Our research indicates an increase in unsatisfied Web hosting customers. Most of the unrest exists in the services being provided, not the core infrastructure (e.g., Web server technology). Core infrastructure capability has commoditized, and the core architecture is well understood. Most companies complain that their provider is not delivering service levels to their need level, yet we commonly find that the provider is indeed meeting the letter of the service-level agreement (SLA).

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Once an agreement is signed, it is difficult to alter that agreement without renegotiating the entire contract, which usually ensures higher costs. The alternative is to switch providers. Although that is a commonly chosen option, it is a waste of time and money (due to spend on conversion) if the new SLA is not stronger and does not better define the services required. Not only must the infrastructure performance metrics be more granular, but customer satisfaction metrics, service performance metrics, and other protections must also be included.

We are now seeing hosting requests for proposal turning their focus from infrastructure specifics toward management services, which will be the leading concern for Web hosting selection through 2002/03. These services will clearly manifest themselves first in SLAs and, eventually, in service provider interfaces (see table of service-level agreement specifics). Through 2002, the SLA--combined with price--will be the core differentiator for vendors, but by 2003, we will begin to see service provider interfaces offered by innovative service providers. However, they will not become mainstream until 2005+.

The Web hosting market itself is in major transition, with many stand-alone vendors in poor shape financially. By 2004, Web hosting as a stand-alone industry will no longer be viable, but most business will end up in the hands of larger, broad-based telecommunications firms (e.g., AT&T, Qwest, Sprint, C&W) as well as traditional full-service outsourcing companies (e.g., EDS, CSC, Perot, IBM). Short term, vendor financial viability must be a primary selection criterion.

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