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Customization vs Standardization, or What Amazon and Rackshack Have in Common

Tue, 27 Feb 2007 23:27:00 -0400

In early 2001, just a few months before Exodus filed for bankruptcy, Robert Marsh launched Rackshack. Unlike his struggling competitors, who typically built servers to spec, Robert sold $99 Cobalt RaQs. Only one configuration was available, and orders were provisioned instantly and automatically. And instead of demanding multi-year commitments, Rackshack offered month to month service. By the time I joined the company in early 2003, Rackshack (which later changed its name to EV1Servers) had become the world's largest dedicated server provider.

A year or so later, Robert unveiled EV1's private racks program during a customer gathering; two attendees signed up on the spot. Soon other orders starting pouring in, along with complicated network diagrams and super detailed server specs from customers who wanted their systems built just so. We did our best to accommodate any and all requests, which were a huge challenge to keep track of. Only much later did I learn about ITIL from Rich Bader over at EasyStreet. By that time, Amazon had already launched S3 and would soon introduce EC2.

Unlike EV1's Custom Order team, who gladly built whatever customers asked, EC2 sells only $0.10 virtual server instances. There's just one configuration available, and orders are provisioned instantly and automatically. Instead of demanding month-long commitments, Amazon offers pay-as-you-go service in 1 hour units.

According to Vinne Marchanadi from Deal Architect, pay-as-you-go is what large customers nowadays are looking for. (A former Gartner analyst, Vinnie now advises enterprise IT buyers on vendor selection.) He offers the analogy of plugging into an efficient power source versus buying fancy generators. On behalf of his clients, he says:

"Message to vendors - so long as you meet our security, privacy and compliance standards, we want as vanilla, standardized a service as possible. Sell us capacity by unit of consumption. We want to leverage all your economies - in financing, procurement, operations, everything. In return, we want to fit as much as possible in to your standards."

Another couple of years from now, will standardization again give way to customization? I think the answer is yes. And no. Amazon recently started offering Machine Image sharing. And VMWare's virtual appliance marketplace features about 400 listings. And SalesForce.com offers over 500 partner apps on AppExchange. And earlier this month Netvibes unveiled its universal widget API... It seems service delivery platforms will become more - not less - standardized, while each user will have increasing freedom to mix and match a wide range of interoperable applications into highly customized solutions. Doesn't that sound like the best of both worlds?

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