Tirschwell says Savvis has handled the growth in Wall Street System's infrastructure "exceptionally smoothly. We couldn't ask for a better outcome,'' he adds.

Tirschwell says owning a data center and equipment and hiring IT staff to support its software-as-a-service offering doesn't make economic sense for Wall Street Systems.

"I haven't found a model that works as well as having Savvis own everything and we lease it out,'' Tirschwell says. "Our infrastructure costs have dropped by 20 per cent over the last year because of the nature of technology changes, such as dual-core CPUs being replaced by quad-cores at relatively the same cost. My infrastructure costs are actually going down.''

Using Savvis' data center not only saves Wall Street Systems money, but it also speeds up its ability to serve new customers of its software-as-a-service offering. And it's less risky.

"If we do a risk analysis between a client of ours doing something themselves versus going the outsourced route, it's night and day,'' Tirschwell says. "With Savvis, we have SAS 70 certification, auditability and we have [service-level agreements] for response times and turnaround. It's a no-brainer. Our products run much quicker, the transition is much smoother, and there's much less risk. So that's a huge value to us.''

What Web hosting vendors are working on next is what they call "in-the-cloud" offerings that allow customers even more flexibility in how they purchase Web hosting services. Rackspace, for example, has a spin-off venture called Mosso.com that allows Web 2.0 developers to outsource all of their IT operations.

"Mosso.com is cloud hosting so you don't have to think about how many dedicated servers you need to run your application,'' Engates says. "One day you have one server. The next day you end up on Oprah, and you have the resources of 100 servers. It's pretty seamless. It's ideal for blogs that typically have a trickle of traffic and one day they get a scoop and they're on Slashdot.org or digg.com.''

As the Web hosting industry grows so rapidly, one question for buyers is whether they will continue to get top-notch customer service from their providers.

"Rackspace itself is growing so quickly. This is obviously something that we do have a concern about. Can they continue to grow and still maintain that hungry side of them to continue being top-tier in customer service?'' Maag asks.

Garner's Leong says the key factor for enterprise customers in choosing a Web hosting vendor is customer service.

"The key area where the customer makes a buying decision is the quality of service they can get,'' Leong says. "It's about vendor responsiveness, the vendor's degree of pro-activeness and their ability to be flexible. It's not just about fixing an outage. It's about supporting a customer who needs to make a change.''