Cisco Systems will team up with Microsoft, PeopleSoft Inc., and several other software vendors, hardware vendors, and service providers next week to further the development of hosted-application services.
The initial goal of the Cisco Host Applications Initiative will be to set up a joint development lab that streamlines the performance of applications--such as PeopleSoft, Great Plains Dynamics, and Microsoft Exchange or SQL server--running over the Cisco-based infrastructures operated by application service providers. It is Cisco's intention to add security and quality-of-service controls to hosted-application services, making them more reliable and secure than they are today.
Application server hosting is an outgrowth of Web server hosting services offered for years by service providers such as GTE Corp. and PSInet Inc., both members of the Cisco initiative. The logic is that companies can better focus on their core businesses if they minimize the amount of resources allotted to maintaining large numbers of apps servers.
"It's a real challenge to build a robust, redundant application server farm and keep it up 24-by-7," says Oliver Sharp, chief technology officer of iTurf Inc., a provider of online services and commerce in New York. ITurf operates a server farm for its Web site, but lets Cisco Host Applications Initiative member Breakaway Solutions Inc. host Internet-commerce applications that are peripheral to its main line of business.
In addition to Web-commerce applications, hosting services that let companies outsource human resources, accounting, and other business applications have the potential of saving considerable amounts of money, industry analysts say.
However, hosted-application services have been slow to take off, largely because of security and privacy concerns. "Businesses are very wary of letting core business information out of their hands," says David Baltaxe, senior analyst at research firm Current Analysis Inc. "You are placing intimate details of your corporation in other people's hands. How comfortable are you with that?"