Posted by: Greg Ness | March 22, 2015

Cloud Costs Dropping, Data Centers Closing

A couple items grabbed my attention recently, including the recent Synergy report on the growing share of IT infrastructure spending going to the cloud.  It surprised me. I had nothing to say, for once.

Then the answer hit me.

While cloud costs are declining slightly, the costs for cloud migration and deployment are dropping aggressively.  A first effect is the shuttering of secondary data centers and the deployment of more apps and services in the cloud. Then consider that the cloud leaders are becoming more enterprise-friendly.

Cloudy Days Ahead for IT as Usual

Cloudy Days Ahead for IT as Usual

Shuttering data centers for the cloud you ask?  Check out the case study from an upcoming webinar with Gartner on how a San Francisco-based company saved 50% by replacing its secondary data center with the cloud, and reduced costs by 50% while increasing agility. (Yes you can get the MyPoints slides after registering.)

Certainly the MyPoints team is ahead of the curve and most companies are still using DRaaS or secondary data centers, despite the costs, inconveniences and challenges. Yet they’ve proven how transformative the cloud can be for a large server environment. A 50% cost reduction for retiring a data center into the cloud is beyond noteworthy.

The secondary data center business (based on IT as usual) has been sizzling thanks to the innovations introduced by VMware and innovations in data center electrical and mechanical design.  Plus the shifts of the web giants into leased space. Their cloud migration costs were not trivial, yet they moved.  It was all about predictable workloads and lease versus own. It seems likely, however, that the cloud has already started crowding out the traditional data centers, hence the Synergy stats on infrastructure spending shifting to the cloud.

In addition to falling cloud migration costs some of the cloud leaders have caught up with even primary data centers when it comes to security and compliance issues which had been troublesome in the early cloud days when it started as a Dev/Test environment ala VMware’s early days.  Specialized partners and SLAs can be created to address requirements once in the exclusive domain of traditional IT experts.

Traditional IT will certainly be around for many years, yet the ever lower costs of the API-driven cloud and the billions in investments made by the leaders (in security, compliance, and infrastructure) are already being felt by the “private cloud” huggers still willing to pay the vendor lock-in tolls. The agility, however, may be the biggest factor; from migration into a cloud to migration between clouds.

Stay Tuned.



  1. Tech hardware vendors getting squeezed by the cloud.

  2. The Data Center Industry is in Crisis: And Now What?

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