When San Francisco-based graphic designer Alexander Allan was looking for a web host for his website last December, he didn't just pick the company with the biggest banner ad on his computer screen.

Instead, he embarked on a lengthy internet-based research process, starting with general online resources such as CNET and About.com. A link from About.com led him to Web host resource Hostsearch.com, where he was able to input details about the type of service he was looking for and obtain a shortlist of companies that matched his needs. Further refining his selections by reading online reviews, he eventually made a final choice.

Whether sustaining a single homepage or running vast corporate internet and intranet systems, today's web-hosting customers are more educated than ever - and they have to be: with some 7,000 hosters all vying for attention, and a huge number of service packages and plans costing anything between nothing and thousands of pounds a month, customers are arming themselves with detailed information about potential service providers, from the security of their data centres to their financial stability.

The first step in a company's journey towards selecting a web host is to decide whether they actually need one. While many organisations choose to outsource their web operations to an external web host, some, such as major international banks handling sensitive personal data, prefer to keep everything in-house.

But for most companies, the cost of implementing the necessary management tools, equipment and staff, makes internal hosting an unfeasible option. According to IDC, the technology market research company, and Genuity, the network services provider, nearly two-thirds of large companies in Europe use external providers to host their websites.

Some companies, such as California-based Borland Software, have the capability to run their own systems. But Borland decided to outsource management of its Teamsource Development Services Platform to web host Conxion.

"It's important for us to focus on our core competencies, which don't include running real-time data centres," says Patrick Kerpan, vice president and general manager of Borland's Teamsource DSP. "Once you decide you don't have the internal capability, you resolve to buy-in services intelligently."

User's priorities

Having decided to outsource, companies need to take an inventory of their needs before looking at the market. Today's informed web host seekers do not usually just reach for the cheapest choice. For small contractors such as Mr Allan, priorities for selecting a web host include value for money, disk size, customer service and not being tied into long-term contracts. For larger businesses, selection criteria include network quality and speed, security, and financial stability.

The financial stability of web hosting companies has lately become an important consideration for web host customers.

Key suppliers such as HostPro, Interland and Digex bought or merged with other companies in a drive towards creating more robust conglomerates. Some companies that recently filed for bankruptcy, such as Exodus and PSINet, are still doing business, despite internal restructuring.

The turmoil is creating problems for many clients. "Bankruptcy filings among managed hosting service providers have served as a wake-up call for businesses threatened by service disruptions," says Glenn Mingay, a spokesman for Genuity.

Even five minutes of downtime can cost web-based businesses lots of money. According to a new report by the Yankee Group, the Boston-based technology research company, UK businesses lost more than £500m in 2001 as a result of website downtime.

Larger, publicly-traded companies stand a better chance of gaining business over smaller competitors not only because their brand name and track record, but also because of the accessibility of their financial statements.

Customer service is another key factor. Most low-end plans offer only internet-based customer support, but ISPs often offer phone support for a few more dollars per month. In a survey by web host Rackspace, customer service proved to be the vital key decider when choosing a third-party to manage their web-hosting platform, with more than 70 per cent of companies placing customer support at the top of their wish-list.

"Customer service is the number one reason why clients leave their web hosts," says Ted Chamberlin, networking analyst at the Gartner IT consultancy.

Security is also important to customers. Outsourcing web operations to a third-party moves a company's site beyond the perimeter of their internal systems, increasing vulnerability. "Few web-hosting companies will provide cast-iron assurances about security, and companies themselves may overlook their offsite hosted web applications when considering security for the organisation as a whole," says Deri Jones, technical services director of NTA Monitor, a UK-based internet security specialist. "The key is to ensure that the site is regularly tested to identify possible holes before they become a problem."

Having analysed their needs, companies are ready to shop the vast web host marketplace for a suitable vendor. An entire sub-sector has grown up around helping people select a web host.

Online resources

For small companies, assistance can be found via free web-based resources, such as Hostsearch, and reading online reviews, such as Epinions.com. Client feedback is a useful decision-making tool, but the fact that web hosts can contribute to consumer opinion sites using pseudonyms undermines the validity of these resources.

Hosters use a variety of techniques to make themselves stand out from the crowd. Small web hosts buy banner ads or paid listings on search engines. Their larger counterparts leverage partnerships with telcos and technology companies. Digex, for example, markets itself via joint programmes with such partners as WorldCom, Sun, Cisco, and Nokia.

Although today's market conditions favour larger brand-names over smaller start-up ISPs, when it comes to selecting a web host, word-of-mouth goes a long way. "Our most successful marketing tool is customer recommendation," says Thomas Davidsson, European senior vice president of Digex.

Mr Allan thinks recommendations are important, but, ultimately, any selection is going to be a gamble. "The only way you can tell whether you've made the right choice is by trying it out."

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