Out-source your infrastructure

Today's New York Times has an article about Amazon offering its warehouse and distribution services to other e-commerce sites. The article can be found here – "Sold on eBay, Shipped by Amazon.com".

This is an extension to Amazon offering outsourced IT infrastructure via its Elastic Compute Cloud and S3 storage service.

The economics of using these services are very compelling. For example; I was working with a friend last week on his business plan. I asked him what his business was currently paying for servers and web hosting services – turned out to be almost $3000/month. I told him about Amazon EC2 and suggested he take a look at using their data center services instead of having his own. Late that night I got an email from him saying that they had looked at moving their web presence to Amazon and for the same capabilities (server capacity, bandwidth, storage) it would cost them $250/month – over a 10x saving!

I haven't had a chance to look at the economics behind the warehouse and distribution services that Amazon is now offering but I'll bet it's also compelling compared with trying to set up (and manage!) your own. Amazon's new tag line ought to be "The Outsourced Infrastructure Company" – a fascinating extension of their business!

Whether you are planning to start a new company or are running an existing one, you should take a very serious look at outsourcing your infrastructure. Not only could it save you capital and operating costs, it will give you more time to focus on your core business and avoid multiple distractions!