Managed Hosting Services are used primarily by companies that either don't have staff with the expertise to manage a dedicated server or don't have staff with the time to attend to the needs of managed hosting. In either case the option of having the host manage the server can be of great value to firms that have such needs.
Some companies web sites are too traffic intense to share a server with any other sites. This is the point at which a dedicated server becomes a necessity. Many firms reach this point and are put in the position of being hosted on a dedicated server yet do not have the IT personnel with the background to manage a dedicated server. The knowledge requirements to upkeep the server operating system, updating security patches and handle the special circumstances that arise, require a great deal of in depth expertise. The question then becomes can the firm afford to hire someone with the capabilities needed to take care of a managed dedicated server or would outsourcing the task be more practical?
This question has to be answered by each individual company and all the factors are weighed according to the specific situations. The case could be for example that the firm is already needing additional IT help beyond the above needs and adding a qualified person would be a timely efficient solution. In most instances however it isn't practical to add full time specialized personnel, when getting managed hosting services is an option for much less expense.
A company may have personnel on staff that are capable of operating a managed dedicated server. The question then becomes is time available to devote to such a server and is the person able to keep abreast of all the continual updates and changes that the server industry is constantly incurring? Again the issue is does the additional expense of managed hosting services off set the added work load and responsibility that will be assigned to the existing staff. Since a dedicated server is definitely needed the managed dedicated server option can add as little as $250-$300/mo. to the total monthly outlay.
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