From the Lab

An End to Data Centers?

Do companies still need physical data centers, or is cloud technology rendering such facilities obsolete?

The case of Netflix, which said in August that it was closing its final data center, indicates that a company can indeed migrate entirely to the public cloud. As reported by the Wall Street Journal’s CIO Journal, the video streaming company had nearly completed its strategic shift of all IT operations to the Amazon Web Services (AWS) platform.

Cloud technologies also benefit companies at the front end of the business lifecycle. Start-ups are turning to AWS, Microsoft Azure or other public clouds, along with a host of software-as-a-service (SaaS) offerings, thus opening shop without buying a single rack or server or switch. But while the benefits are real and interest is growing, the cloud does pose certain limits.

First, migrations are not easy. That’s one reason Forrester Research VP Glenn O’Donnell told the CIO Journal that for large, established companies, the all-in public cloud approach will be “extremely rare.” After all, it took Netflix seven years to complete its transition. On top of that difficulty, there is a natural reluctance to move core applications and data outside of a company’s traditional control. (Netflix still operates its own content distribution network, hosting equipment – some of which it builds itself – at Internet exchange points.) Even start-ups may like AWS for software development but take operations in-house for production.

Regarding data centers and the cloud, CIOs have options. If not the public cloud, they can go with the dedicated resources that comprise a private cloud. If using internal resources, they can leverage existing infrastructure or extend their footprint by leasing space from a cloud-friendly, multi-tenant data center (MTDC) operator. Or they can do some or all of the above, which is the “hybrid cloud” approach that is beginning to prevail as the new norm.

A smart hybrid strategy is to collaborate with a third-party data center that offers managed services to help you to migrate to the right cloud with the right applications at the right time. Not all MTDCs want to do so, as it potentially takes business away from them. At Keystone NAP, we embrace this solution.  Keystone NAP offers connects to major public cloud services, including AWS and Azure, though interconnections at major network peering points and private cloud providers including Xtium and Steadfast.