Why cloud adoption isn’t slowing datacenter growth

Enterprises can’t yet give up the corporate datacenter, and the cloud providers are using all they can get

Why cloud adoption isn’t slowing datacenter growth

I’m always interested in datacenters because I live in Northern Virginia, where a new one opens about once a month, leveraging a huge bundle of fiber coming out of the ground near Dulles Airport and cheap power sources. Indeed, they now call my region “Datacenter Alley.” 

A report by JLL shows that the strong movement of data from private corporate servers to cloud services, coupled with a growing corporate interest in internet of things (IoT) initiatives, is pushing the demand for these new datacenters. With data usage skyrocketing, major cloud providers expect triple their infrastructure by 2020, so they are building or renting datacenter space to keep up with the growth.

But at the same time, enterprises are not giving up their private or hosted traditional datacenters. That’s a natural part of the process, because you just can’t shut down the legacy systems before bringing their functionality to public cloud platforms.    That duality is a redundancy cost of cloud migration. 

So, we’re going to have more datacenters in the short term. However, as we share pools of platforms on public cloud providers, and do such way more efficiently, we should end up with fewer datacenters, right?

Not for at least for the next ten years.  

There are a few factors driving this delay in dumping the corporate datacenter:

First, enterprises have no plans to give up their datacenters. Although some companies have very publicly reduced their own datacenters, most of the companies that have datacenters now will have them five years from now. They simply don’t seem to believe their increased use of the cloud means they will eventually decrease their private datacenter usage.      

Second, enterprises have tax and business reasons to hang on to their datacenters.    I’ve worked with many enterprises that have datacenter leases that continue for another ten years. Moreover, the CFOs often find that owning the hardware and software provides a tax advantages that they are not willing to give up. 

My bet is that keeping the legacy datacenters is both expensive and getting old fast, so those factors keeping all those corporate datacenters in use will change. Modernization is in order, and the more effective way to do that is as part of a migration to the cloud and the modern datacenters and services already there.

Sooner or later, enterprises will truly understand that the measure of success is how many effective services you have working for your business, not whether you can physically touch the gear they run on. Those services will run in datacenters—but fewer and fewer should run on ones you own.

Copyright © 2017 IDG Communications, Inc.