The best way for service providers to enter the hosted services market is to build in-house hosted services for their own internal use, and then demonstrate it to their clients. For many clients, seeing is believing.
In addition, there are generally two motivations for a company moving to a hosted environment: cost and failure events. There is an adage that for every cent spent on hardware, a company will spend a dollar on management. Most companies realize the economies-of-scale argument and have experience with other companies hosting their websites and sometimes other services -- like security monitoring. With budgets getting squeezed and companies being forced to do more with less, including staff, clients will frequently be interested in opportunities to lower their management costs. If the service provider can provide hard numbers on cost savings, management will be more open to discussing hosted services.
A failure event is the biggest reason why clients warm to hosted services. Should an internal failure occur -- perhaps with a disaster recovery, or perhaps the client has a bad experience with another hosting provider -- the client will frequently be quite eager to engage in a conversation with a hosting provider.
This was first published in May 2008