State of the Data Center Market: What to Consider if Choosing the Cloud for Your Business

October 25, 2018 Frank Nash

According to a recent Synergy research report, Microsoft, Google, Alibaba and AWS drive 75% of the revenue in the cloud provider space of the data center market. In the U.S., that leaves enterprises with essentially two choices. Does that mean it’s easier or harder to migrate to the cloud?

Put simply, both. So said panelists David Linthicum, Chief Cloud Strategy Office, Deloitte Consulting and David McCall, VP of Innovation, QTS, during a discussion I led at this year’s Data Center Austin Conference (DCAC).

Assessing Cloud Providers for your IT Applications

Linthicum and McCall are mixed on their views of simplicity and complexity. McCall believes it’s “exponentially harder for CEOS, CIOs and CTOs to walk through the minefield.”

The question is bigger than which cloud provider to pick, he said. It’s a matter of what companies are specifically looking for: IaaS, PaaS, SaaS, private cloud and so on. Before picking a provider, he said that companies must understand the problem they need to address, their available talent, budget requirements and constraints.

people gathering around a table at work On the other hand, “We are in a simpler world,” according to Linthicum. “Consolidation has narrowed down the options, and now we are dealing with the pragmatic application of cloud. That is, the ability to mix existing legacy systems with the public cloud. Enterprises have to look at the practical migration paths.”

His recommended plan starts with understanding workload portfolio in the data center, who owns the data and what the security and governance parameters are.

“Typically, 30 percent of applications are an easy to lift and can be shifted without many changes. Another 30 percent require significant refactoring, and 30 percent can’t be moved. The other 10 percent must be retired and replaced.”

McCall added, “When assessing migration, you also have to work through the group’s bias – of what they imagined they would move. Emotion goes with that process, and it shouldn’t be underestimated.”

Get Ready to Invest: Why Cloud is Worth the Cost

In terms of making the right cloud platform selection, McCall advised on matching the provider’s technical expertise, the performance and portfolio options to the business’ application needs. Of course, cost is also a factor.

“Realistically, the cloud costs a half a million dollars per workload and the same per data center,” Linthicum said. “Don’t think the cloud will provide savings enough to pay for the migration. It’s about the agility to expand to the speed of need.”

The speed of business, that is, which he pointed out is changing faster than enterprises can internally. “That leaves globally 300 companies lagging behind. So, you must go all in to change the business for the better. The cloud’s value is in its ability to drive the business forward.”

The ROI Reality: Advantages When Assessing the Cloud

Admittedly, Linthicum said, agility is a hard sell. That’s why he suggests companies derive metrics to understand the cloud’s strategic benefit first. A great deal of upfront work is required to ascertain this understanding.

“It’s a huge engagement,” he noted. “It must be defined in terms of market advantages within the context of economics, product roadmaps, and force multipliers. The business case is backed up by a lot of data. If you are looking for OPEX efficiency, that’s not what cloud is about.”

In the data center space, McCall explained it usually makes more sense for businesses to leverage someone else’s infrastructure — as in colocation — rather than build it. He agreed the ROI of cloud savings is in agility.

“Trying to save money versus solve a problem is a dangerous precedent to set. Due diligence up front ensures an understanding of the true value of the cloud.”

The Forecast is Cloud-y

Knowing that the speed of business will only accelerate, I wondered what the panelists thought about the future of cloud. Will it take over all applications or remain as part of the hybrid environment?

“The short answer is no; it won’t take over,” said McCall. “For one, there’s too much diversity in applications and regulations.”

Linthicum expanded on this. “We are heading for saturation at about 60 to 70 percent. There’s simply no value proposition for moving some applications to cloud. Colos and MSPs will grow their market share tremendously in the next five years as companies look to get out of the data center ‘business.’  And, let’s just call it computing because the cloud will become an infrastructure we take for granted. The state will be like the non-existent internet technology of 20 years ago. Now, we can’t live without it.”

Cloud Computing in the Data Center Market – What Customers Are Saying About its Future

It’s clear to me the “big 5” cloud providers have clearly dominated growth through investment. Nevertheless, there’s still a significant number of niche cloud providers who provide more customization through IaaS, PaaS, and private cloud services that can and should be evaluated by prospective customers.

Stay tuned for an upcoming blog by Jason Walker that provides customer perspective on the edge from the panel he hosted at DCAC. In the meantime, check out what our other customers are saying about the future of cloud computing and the impact of edge.

The post State of the Data Center Market: What to Consider if Choosing the Cloud for Your Business appeared first on Schneider Electric Blog.

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