Providing a host of web services

UNDER THE RADAR: Stephen McCarron,Hosting365

Armed with that certainty, McCarron’s company, Hosting365, has spent more than €3 million on cloud infrastructure in the past two years and leads the market in Ireland – allowing its customers to pay for IT services as and when they use them.

“It’s extraordinary to think that this technology didn’t even exist two years ago,” says McCarron (32), who started his career as a primary-school teacher and who has built Hosting365 into a business with an €8 million turnover since he set it up in 2001.

“The planet is heading [for the] cloud, heading for this model of utility delivery. And since that became evident, we’ve had our six-person R&D team working full time on the development of our cloud-computing platform.

“We spend somewhere between €700,000 and €1 million on R&D every year and I have absolutely no doubt that the day we reduce that emphasis on research, development and innovation is the day we’ll lose our competitive edge.”

McCarron is no stranger to change, although he admits it can take its toll. His first business was IWD Ltd, a modest web-design and hosting company which generated €50,000 in its first year, 1999.

Hosting365 was more scalable, however. By 2004, after just three years, it was the largest hosting provider in Ireland. By 2006, it had a new 25,000sq ft data centre in Park West and a turnover of more than €5 million.

Despite that success, the emphasis switched again at the start of 2008, this time away from individual customers and small and medium-sized enterprises (SMEs) towards larger corporate clients that generated more income.

“The business had developed a bit of a split personality,” says McCarron. “We’d started out selling domain names and e-mail addresses and hosting websites. But as we grew, we found we were moving naturally towards providing outsourced internet infrastructure, or building out infrastructure, for larger corporate clients.

“We found ourselves in the position where two-thirds of our revenue was coming from those large corporates and their business was growing at nearly 40 per cent a year, whereas 99 per cent of our customers were at the individual consumer and SME end, generating just one-third of revenue, consuming all our resources and growing at less than 5 per cent a year. Strategically, that couldn’t continue.”

Today, Hosting365 hosts the online booking systems of three airlines and the Hilton Hotel Group, as well as online banking systems and e-commerce stores, to give but a small flavour of its activities. Customers range from O2 and Bord Gáis to Tesco Mobile and TV3. “Whereas a lot of the big corporates have their own data-centre infrastructure and run their own networks, they see the internet as a different thing that they don’t necessarily want to bring into their local data centre. So they let that sit with a provider like us,” says McCarron.

STEPHEN McCARRON has seen the future of the internet, and it’s cloud computing. This will allow web-based services, no matter how complex, to be downloaded on demand and used just like any other utility, such as gas, electricity or water.

Now, as a “cloud infrastructure provider”, that offering is even more attractive, he adds.

“The way infrastructure used to work, you always had to build for peak capacity, for the maximum level of redundancy and scalability, and that applied to everything from firewalls to servers. And there was a reaction time to get the kit in and wire it up,” says McCarron.

“Cloud computing allows customers to deploy the online resources they need at this moment and not to worry too much about the infrastructure. They can start with one machine, one CPU or one gigabyte of RAM.

“Then, if a customer is running a big internet-based promotion, for instance, they can scale that to hundreds of machines or 10s of gigs of RAM on one machine, without anything bespoke needing to be put in place. They pay for the peak, but then revert to normal rates. In business terms, that’s the way of the future.”

On The Record

Name:Stephen McCarron

Company:Hosting365

www.hosting365.com

Job:Managing director

Age:32

Background:Began his career as a primary teacher after graduating with a BEd from TCD.

Seconded to the National Centre for Technology in Education, followed by the Department of Education.

Set up a web-hosting and design business in 1999, which was followed by Hosting365 in 2001. It became the largest hosting provider in Ireland by 2004.

In May 2008, McCarron sold Registrar365, its shared hosting and domain registration division, to Namesco, one of the top 50 hosting providers in the world.

Now concentrating on hosted managed services for the enterprise market. Ranked 25 last year in Deloitte Fast 50 list.

Challenges:"As a small company, our greatest challenge is to do RD, especially when our technological competitors are people like Oracle and Amazon or, for instance, Rackspace, who had a billion-dollar turnover last year.

“If we fall back on R&D, we lose our competitive edge. We become an also-ran.”

Inspired by:Fellow TCD graduate Dr Chris Horn, founder of Iona Technologies. "I've always been impressed with his intelligence and his candour about the business. He always saw the world as his marketplace, rather than following the traditional route, starting in Ireland, moving to the UK, and so on."

Most important thing learned so far:"Don't be afraid to change, even if that change is fundamental to the business."