Avoiding lock-in

A big benefit to both Amazon and IBM's approach is that users don't have to enter into multiyear contracts like they do with traditional data centre outsourcing. "You don't have to lock yourself in with any of these plans," Kumar says. "It is that flexible model that we're seeing evolving in the industry today."

Evans, who uses IBM's service, says he has been very happy with the decision to outsource the application and renews his contract every few months. "Since this is a new service, we didn't want the fear of the five-year contract," he says.

As rosy as his experience has been, Evans warns his peers to do their homework upfront.

"You've got to get your business model right before venturing down this path. If you're not prepared to be great at that, then maybe you should rethink the decision," he says.

In fact, Evans hired an outside firm to perform load tests on the PGA's TourCast application. He focused on how the system handled the data being generated in his data centre along with the application being hosted by IBM. "We wanted to make sure the application could handle the load we were generating almost every 30 seconds," he says.

Evans wrote the test into the project plan with IBM. "It was one of the agreed-upon benchmarks we established," he says.

He also recommends keeping a close eye on the service provider relationship and spending time developing a service-level agreement. "You always have to worry about control," he says.

Guarding the enterprise

Gartner's Kumar says companies offering these services are using virtualization software to better assess pricing at a very granular level, even down to the actual CPUs used on a particular server. So rather than paying for the possible use of hundreds of servers, users know exactly how many CPUs they are being charged for.

Still, customers should be cautious.

"The disadvantage to this model is that you're suddenly tying your company's fortunes to that of another company," Nemertes's Antonopoulos says. He encourages users to research the provider's ability to respond to support needs as well as its overall financial health.

Antonopoulos says he can see a fit for this model in the world of franchisees. "In a franchise environment, franchisees take cues for what operations should look like from the franchise leader. It would be smart of them to do the same cookie-cutter approach with their technology infrastructure and allow franchisees to share their resources. They could use technology to help them standardize across the board," he says.

Some experts have concerns about companies in heavily regulated markets like the financial sector engaging in this type of infrastructure-sharing. But Mike Grandinetti, chief marketing officer at Virtual Iron Software, says users can cover their compliance bases by writing a solid service-level agreement. "Providers have to be able to meet whatever requirements you place on them. If you require weekly, hourly or monthly reports, that's just part of the packaging," he says.