Information In The Bank
Problem: Expanding data storage with limited staff
Solution: Outsourcing the project to a pay-as-you-go data-storage company
Payoff: Tech staff can focus on profit-making projects
Time and again, Greg Strakosch heard the same complaint from information-technology professionals he met as president of the technology division of United Communications Group (UCG). They needed to keep up-to-date about the computers and the software they used, but they didn't have time to look through stacks of magazines or surf for the information on the Net. Strakosch had a dot-com brainstorm: search engines targeted specifically at the interests of the IT pros.
By 1999, the 38-year-old publishing executive was CEO of TechTarget.com, a start-up that was spun off by UCG. And he had his own IT problems to solve.
To reach its "target" audience, TechTarget planned to build a large family of IT Web sites. But faced with the threat of copycat competition, the company had to act fast. Creating the sites would be easy and relatively cheap. (Launching the first one, Search400.com, for users of IBM's AS/400 servers, cost only about $50,000.) The difficult part would be deciding where to put TechTarget's stockpile of content, advertising, sales, and user data.
Once considered the backwater of IT departments, storage was in the forefront of Strakosch's concerns before the launch of a second Web site, Searchdomino.com, for Lotus Domino users. Strakosch expected that data would accumulate, but he couldn't predict how fast or how much. He could only estimate what his needs would be based on the response to Search400.com and his research into the size of each potential market. He observed that storage costs ate up almost 50% of most companies' hardware budgets, and he figured that before long that figure would be 80% for his business.
One of the options that TechTarget had for storing its data was buying computer hardware as needed and keeping the function in-house. But Strakosch was skeptical. Expensive hardware eats up capital, and installation takes time. Plus, he feared that because of the perpetual industrywide shortage of IT workers, TechTarget might not be able to hire staff who had the right expertise. Besides, Strakosch didn't want his managers running storage servers; he wanted them working on projects that would build his business.
So he presented a second option: outsourcing the function to StorageNetworks Inc., in Waltham, Mass.
Now Patrick Laughran, TechTarget's chief technology officer, had misgivings. None of his staff had ever outsourced storage before. Under the proposed arrangement, his people would be responsible for a vital operation that they wouldn't control. Sure, StorageNetworks offered the ability to add storage capacity on a pay-as-you-go basis as fast as the company would need it. But the company's data would reside on disk drives at StorageNetworks and would be overseen by the storage company's personnel.
So Laughran grilled StorageNetworks' staff until he was convinced they could handle any problem that came up. In the end, Laughran swallowed his fears and decided to give outsourcing a try. Hiring more IT staff would take time that he didn't have. "We had to get a product to market that could start generating revenue in weeks, not months," Laughran says.
Almost immediately, a glitch tested the relationship between TechTarget and StorageNetworks.
As Strakosch tells it, the two companies had only 30 days to put together a system. But TechTarget goofed in a hardware order and as a result couldn't hook up its equipment to the data-storage company's network. Even though StorageNetworks wasn't responsible for the mistake, the vendor scrambled to fix it overnight.
TechTarget now has 24 Web sites, including the popular Whatis.com encyclopedia of computer lingo. About 200 employees cater to more than 1 million registered members and 2 million monthly visitors to its sites; the company now stores two terabytes of data in StorageNetworks' digital vaults. The storage bill comes to more than $100,000 a month, but Strakosch figures that by now he would have spent an equivalent amount -- some $2 million -- if he had kept storage in-house at TechTarget's new headquarters, in Needham, Mass.
What matters to him is that his IT staff can work full-time on building the company by creating moneymaking services. "In hindsight," says Strakosch, "outsourcing storage was a home-run decision."
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