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I have an idea to form a collaborative of business owners in my community to team up on IT infrastructure and costs (and staff). Basically acting as one large company with powerful servers, partitioned for our respective businesses. Besides privacy, which I think a pro consultant could set up properly for us, are there any other pitfalls/reasons I should dump this idea? My business is growing but not enough to do the tech expansion I need.
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There’s a model for what you describe — it sounds similar to a colocation center. These are basically data centers with shared IT hardware, data connections, and staff — often geared toward hosting of websites.
Wikipedia describes the features and benefits of such a service: http://en.wikipedia.org/wiki/Colocation_centre
I think that managing such a center or collaborative could be a full-time business all by itself. Plus, it injects other complexities into the picture, such as potential liabilities and the need to manage relationships with other companies. These could be a distraction to your core business.
With a little creativity, chances are you could meet your needs without going that far:
(1) Shop wisely and discuss your needs and your budget with your IT vendor. Discuss today’s strategies, such as virtualization and server consolidation, trade-ins, etc. Investigate also the Federal tax advantages of investing in IT equipment (e.g., $250,000 capital deduction in 2009). Meeting your IT needs could be more affordable than you imagine.
(2) See if you can tap into affordable infrastructure services. Example: Amazon Web Services: http://aws.amazon.com/
I’m always reluctant to discourage a good idea, and I think you do have a good idea (at least on the surface), Henry. However, I have to agree with Anita. The biggest pitfall of your idea is that what you describe is basically another full-time business. Who in the collaborative would manage the IT infrastructure? Who takes on certain liabilities? As Anita said, all this would distract from your core business. Or it would at least require you to hire someone else to manage your business’s role in the collaborative.
Make sure you actually need the expansion you speak of, and definitely take a good look at Anita’s two suggestions above.
Henry, there are probably lots of potential pitfalls from this strategy, but the potential upside makes it worth the effort.
We only have you hint that growth isn’t what you want to be so perhaps this is a strategic direction for your organization that would make sense AS your business. What if you looked at it not as a way to get more business, but the innovation that your business or industry so sorely needs?
That’s how you should consider this right now.
I have to agree with the other commenters. Plenty of vendors already have economies of scale and can offer good prices based on that scale. Hosting (traditional or cloud) is hugely competitive so there will be good prices. Unless you really, really want to be in the hosting biz, I suggest staying focused on your core biz.