Server hosting is cure for bird flu fears

Joy Cottle says server hosting has been unexpectedly popular. Picture / NZH

Bird flu jitters have prompted a flurry of corporate crisis planning activity, generating welcome business for a variety of service providers, including IT hosting companies such as iServe.

General manager Joy Cottle says iServe realised early last year, before the bird flu hit, that there was a market for housing and managing businesses' servers at its Lower Hutt base.

Having servers located off-site means a business's internet link to customers is secure and can be maintained even when staff are not in the office.

"Since we started promoting it [server hosting] in November we've probably doubled the expected sales we'd thought we'd have over the past two-month period," says Cottle.

Customers who have picked up the service are mainly small to medium businesses but also include two smaller Government departments.

IServe has had success attracting business since its formation in 2001. Last year it was ranked 10th fastest growing company in the Deloitte/Unlimited Fast 50 Awards and it was 87th on the Asia Pacific list.

Cottle met iServe's four other founding shareholders while working as a help desk operator for Wellington ISP Globe.Net.

Over pizza and beers a few years later the five hatched a plan to start a web hosting company using an internet-based interface through which customers could manage their own services, including setting up new email accounts.

"Back in '99 that was unheard of," Cottle says. "Your system administrators were the ones who did that kind of thing for the customer. You didn't allow your customers to create their own email box or their own FTP user because it was something that was done by the geeks in the big dark room out the back."

The idea took off, and iServe now has more than 30,000 customers, 18 staff and a multimillion-dollar annual turnover, Cottle says.

Acquisitions have helped the company's growth.

It bought The Kiwi Web Hosting Company last June.

"[The Kiwi purchase] was the largest of a string of acquisitions," she says.

"It's a path that we are continuing down in 2006, specifically targeting companies looking to exit the industry or merge with a large provider like ourselves."

The company's expansion into the server hosting market has included spending several hundred thousand dollars building a data centre at its Avalon base, which Cottle says is expected to be completed by the end of this month.

The centre will allow it to target larger corporate clients, including those in the application service provider market, she says.

The company has recently taken over another floor of its building to develop a network operations centre and a larger customer support centre. Its aim is to increase staff to 44 by the end of this year.

Growth in the equipment-based technology sector is expensive; the company buys servers and leases them back to clients.

Late last year it secured debt funding to finance its expansion plans.

For the latest injection of funding the directors chose to take on debt rather than diluting their shareholding by bringing in a new equity partner or venture capitalist.

"Because there are only five of us and we've spent a lot of blood, sweat and tears getting the company to where it is, we really didn't want to give away part of our company," Cottle says.

iServe
* Who: general manager Joy Cottle.
* Where: Lower Hutt.
* What: web hosting and data services.
* Why: "Kiwis are a do-it-yourself bunch, and there were not a lot of self-help web hosting services available."