How the hybrid cloud has already doomed your data center

You may not have decided to fully decommission all of your server rooms yet. But asset capitalization and operational expenses will eventually lead enterprise CxOs down that path.
Written by Jason Perlow, Senior Technology Editor on

The cloud ate my homework. I'm not one for making excuses, but in July, my ZDNet article production came to a screeching halt. Why? Because my partners went cloud crazy.

As I am sure many of you know, my day job at Microsoft is as a Partner Technology Strategist for the company's Hosting and Cloud Services division. It's a group of only about 80 people in the United States, but it's making big waves from a revenue and growth standpoint.

And I'm proud to be a part of it.

This year, along with several other members of our team, I attended our Worldwide Partner Conference in Orlando representing our organization.

July in central, inland Florida is hot. Really sticky, disgustingly hot. I've lived in South Florida for three years now and I still haven't gotten used to it. To call the weather oppressive is an understatement.

The air conditioning system in the Orange County Convention Center is amazing and a marvel of modern engineering. Despite its ability to make everyone stay cool, its powers were futile in being able to chill out my partners regarding their plans for cloud adoption.

The partners that I work with are hosters and service providers -- companies that traditionally have run datacenters on behalf of enterprises in the form of managed and dedicated services.

This business is not going anywhere, as workloads that are deemed business critical, particularly those in regulated industries, will continue to require managed and dedicated environments.

This is important because it means the large scale data center business from an operator perspective is still healthy.

However, what my partners are also telling me is that in order to continue to scale their business and to provide additional value-added services to their customers, they need to leverage the power of public clouds like Azure and Amazon Web Services, or 3rd-party private clouds offered by companies like Rackspace.

They want, or rather need to extend their resources, in the form of Hybrid Cloud.

The conversations have been consistent with all of my partners which cover the entire breadth of the managed hosting industry as well as SaaS and vertical services providers. This covers the big and huge doing commercial hosting as well as those that are smaller and heavily industry specialized.

Most of these guys are going to keep their data center footprints, to some extent. Contractually they have to, in order to keep their legacy customers happy. But when it comes to net new offerings, it's an entirely different ballgame.

Those net new managed services offerings in many cases are targeting SMBs, because they don't (or no longer) have the money to invest in dedicated infrastructure and internal IT and they need to be lean and mean in order to continue doing business.

At least for SMBs, operating a datacenter is an expense they aren't willing to incur anymore. The partners themselves may be keeping some datacenter footprint, but their customers are increasingly not.

So offering services by leveraging hyperscale providers like Azure or AWS makes a great deal of sense to my partners.

What kind of offerings are we talking about?

Well, it could be seasonal, on-demand kind of stuff, where you need a lot of temporary computational resources for a short period of time.

Or maybe it's offloading on-site data to a backup location, and it just so happens that in many cases cloud storage is substantially cheaper than what the provider can price for an on-prem solution, particularly if they have to consider a second data center for geo-redundancy.

Using cloud resources for Disaster Recovery is also a big topic of conversation for partners examining new offerings.

What else? Database as a Service. Or standing up Remote Desktops in the cloud, pre-populated with vertical-specific line of business apps, to provide mobility to devices like iPads and smartphones.

My partners may never have had these kinds of offerings before, and it might not have made sense for them to do it on their own infrastructure, because it would have been cost prohibitive.

But not if they use the cloud.

Here's the thing. At the end of the day, all their customers want is for the IT burden to be removed, or for specific technology problems to be solved or solutions provided. Where that infrastructure has to live, for the most part, doesn't matter to them.

If you're buying managed services, whether it is in the form of SaaS or managed IT, or some mixture thereof, all you want is your bills to come down. And who else can make data center resources cheaper or more reliable from a SLA perspective than a hyperscale-class cloud provider?

Can an enterprise build and manage their infrastructure cheaper than a public cloud provider? As a CxO, that's a question you need to continue to ask yourself.

For the partner, moving these resources from on-prem to the cloud makes a lot of sense. They've come to the realization that their value add is not in the infrastructure itself, but the secret sauce that makes what they do important for their customers.

It could be a highly specialized SaaS application or something extremely basic and horizontally focused like outsourcing technical support for desktops and email. Either way, using the public cloud is a gold mine for the partner, and allows them to make their offerings more competitive and affordable.

Today, and for the foreseeable future my largest partners will keep (at least some of) their data centers, and extend into the cloud as needed. My smaller, vertical-oriented partners that are SaaS-focused are decommissioning data center hosted resources and moving to the public cloud entirely.

What does this mean, long term? Well if you look at data centers from a trickle-down perspective, only the largest providers will be able to afford them -- and the biggest providers are the ones working at hyperscale.

Enterprises will increasingly move workloads away from on-prem and to the provider, and the provider will extend as needed to hyperscale, public cloud resources. SMBs are already well on their way to eliminating on-prem stuff entirely.

So datacenters will still exist, but we're looking at a ton of industry consolidation here. Your own datacenter (particularly if you're working with a managed service provider) may already be doomed.

Will hybrid clouds eventually doom your own data center? Talk Back and Let Me Know.


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