be costly to the vendor, and too much standardization, which can turn off buyers.

?They don?t customize for each customer, and they don?t try to shoehorn any customer into one solution,? Posey says. ?It?s very much a happy medium.?

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Used with permission from HostingTech magazine (www.hostingtech.com).
Irwin Soonachan
correspondent
isoonachan@hostingtech.com