Doug Kaye, chief technology officer with NextMonet.com Inc., a San Francisco Internet company selling contemporary art, says Web hosts are starting to apply the same network-manage ment methodologies and rigor to Internet systems as system administrators have previously applied to legacy systems or client-server LANs and WANs. "The Web is really moving into this professional level of network support," Kaye says.

But Forrester's Schaaf and others say it's still caveat emptor for any company shopping for a Web-hosting provider. Schaaf recommends redundancy for any company planning to run enterprise applications through a Web-hosting service. As the MCI WorldCom frame relay outage in August demonstrated, bad things can happen to good companies at any time on the Web, regardless of what your provider promises.

That's why Kaj Pedersen, VP of engineering at Quote.com Inc., a Mountain View, Calif., online resource for stock information and day trading, uses two hosting companies, primarily to protect itself from networking outages. Its business is based on providing real-time information and constant stock-trading access. A glitch in the system could prove disastrous for its customers.

Quote.com brought on Exodus in last January to handle a hosting site, which joined two sites already run by Frontier Global Center. Pedersen cites "attention to customer and understanding business needs" as his biggest criteria for selecting a Web-hosting company.

The simple reason for the growth of Web-hosting services is the growth of the Internet. But in particular, the rise in E-commerce during the last year is providing an even greater boost to the need for Web-hosting services, analysts say. Forrester estimates $1.08 billion in consumer and $1.3 trillion in business trade will flow over the Internet by 2003.

E-commerce often involves the most important applications and a greater flow of data, and so companies usually want more guarantees of dependability and support services. Companies interested in E-commerce require support for shopping carts, electronic payments, and database management, in addi- tion to services such as back-office integration.

Despite all the issues and concerns surrounding Web-hosting companies, they still hold promise for many companies involved in E-commerce. Web hosts can spread out the high overhead expenses of running servers and maintaining huge bandwidth connections among multiple customers. A company needing extra bandwidth during the holiday season, for example, can arrange for bandwidth "bursting" during that time from a Web host and then scale down after that period.

Kaye with NextMonet.com says the cost savings associated with using a Web-hosting company are significant compared with trying to do the same thing in-house. Kaye estimates it would cost his company $750,000 a year for the staff and resources to maintain round-the-clock support for its Web operation. NaviSite, NextMonet.com's hosting company, provides 80% of all support Kaye would like to have for 20% of what it would cost in-house.

For Kaye, that's close enough. Because of its business model, NextMonet.com isn't as sensitive to downtime as Charles Schwab, eBay, or Quote.com. Besides, that extra 20% of support becomes extremely expensive. "We simply can't afford 99.999% reliability," he says.

But some can. That's why Web-hosting providers must address a wide range of needs and capabilities on the part of their customers. If they do, the potential for this aggressive market is wide open.

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