There have been ongoing debates within the information technology community about putting data centers in the cloud, and I have been hearing both sides of it. On one hand, there's the view that massive cloud services -- Amazon Web Services being the prime example, but also Microsoft, IBM, Google and Rackspace -- offer back-end infrastructure services and capabilities with which few enterprises can, or should, compete. On the other hand, there's the view that more than 80 percent of the corporate IT landscape is on-premises systems, and remain that way for a long time to come. Enterprise IT proponents point out that the big cloud sites provide good examples of ease of use and competitive pricing that enterprise IT shops should replicate in their own offerings to business users.
David Vallente, co-founder and co-CEO SiliconANGLE Media, is more inclined to agree with the first point of view -- that the economics of Amazon and other cloud providers make individual, on-premises data centers costly anachronisms. "Amazon has turned the data center into an API," he says. "This trend is having profound impacts on enterprise IT customers."
Thanks to the massive scale cloud providers such as Amazon offers behind its API, the economics of deployment, provisioning, management and orchestration of underlying systems are hugely compelling in contrast to on-premises systems,Vallente writes in Wikibon, the open-source research site. These are economics data center managers cannot ignore.
IT executives shouldn't try to compete with the likes of Amazon when building out their infrastructures, because few can offer the resources and relatively cheap pricing that the cloud giants offer. Instead, IT leaders need to focus on up-front, value-added services such as big data analytics. As Vallente put it:
"To compete, IT organizations must either have massive scale (unlikely for most) or have clear differentiable advantage through vertical integration. CIOs should plan to expend labor for managing IT infrastructure only in cases where it drives direct profit. Otherwise, technology organizations should focus resources on integration and adding differential value through analytics, new services and unlocking innovative digital business technology models."
Is Vallente right? Is it time to let go of back-end infrastructure because someone else can do it cheaper and to unlimited scale? Or is it too risky to entrust key corporate processes, applications and data to an outside provider? There's a good case to be made for hybrod cloud here.
Vallente also talks about "vertical integration" being a point for which enterprise IT may need to maintain its own infrastructure. In essence, in many cases, data center operators, especially at larger organizations with large sunken investments, could serve as cloud providers in their own right, providing services to participants in their supply chains, or within their industries.