The king of connectivity

ARN: What services does WebCentral offer?

Ernst: We tend to think of ourselves as a Web hosting/ASP because we don't generate a lot of our revenue through connectivity. Initially we started off in the SME hosting service but as our infrastructure grew we moved that up our dedicated server market. This allows large corporate customers to outsource the operation of their exchange, Web or sequel servers to us - we can manage them and provide 24-hour support and a disaster recovery strategy. At the moment we are trying to commodify that market by offering a great level of service with all the important features, like reliability and service-level agreements, as well as being cost effective. We're starting to roll out more add-on services to our customers but we've got a way to go before we start moving people into the ASP environment.

Where is ASP at, in real terms?

While a lot of people are talking about ASP and all the cool products you'll be able to run online, it's still very much in its infancy. If you go down mainstreet and ask a newsagent "what's your ASP strategy?" you'll be lucky if they're on e-mail. So we recognise that, for our customers, this is an evolving process. There are three key products that businesses are using - access, e-mail and Web space, and maybe some e-commerce.

The ASP model is still probably five years away from where we're going to see some real significance.

What are the great issues/dangers of ASP?

In December we're launching our major ASP roadshow to bring people on-board and the biggest challenge facing me is solving connectivity issues to the end user when we try to deliver the ASP services. Where the ASP model can completely fail in Australia is if we don't get good high-speed broadband access into SME businesses at a really economical level.

Rapid growth is the pleasure and plague of the IT industry and you have certainly had your share. How do you control the beast?

WebCentral identified very early on in the piece how to scale a business that is growing very, very fast. I talk to businesses that say "wow, we grew 2 per cent the whole year," and I go "well, gee . . . we grew 300 per cent," but it's scaling and managing this growth that is the really interestingly challenge. We've been able to add up to 26,000 sites - now it's 36,000 domains that we host - while delivering a great level of service to our customers. Part of this is educating ourselves about the technology and what it can do; in the early days we spent a lot of time learning about mail servers, load and those sort of things. The other part is looking at where we think the growth is likely [to be] and then adding a 10 to whatever figure we come up with. The idea is to keep evolving the technology to that level. We're just moving to our latest mail server technology called superclusters which are designed to handle loads in excess of 10 million e-mails a day. The previous technology, which we're running on now, will take us to about 1.5 million e-mail messages a day. It's a process of planning it and as soon as you finish implementing one design you move into design mode for the next mail server architecture to replace it.

The other thing we watched carefully was the extent of our involvement in the networking side of the business. If you're not careful you end up moving your model too far to one side, where you simply become a consultancy company. The disadvantage with this is that your revenue is directly related to how many people you can physically employ. You do a lot of customisation and spend a lot of one-on-one time with the customers, your scalability simply becomes how many people you can put on board to grow the business.

To make things scalable, our goal is to ensure workers aren't sitting there doing mundane things. Where possible, you use the technology to automate it, you get the systems to report back. That way your people can be out doing the smart things.

I imagine it's very easy to fall off the edge into consultancy. How do you maintain the balance?

Through the 80/20 rule - we're not after 100 per cent of the market we're just after 80 per cent of it. We may pitch suggestions to a customer about the kind of hardware set up we think is best and the advantages of having us to maintain it, but if our set-up doesn't suit their requirements we'll suggest something different.

Does this strategy work 80 per cent of the time?

Absolutely. It's really hard to find technology people and it's going to get harder. Some of the top 100 Australian companies host with us and we'll get these scary phone calls saying "Ahhh, we've just lost our Web developer, how do we check how many people came to our Web site?".

It's hard to find people who know what they're doing that don't cost an arm and a leg. I mean, it used to be that when you employed staff they'd bring their résumé. Now you have to give them a prospectus.

But the common complaint among Web developers is that they're sick of dealing with the hardware - it failed Sunday at two o'clock while the technician was out getting drunk and the sites were down for five hours. So they just say "give us the server, you look after it and we'll do the front-end stuff".

Is the lack of IT staff driving businesses to you?

Yes it is, especially if we talk to Web developers. They want their staff building Web sites or coding ASP pages, not managing the servers or backing up the system. The other concern is that a lot of the Web developers coming straight out of university know how to cut great sequel codes and do third normal form in their statements, but they lack the experience to back up the database and make sure it's working. Especially when it comes to systems that were put in place 10 or 20 years ago by mainframe and mini operators, these new guys don't have the level of industry experience.

WebCentral is currently the leading Web host in the Australian market, do you foresee any competition on this front?

On some levels we compete with Telstra and I suppose there's some concern that they're eventually going to get the model right and come after us with a vengeance. We're even seeing entities such as ANZ coming into the SME-hosting markets, and there's the second-tier ISPs. They are competitors, but they're also potential customers because anyone can set up an ISP, it's the level of service and connectivity which is the real issue.

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