4 ms·

I had an interesting conversation with Rackspace this week that I found pretty amusing. My company is putting together a project that will ramp up to around $3

I had an interesting conversation with Rackspace this week that I found pretty amusing. My company is putting together a project that will ramp up to around $3 million / yr in hosting costs, give or take, within two years and continuing on for the winning hosting provider indefinitely. It is a bit of a surprise contract so we are in a big hurry to get a third of that capacity up ASAP. We have several options and Rackspace /was/ near the top of the list. So I am in a meeting with someone from their engineering staff, a sales guy, our lead operations engineer and our top sales guy. So our sales guy, doing his job, asks their sales guy "Is there anything else you can do for us." (referring to price) "I mean this deal is worth about $3 million/year" and the Rackspace sales guy replies "Well we are a $700 million dollar a year company so no, we do these kinds of deals all of the time." I was floored...My immediate thought was "Well, I guess you won't be a 703 million dollar a year company."

lsc 16y ago
if you have that kind of scratch to throw at the problem, why are you not buying your own hardware? I mean, outsourcing is great if you need to scale up fast, but if you are at that kind of scale, you will quickly save a lot of money if you can move some of your longer-term load off to your own hardware. Your monthly cost is going to be a rather large fraction of the capital cost of the hardware, and difference between the capital cost of harware+co-lo fees and what an outsourced server rental will charge at that scale is more than enough to amortize out the cost of a good sysadmin and a hardware grunt or two.
- clavalle 16y ago
  We are definitely exploring this option but it will have to wait until after we ramp up because we have to do it in such a hurry. Not only that but I'd like to stay out of the hardware business as much as possible. If we have to pay a premium to do so we have to pay a premium...depending, of course, on the size of the premium. We've fallen into the trap before of "We can do this. We'll just roll our own and save some cash." It has, without fail, ended up being more trouble than it is worth. Granted, that was on a much smaller scale so its not like we were hiring people just to handle that aspect (at first) but there is a lot to be said for focusing on core competencies and ours is software. My first concern, funny enough, was not the cost but the loss of control...there is something almost aesthetically pleasing about owning the whole stack. But, surprisingly, I've found that it feels like we are actually more in control when I can pick up the phone and say "This is what I want done." or "We are having a problem. Fix it." and not have to worry about "Is this key person in my organization trying to help fix some hardware problem when they should be working on 'x'?" etc, etc. And if the provider becomes too much of a problem, we know we can always fall back to doing it ourselves.
  - lsc 16y ago
    >We are definitely exploring this option but it will have to wait until after we ramp up because we have to do it in such a hurry. yeah, that's the big advantage of outsourcing. I was just pointing out that you should make sure you are aware of and okay with the premium you are paying if you keep the outsourced stuff around for more than a few months.

lsc 16y ago

if you have that kind of scratch to throw at the problem, why are you not buying your own hardware? I mean, outsourcing is great if you need to scale up fast, but if you are at that kind of scale, you will quickly save a lot of money if you can move some of your longer-term load off to your own hardware. Your monthly cost is going to be a rather large fraction of the capital cost of the hardware, and difference between the capital cost of harware+co-lo fees and what an outsourced server rental will charge at that scale is more than enough to amortize out the cost of a good sysadmin and a hardware grunt or two.

clavalle 16y ago
We are definitely exploring this option but it will have to wait until after we ramp up because we have to do it in such a hurry. Not only that but I'd like to stay out of the hardware business as much as possible. If we have to pay a premium to do so we have to pay a premium...depending, of course, on the size of the premium. We've fallen into the trap before of "We can do this. We'll just roll our own and save some cash." It has, without fail, ended up being more trouble than it is worth. Granted, that was on a much smaller scale so its not like we were hiring people just to handle that aspect (at first) but there is a lot to be said for focusing on core competencies and ours is software. My first concern, funny enough, was not the cost but the loss of control...there is something almost aesthetically pleasing about owning the whole stack. But, surprisingly, I've found that it feels like we are actually more in control when I can pick up the phone and say "This is what I want done." or "We are having a problem. Fix it." and not have to worry about "Is this key person in my organization trying to help fix some hardware problem when they should be working on 'x'?" etc, etc. And if the provider becomes too much of a problem, we know we can always fall back to doing it ourselves.
- lsc 16y ago
  >We are definitely exploring this option but it will have to wait until after we ramp up because we have to do it in such a hurry. yeah, that's the big advantage of outsourcing. I was just pointing out that you should make sure you are aware of and okay with the premium you are paying if you keep the outsourced stuff around for more than a few months.