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The document discusses the hidden costs associated with shared and multi-tenant hosting compared to dedicated hosting, highlighting that lower-priced options may lead to significant additional expenses from factors such as downtime, security risks, and inefficiencies. It emphasizes that dedicated hosting offers superior reliability, speed, and security, making it a more cost-effective solution for businesses that heavily rely on IT services. Companies must assess their specific needs and the potential financial impact of downtime and security breaches before choosing a hosting solution.
![The Hidden Costs of Shared and Multi-Tenant Hosting
Reliability
The high cost of downtime
The effects of downtime on revenue, customer satisfaction
and brand reputation can range from minimal, to devastating.
The difference generally depends on the type of company, the
services the outage affects, and the length of the outage.
Companies involved in e-commerce, telecommunications, or
whose revenue source requires IT services to function are at
particularly high risk, but downtime can affect all industries.
Costs to the average individual company in North America
from IT downtime and data loss are $159,331 every year, with
downtime incidents totaling 10 hours each year. [1]
59% of Fortune 500 companies experience an average of 1.6
hours of downtime every week, making their average yearly
downtime cost approximately 2.79 million dollars. [2]
Larry Ponemon, the director of the Ponemon Institute, a research
firm that studies IT reliability, sees downtime as posing a major
threat to businesses, saying “With the increase in reliance on
A ZeroLag White Paper
“
With the increase
in reliance on IT
systems to support
business-critical
applications, a single
downtime event now
has the potential to
significantly impact
the profitability – and
in extreme cases,
the viability – of
an enterprise.”
IT systems to support business-critical applications, a single
downtime event now has the potential to significantly impact
the profitability – and in extreme cases, the viability – of an
enterprise.”
Clearly, the costs of downtime to American business are
incredibly high and must be carefully weighed when choosing a
hosting option.
[1] The Avoidable Cost of Downtime.
Coleman Parkes Research. 2013.
[2] Assessing the Financial Impact of
Downtime. http://www.businesscomputingworld.co.uk/assessing-the-financial-impact-of-downtime/. Business Computing
World. 2011
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![The Hidden Costs of Shared and Multi-Tenant Hosting
A ZeroLag White Paper
Downtime affects company reputation
Case study: Virgin Blue
In September of 2010, Australian airline Virgin Blue’s
reservation system went offline for 21 hours. After
their server went down, thousands of passengers
were trapped overnight while the company manually
re-booked their flights. The total incident was estimated
to have cost Virgin Blue 20 million dollars.
Although it is difficult to estimate the total cost the
incident had to Virgin Blue’s reputation, it is undoubtedly
high. During and after the incident, the company
received a large amount of negative press, and one poll
found their favorability rating to have dropped by 20% in
the following year.[3]
[3] Virgin Blue. http://www.theregister.
co.uk/2010/09/28/virgin_blue/. The
Register. September 2010
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![The Hidden Costs of Shared and Multi-Tenant Hosting
A ZeroLag White Paper
Dedicated hosting reduces downtime
Low cost hosting alternatives such as VPS and shared hosting
generally suffer from more downtime than dedicated hosting
servers. A variety of factors contribute to this, including overall
improved technical support for dedicated hosting companies,
ZeroLag’s 100%
Uptime SLA
ZeroLag’ stands behind its
ability to handle larger traffic load, increased security, and
dedicated hosting service with
general equipment. Because dedicated servers utilize an entire
a financially backed 100%
server’s capacity, they are better able to cope with stresses that
uptime service level agreement
can potentially lead to downtime.
(SLA). Given that the average
downtime for shared servers
Shared hosting environments can also be negatively impacted
in a year is 8.76 hours[4],
the by poorly written, inadequately tested, or malicious
with the cost per minute of
code of neighboring tenants. Periodic server hangs and
downtime being $5,600,
crashes are all but inevitable as other tenants experiment
zero downtime represents
with poorly behaved applications and plug-ins. In severe
a potential average savings
cases, the hosting provider may find it necessary to take the
of $2,943,360 each year.
server offline, taking down innocent clients at the same time.
Another pitfall is the risk of spam blacklisting. Spammers
frequently use shared hosting accounts to operate spam email
servers. They send thousands of emails until the server’s IP
address is detected and added to spam blacklists maintained by
network administrators around the world. Then they cancel the
account and move their operation elsewhere. But the damage
has been done. With the IP address blacklisted, other tenants
on the server will face difficulties getting their legitimate email
delivered.
[4] VPS vs. Dedicated Servers. http://
www.artofblog.com/vps-vs-dedicated-servers/. The Art of Blog. January
2012.
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![The Hidden Costs of Shared and Multi-Tenant Hosting
A ZeroLag White Paper
Speed
Server speed can have a significant impact on customer sat-
ZeroLag dedicated hosting
increases site speed
isfaction, search engine rankings, and business efficiency. Although
its effects on a company’s profitability are harder to measure than
reliability, it nevertheless has a significant financial impact.
Shared servers offer an
Server speed affects search engine rankings
average download speed
For many companies, their website’s search engine rank is critical
of approximately 400 kb/s,
to their success. In April of 2010, Google officially announced
whereas ZeroLag’s dedicated
that site speed is a factored component in its algorithm. Even
hosting service provides up to
small differences in speed can have a significant negative impact
10 Gb/s in download speeds.
on a website’s ranking.[5]
This represents a large
potential increase in site load
Page views decrease as load time increases
speed, allowing for improved
In a recent study conducted by AOL, it was discovered that pages
rankings in Google, more page
with longer load times have fewer views than their faster loading
views, increased conversions,
counterparts. Sites in the top ten percent of site speed saw an
a lower bounce rate, and
average of 7.5 page views per visit, while those in the bottom ten
greater profitability in site load
percent averaged only 5. The amount of time visitors spend on a
speed, allowing for improved
page has been shown to have a strong correlation with whether
rankings in Google, more page
or not they eventually become customers, so this difference can
views, increased conversions,
have a significant effect on a company’s bottom line.[6]
a lower bounce rate, and
greater profitability.
Faster site speed increases profitability
A study conducted by ShopZilla’s Phil Dixon found that a
5-second increase in website load speed increased revenue
by 7%-12% for e-commerce sites. For a site that generates
$100,000 in revenue yearly, this represents a $7000 to $12,000
[5] Using site speed in web search rankings.
increase in revenue. [7]
http://googlewebmastercentral.blogspot.
mx/2010/04/using-site-speed-in-web-searchranking.html. April, 2010. Google.
[6] Velocity and the Bottom Line. http://
programming.oreilly.com/2009/07/velocity-making-your-site-fast.html. July, 2009
[7] Shopzilla’s Site Redo - You Get What You
Measure. August, 2009. ShopZilla
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![The Hidden Costs of Shared and Multi-Tenant Hosting
A ZeroLag White Paper
Security Risks
Server security represents a significant concern for many
businesses. Highly publicized breaches at companies like
Adobe, Facebook, and Zappos highlight the risk of improperly
protected servers, particularly for companies that store sensitive
information.
The financial impact of security breaches
A 2011 study conducted by McAfee found that each year
cybercrime costs the global economy 400 billion dollars.[8]
Companies in the financial, defense, and utilities industries are
at particularly high risk, losing an average of 16 million dollars
per company annually to various forms of cybercrime.[9]
Identity theft from servers is a major source of losses for companies
in the financial sector, accounting for about 768 million dollars
annually. [8] The cost per employee of cybercrime increase significantly for smaller companies, with smaller companies seeing a
cost of $1,324 per employee versus $305 for larger companies.[9]
Security breaches and public relations
Case study: Adobe
Cybercrime can also have serious indirect consequences to companies’ public image, especially for
companies trusted with customers’ private information.
A public relations incident occurred after the recent
hacks into Adobe’s order information servers. Hackers
stole 38 million customers’ names, encrypted credit
card numbers, and other sensitive information. Adobe
was forced to reset user accounts and launch a major
public relations campaign to reassure their customers
that their information would be more secure in the future.
The incident will cost Adobe several million in notification, enhanced security, and loss of productivity, but
the costs to their reputation are impossible to quantify.
Copyright © 2013 Zerolag
[8] The Economic Impact of Cybercrime and Cyberespionage. McAfee.
July 2013
[9] 2012 Cost of Cybercrime Study:
United States. Ponemon Institute.
October 2012
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![The Hidden Costs of Shared and Multi-Tenant Hosting
A ZeroLag White Paper
Dedicated hosting offers increased security
Compared with shared, VPN, and public cloud hosting, dedicated
hosting provides significant security benefits. Because each
SIGNIFICANT SECURITY BENEFITS
client is provided with their own dedicated server, there is far
less chance of viruses or malware spreading between clients.
Dedicated hosts also usually provide more comprehensive
cybercrime protection than their less expensive counterparts.
[10] Cyber-attack methods are continually evolving as hackers
and mischief-makers develop new exploits. Server operating
systems, application software, and device firmware must be
updated and patched on a regular basis, and hosting infrastructure must be closely monitored to quickly detect and actively
defend against intrusion attempts. Maintaining a level of constant
vigilance, along with the expertise required to harden the server
environment against attacks, is beyond the capabilities of most
in-house IT departments.
Given the high costs of security breaches, investing in dedicated
hosting may be a more cost effective choice, particularly if your
company handles sensitive information.
[10] Dedicated Hosting Service. Wikipedia.
http://en.wikipedia.org/wiki/Dedicated_
hosting_service#Security. November, 2013.
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White Paper and Branded Template
- 1. The Hidden Costs of Shared and Multi-Tenant Hosting When is dedicated hosting right for your business? Copyright © 2013 Zerolag www.zerolag.com
- 2. The Hidden Costs of Shared and Multi-Tenant Hosting A ZeroLag White Paper Summary of key findings Shared hosting, virtual private servers (VPS), and public cloud hosting are low cost alternatives to dedicated hosting, and as such can be appealing to many businesses looking to minimize spending. ZeroLag offers reliable dedicated hosting solutions ZeroLag’s dedicated hosting However, these low price alternatives may carry hidden costs, solutions rank among such as: the highest in reliability, • • Security risks • security and speed. They Lost opportunity due to downtime Effects of slow server speed are among the most cost effective hosting providers for businesses which decide the advantages of Dedicated hosting might be the more cost effective choice dedicated hosting outweigh for your business the difference in initial price. In some cases, the hidden costs of low price hosting can exceed the difference in initial price. This is particularly true for companies that depend solely on revenue from IT services, such as e-commerce and telecommunications companies. In these cases, dedicated hosting is the better choice to minimize expenditure and maximize profitability. Businesses should carefully consider all monetary and opportunity costs before choosing a hosting solution that’s right for them. Copyright © 2013 Zerolag – 1 – www.zerolag.com
- 3. The Hidden Costs of Shared and Multi-Tenant Hosting A ZeroLag White Paper Understanding the real costs of hosting There are many low cost alternatives to dedicated hosting, such as shared hosting, virtual private servers (VPS), and public cloud hosting. These services can provide many of the same features as dedicated hosting, and can be very effective in some Dedicated Hosting However, dedicated hosting provides many advantages over More Uptime situations. Increased Speed Better Security these low cost competitors that may make it more cost effective for businesses. Dedicated hosting is generally found to have more uptime, increased speed, and better security, making it the preferred choice for reliability and performance. Other Hosting Options Hidden costs, such as lost revenue from downtime, damage to company reputation, security risks, and poor technical support can add to the final price of low cost hosting. In order to determine the best solution, all these factors must be weighed. Lost Revenue Security Risks Poor Technical Support This guide will examine the various areas in which dedicated hosting may have an advantage over other low cost alternatives, and attempt to make a real cost comparison of the services. Copyright © 2013 Zerolag – 2 – www.zerolag.com
- 4. The Hidden Costs of Shared and Multi-Tenant Hosting Reliability The high cost of downtime The effects of downtime on revenue, customer satisfaction and brand reputation can range from minimal, to devastating. The difference generally depends on the type of company, the services the outage affects, and the length of the outage. Companies involved in e-commerce, telecommunications, or whose revenue source requires IT services to function are at particularly high risk, but downtime can affect all industries. Costs to the average individual company in North America from IT downtime and data loss are $159,331 every year, with downtime incidents totaling 10 hours each year. [1] 59% of Fortune 500 companies experience an average of 1.6 hours of downtime every week, making their average yearly downtime cost approximately 2.79 million dollars. [2] Larry Ponemon, the director of the Ponemon Institute, a research firm that studies IT reliability, sees downtime as posing a major threat to businesses, saying “With the increase in reliance on A ZeroLag White Paper “ With the increase in reliance on IT systems to support business-critical applications, a single downtime event now has the potential to significantly impact the profitability – and in extreme cases, the viability – of an enterprise.” IT systems to support business-critical applications, a single downtime event now has the potential to significantly impact the profitability – and in extreme cases, the viability – of an enterprise.” Clearly, the costs of downtime to American business are incredibly high and must be carefully weighed when choosing a hosting option. [1] The Avoidable Cost of Downtime. Coleman Parkes Research. 2013. [2] Assessing the Financial Impact of Downtime. http://www.businesscomputingworld.co.uk/assessing-the-financial-impact-of-downtime/. Business Computing World. 2011 Copyright © 2013 Zerolag – 3 – www.zerolag.com
- 5. The Hidden Costs of Shared and Multi-Tenant Hosting A ZeroLag White Paper Downtime affects company reputation Case study: Virgin Blue In September of 2010, Australian airline Virgin Blue’s reservation system went offline for 21 hours. After their server went down, thousands of passengers were trapped overnight while the company manually re-booked their flights. The total incident was estimated to have cost Virgin Blue 20 million dollars. Although it is difficult to estimate the total cost the incident had to Virgin Blue’s reputation, it is undoubtedly high. During and after the incident, the company received a large amount of negative press, and one poll found their favorability rating to have dropped by 20% in the following year.[3] [3] Virgin Blue. http://www.theregister. co.uk/2010/09/28/virgin_blue/. The Register. September 2010 Copyright © 2013 Zerolag – 4 – www.zerolag.com
- 6. The Hidden Costs of Shared and Multi-Tenant Hosting A ZeroLag White Paper Dedicated hosting reduces downtime Low cost hosting alternatives such as VPS and shared hosting generally suffer from more downtime than dedicated hosting servers. A variety of factors contribute to this, including overall improved technical support for dedicated hosting companies, ZeroLag’s 100% Uptime SLA ZeroLag’ stands behind its ability to handle larger traffic load, increased security, and dedicated hosting service with general equipment. Because dedicated servers utilize an entire a financially backed 100% server’s capacity, they are better able to cope with stresses that uptime service level agreement can potentially lead to downtime. (SLA). Given that the average downtime for shared servers Shared hosting environments can also be negatively impacted in a year is 8.76 hours[4], the by poorly written, inadequately tested, or malicious with the cost per minute of code of neighboring tenants. Periodic server hangs and downtime being $5,600, crashes are all but inevitable as other tenants experiment zero downtime represents with poorly behaved applications and plug-ins. In severe a potential average savings cases, the hosting provider may find it necessary to take the of $2,943,360 each year. server offline, taking down innocent clients at the same time. Another pitfall is the risk of spam blacklisting. Spammers frequently use shared hosting accounts to operate spam email servers. They send thousands of emails until the server’s IP address is detected and added to spam blacklists maintained by network administrators around the world. Then they cancel the account and move their operation elsewhere. But the damage has been done. With the IP address blacklisted, other tenants on the server will face difficulties getting their legitimate email delivered. [4] VPS vs. Dedicated Servers. http:// www.artofblog.com/vps-vs-dedicated-servers/. The Art of Blog. January 2012. Copyright © 2013 Zerolag – 5 – www.zerolag.com
- 7. The Hidden Costs of Shared and Multi-Tenant Hosting A ZeroLag White Paper Speed Server speed can have a significant impact on customer sat- ZeroLag dedicated hosting increases site speed isfaction, search engine rankings, and business efficiency. Although its effects on a company’s profitability are harder to measure than reliability, it nevertheless has a significant financial impact. Shared servers offer an Server speed affects search engine rankings average download speed For many companies, their website’s search engine rank is critical of approximately 400 kb/s, to their success. In April of 2010, Google officially announced whereas ZeroLag’s dedicated that site speed is a factored component in its algorithm. Even hosting service provides up to small differences in speed can have a significant negative impact 10 Gb/s in download speeds. on a website’s ranking.[5] This represents a large potential increase in site load Page views decrease as load time increases speed, allowing for improved In a recent study conducted by AOL, it was discovered that pages rankings in Google, more page with longer load times have fewer views than their faster loading views, increased conversions, counterparts. Sites in the top ten percent of site speed saw an a lower bounce rate, and average of 7.5 page views per visit, while those in the bottom ten greater profitability in site load percent averaged only 5. The amount of time visitors spend on a speed, allowing for improved page has been shown to have a strong correlation with whether rankings in Google, more page or not they eventually become customers, so this difference can views, increased conversions, have a significant effect on a company’s bottom line.[6] a lower bounce rate, and greater profitability. Faster site speed increases profitability A study conducted by ShopZilla’s Phil Dixon found that a 5-second increase in website load speed increased revenue by 7%-12% for e-commerce sites. For a site that generates $100,000 in revenue yearly, this represents a $7000 to $12,000 [5] Using site speed in web search rankings. increase in revenue. [7] http://googlewebmastercentral.blogspot. mx/2010/04/using-site-speed-in-web-searchranking.html. April, 2010. Google. [6] Velocity and the Bottom Line. http:// programming.oreilly.com/2009/07/velocity-making-your-site-fast.html. July, 2009 [7] Shopzilla’s Site Redo - You Get What You Measure. August, 2009. ShopZilla Copyright © 2013 Zerolag – 6 – www.zerolag.com
- 8. The Hidden Costs of Shared and Multi-Tenant Hosting A ZeroLag White Paper Security Risks Server security represents a significant concern for many businesses. Highly publicized breaches at companies like Adobe, Facebook, and Zappos highlight the risk of improperly protected servers, particularly for companies that store sensitive information. The financial impact of security breaches A 2011 study conducted by McAfee found that each year cybercrime costs the global economy 400 billion dollars.[8] Companies in the financial, defense, and utilities industries are at particularly high risk, losing an average of 16 million dollars per company annually to various forms of cybercrime.[9] Identity theft from servers is a major source of losses for companies in the financial sector, accounting for about 768 million dollars annually. [8] The cost per employee of cybercrime increase significantly for smaller companies, with smaller companies seeing a cost of $1,324 per employee versus $305 for larger companies.[9] Security breaches and public relations Case study: Adobe Cybercrime can also have serious indirect consequences to companies’ public image, especially for companies trusted with customers’ private information. A public relations incident occurred after the recent hacks into Adobe’s order information servers. Hackers stole 38 million customers’ names, encrypted credit card numbers, and other sensitive information. Adobe was forced to reset user accounts and launch a major public relations campaign to reassure their customers that their information would be more secure in the future. The incident will cost Adobe several million in notification, enhanced security, and loss of productivity, but the costs to their reputation are impossible to quantify. Copyright © 2013 Zerolag [8] The Economic Impact of Cybercrime and Cyberespionage. McAfee. July 2013 [9] 2012 Cost of Cybercrime Study: United States. Ponemon Institute. October 2012 – 7 – www.zerolag.com
- 9. The Hidden Costs of Shared and Multi-Tenant Hosting A ZeroLag White Paper Dedicated hosting offers increased security Compared with shared, VPN, and public cloud hosting, dedicated hosting provides significant security benefits. Because each SIGNIFICANT SECURITY BENEFITS client is provided with their own dedicated server, there is far less chance of viruses or malware spreading between clients. Dedicated hosts also usually provide more comprehensive cybercrime protection than their less expensive counterparts. [10] Cyber-attack methods are continually evolving as hackers and mischief-makers develop new exploits. Server operating systems, application software, and device firmware must be updated and patched on a regular basis, and hosting infrastructure must be closely monitored to quickly detect and actively defend against intrusion attempts. Maintaining a level of constant vigilance, along with the expertise required to harden the server environment against attacks, is beyond the capabilities of most in-house IT departments. Given the high costs of security breaches, investing in dedicated hosting may be a more cost effective choice, particularly if your company handles sensitive information. [10] Dedicated Hosting Service. Wikipedia. http://en.wikipedia.org/wiki/Dedicated_ hosting_service#Security. November, 2013. Copyright © 2013 Zerolag – 8 – www.zerolag.com
- 10. The Hidden Costs of Shared and Multi-Tenant Hosting A ZeroLag White Paper Is dedicated hosting right for my business? Despite the larger initial price tag of dedicated hosting, there are many instances when it is a more cost effective solution. The hidden costs of shared, VPS, and public cloud hosting often outweigh any initial savings. Lost sales opportunity from downtime, loss of data, and decreased efficiency can drive up the cost of low price hosting, and in some cases, represent a significant threat to your business. Companies that rely on IT for a large part of their revenue, that need to protect sensitive customer information, or that need to service large amounts of traffic stand to gain the most by using dedicated hosting. The increased security, speed, and reliability can significantly reduce operating costs and more than make up for the increase in price. When deciding whether or not to invest in dedicated hosting, it might be useful to ask yourself these questions: • Do my website and/or IT services provide a significant portion of my company’s revenue? • Will my daily traffic require a large amount of bandwidth? • Do I require more bandwidth for multimedia, gaming, or other needs? • Will sensitive information be stored on the servers? • Is SEO important for my website? • Will frequent downtime significantly reduce revenue or damage reputation? • Is site performance important for customer experience? If you answered yes to any of these questions, it may be time to consider upgrading to dedicated hosting. Although dedicated hosting will improve reliability, speed, and security in almost every case, all companies must weigh the relative merits of each hosting solution and determine which will do the most to increase their customer satisfaction, efficiency, and profitability. Copyright © 2013 Zerolag – 9 – www.zerolag.com
- 11. Get 100% reliable dedicated hosting from ZeroLag If your company is ready to make the switch to faster, safer, more reliable dedicated hosting, ZeroLag can help. Our competitively priced hosting solutions were rated the most reliable by NetCraft and rank among the fastest and most secure available. If you’d like to learn more about what dedicated hosting can do for your business, contact us at 877-937-6524 or visit us online at http://www.zerolag.com/ today. CONTACT US Corporate HQ 15260 Ventura Blvd. Suite #730 Sherman Oaks, CA 91403 Mailing/Billing Address: 289 S. Robertson Blvd Box #441 Beverly Hills, CA 90211 Phone: 1- 877-937-6524 Copyright 2013, ZeroLag Communications, Inc. All Rights Reserved.