When deciding for a hosting solution for your business, consider some key factors before choosing an inexpensive virtual or shared hosting solution versus a more costly dedicated server environment.

Notes about servers and hosting in general

• Ensure that you are getting a server with redundant RAID (Redundant Array of Independent Disks) Level. Typically RAID 1, which is mirroring data across two physical disks, will more than suffice. This will ensure that there is no disruption and data loss due to a hardware failure.
• Ensure that backups are done to another location. You can either download your data to a PC in your office or elsewhere. It's safest to have the backup at a different location than your host. While your host should offer daily backup of your data, it will be wise to back up the data yourself on a regular basis to ensure that you have the latest data at your fingertips.
• Ensure a good quality host. Inquire about the network and datacenter. Regardless of the type of equipment your host is offering, the ultimate performance of your site will depend greatly on the quality of the bandwidth, the network and the datacenter where the equipment is located. Watch out for Cogent bandwidth which is notoriously poor performing.
• Ask about the bandwidth utilization in the datacenter. Your server should not be connected to a network where utilization is over 80% of capacity.
• Ask whether there is adequate battery and backup power in the event of a primary power failure. There have been instances when during a primary power failure, the backup circuits are overloaded and the result is total power failure, which can cause major problems on your server. Your host should be able to explain in detail the type backup power utilized by the datacenter where the equipment is located.

Virtual Hosting

In virtual hosting numerous sites share a single server and contend for the same resources such as cpu, bandwidth, and disk.

Pros

• Very inexpensive with plans under $15 per month readily available.
• Generally these come with very nice and full featured control panels enabling you to manage your content, email and options.

Cons

• Environment and resources shared with numerous other customers, usually numbering in several hundreds.
• Other domains on the shared server may adversely impact the performance and availability of your business web site. If a few customers on a shared server utilize a great deal of bandwidth, your site will loose significant performance. The CPU only has so much speed and there is finite amount of bandwidth available for a given server.
• Other domains on the same server may run software that compromises the security of the server and exposes it to misuse by hackers and spammers. This will effect your site's performance, data security, as well as email capabilities.
• Errors in configuration of other domains may prevent startup and proper functioning of the server.
• Excessive load from other domains may effect static pages as well as dynamic pages including those relying on a database and those responsible for checkout processing.
• Problems may result in all areas of server performance:
• Network - excessive utilization by other domains, limiting the throughput available to your web site
• CPU Availability - other sites may utilize too much leaving no spare cycles to process requests for your site such as static page views and database requests.
• Hijacking by Spammers may delay delivery of your email, get your server blacklisted and cause havoc on what is possibly the most important communication channel available to your business.
• Configuration Problems may prevent the startup and proper functioning of the web server.

Dedicated Hosting

Pros

• Isolated server environment that is not effected by serving of any other customers' web sites. Your business web site is the only site on the server.
• For small businesses there are usually no issues with network and CPU utilization and generally the smallest server will more than suffice. Higher traffic sites should consider advanced dedicated options. Your host must be able to evaluate your needs, estimate memory, and bandwidth usage, and suggest a server that can accommodate your requirements.
• Having a dedicated server means your business can grow and your site can grow with it. Make sure you are comfortable that the server recommended to you also leaves some room for expansion as your business demands grow.
• Servers are reasonably priced now days. A server may be purchased, leased, or rented. Your host should be able to offer many different financing options to accommodate your business preference.

Cons

• Unfortunately, it's still possible to have a server on a network that is over utilized and oversold, resulting in slow performance and poor perception from your customers. Inquiring about the type of network and quality of the bandwidth is essential.
• Control panels are extra cost, but they can also be purchased, leased, or rented.
• Most hosts are not offering disk redundancy and backup options. Make sure to have a solid plan for disaster recovery.

Highly Available Configurations

For those requiring 100% uptime, consider the following factors and layers in redundancy:

• At least two servers will be required. All content should be mirrored and databases should be replicated between the servers. Databases work in master/warm standby mode or master-master with any instance able to handle any transaction. See various articles on high-availability.
• You need network redundancy with at least two physically separate networks. This is difficult to test and verify as there have been instances where clients think they have two providers but as it turns out, one of the providers is actually leasing part of the others network. In turn, when one goes down you are completely down. Note that this is neither cheap, nor easy to configure. Talk to your host to ensure the network providers are indeed separate.
• Physical location redundancy is ideal - especially if you can host with two separate companies that use different providers and are in two physically separate locations.
• Actual failover needs to be thought through and tested. For example, how will traffic automatically fail over to another node? When is a failure detected? Is there a load balancer involved? Is DNS used to failover? Is monitoring watching the health of a test transaction or just tcp/ip connectivity to a server? These are all complex issues that require advanced planning and analysis.
• It's safe to assume that adding any level of redundancy will at a minimum double cost. In fact, the increase should be much higher than a factor of two. You must conduct some business analysis factoring in various projected downtime scenarios and determine the value of uptime to your business and hence come up with a budget that makes sense for your company. In conducting a cost/benefit analysis, consider the cost of 4 hours downtime, 12 hours, 2 days. Factor in the expected downtime for various components failing into your disaster recovery plan. Proceed to implement redundancy if the added cost to reduce downtime is justified.