One of the reasons for this decision was staffing, said Berry. The company had about 65 employees in its data center and about 18 different technologies, and in some cases there was only one or two people who had the knowledge to run certain specialized technologies. "That gave us a lot of concern long-term; we didn't have the ability to hire backups for these technical platforms," he said.
Hank Seader, managing principal of the Uptime Institute, said that it takes a "certain set of legacy skills, a certain commitment to the less than glorious career fields to make data centers work, and it's hard to find people to do it."
T Systems has created a private cloud-like, variable-capacity model. If Berry uses less storage or consolidates servers, then costs go down. The company plans to modernize its applications.
Most of OneAmerica's data center employees have left the company, and Berry says he has since put put much more focus on application development and working with the business.
Do in-house data centers have a future? "I think only for the really large companies that have scale; for smaller providers, for smaller companies, no," said Berry.
All firms are trying to limit the IT deployed in small data centers, said IDC's Villars. Smaller firms may be shifting more work to service providers, while larger firms are consolidating and building bigger data centers as they centralize assets, he said. In many cases, virtualization has substantially reduced the need for in-house data centers for smaller IT operations, "and they don't seem to have any plans to expand them at all." They are either moving future work to co-location facilities or to service providers.
Vince Kellen, the senior vice provost and CIO at the University of Kentucky, also wants to shrink his data centers, which total about 15,000 square feet. Kellen said they went through an exercise to determine what it would cost to transfer most of their services to Amazon Web Services, and he said the cost was obscenely high. The ROI didn't work, even factoring in the cost of paying for a new campus data center, he said. One building they are using for a data center dates from 1929.
But the cost of cloud environments is not discouraging to Keelen. He believes that just about every service can be run via the cloud environment, but the pricing has yet to mature and needs to drop. It's different for SaaS services, where software licensing costs and hardware are combined in a way that can be advantageous, he said.
For now, Kellen sees a gradual migration to SaaS providers, via platforms such as ServiceNow or through VMware clusters. In about three to five years service provider pricing models "will be very attractive to us and allow us to take most of our computing off of our data center," Kellen predicts. He'd like to reduce his data center footprint, by half to two-thirds.
Broader trends aside, there are many data centers that will maintain operations and employees.
Michael Kohlman, the IT managers of Cook Group Inc., a life sciences firm, uses SaaS for some applications, which accounts for about 20 percent of his infrastructure. But they will keep their core operations in-house. Protecting intellectual property, particularly in a highly regulated industry, "is strongly desired," he said.
But Kohlman was quick to adapt to data center technology trends. He jumped on blade servers in the mid-2000s and was a Dell beta tester, and built 1,500 square-foot data center with high density systems in mind. He has compared the cost of his operation with service providers, and sees little difference.