The Cloud is Transforming the Role of Data Centers

Em Blog Datacentercloud V2

You amassed tons of data; now what?

What just happened?

The IT industry experienced a tectonic change in 2020 that altered its structure for the foreseeable future. The utility of the cloud and the shortcomings of private data centers came into sharp focus; that made it easier for companies to adopt digital cloud initiatives.

As the return to normal continues, IT budgets of government and business will grow to about $2 trillion in 2021, up 7.4% from 2020.1 At the same time, the cloud services market grew by 40% in 2020 to $64.3 billion compared to $45.7B in 2021.2 Analysts also expect that global spending on data center infrastructure to grow by 6.2% in 2021 reaching $200B.3

If the market forecasts make you scratch your head, you are not alone. The number of internal data centers will increase in 2021 due to pent-up demand fueled by the slowdown in data center investments caused by the pandemic. Let’s put that aside and examine the prominent trends that will guide the future of data centers.

Internal data centers are here to stay

Think about the embrace of the hybrid cloud, which has a private DC component. The more companies adopt the hybrid model, the more DCs will continue to remain operational. Unfortunately, things are not so rosy for data centers. While a small 7% of enterprises plan to eliminate DCs in the next 24 months, 55% plan to reduce their DCs in the same period. Compare that to only 14% of enterprises planning to increase the number of DC in the next two years.4

In short, we will continue to see a decline in internal data center deployments, but they will be around for the foreseeable future. While the cloud is transforming the role of the data center, it is also throwing a lifeline to DCs in more ways than one:

  • High-performance and low latency. In addition to having about 30% of data stored in internal data centers, companies deploy workloads that require high-performance servers or low latency in their DC.5
  • Regulatory compliance. Regulated industries and most enterprises handle sensitive data and customers’ private information. Private data centers give organizations better control over maintaining continuous compliance with specific regulations governing geographies and protection guidelines.
  • Security. The case in favor of internal data centers based on better security is losing steam. Cloud security is improving rapidly and has proven suitable for most applications and workloads. There is an exception to this view. Enterprises with sensitive intellectual property are more likely to keep it under their control.
  • DCs are getting better. Considering the growing pains of DCs, many professionals have a higher tolerance for DC issues. 29% of business and IT leaders say that their data centers meet current business needs. New technologies are making internal data centers more reliable, easier to manage and less costly than before. For example, 32% of business and IT leaders say that >50% of their data centers will be self-healing by 2025.6

The edge-cloud effect

Transformation is a constant element in technology. The rise of the edge, thanks to mobile devices and IoT, has shifted the patterns of data traffic to more edge-cloud than edge-DC-cloud. The impact is evident in the increase of cloud-born and resident data created and stored in the cloud. 49% of data will be held in public cloud environments by 2025, with cloud service providers managing 51% of stored data.7

There is no better indication of the shift to the cloud than the state of the database management systems (DBMS). 75% of all databases will be on a cloud platform by 2023. On the financial side, 86% of the total DBMS revenue growth in 2020 was cloud-based.8

Looking ahead, 5G will help move data and applications closer to the users by enabling carrier-edge data centers. The new class of data centers is expected to be smaller and will serve as a giant step towards better customer experience due to lower latencies and faster apps availability. The laws of physics inform us that apps located closer to users in carrier-edge DCs will have latencies superior to cloud data centers located hundreds of miles away.

Is there a DC in your future?

Sure, your organization will utilize data centers, but they do not have to be owned or operated by you. Unless one must maintain sensitive data locally or babysit monolithic applications, the cloud is a better choice. Digital transformation and modernization trends will continue on their current trajectory leading to the cloud. Increasingly, containerized apps and the data that they analyze are best kept close. Elasticity and scale work in favor of the cloud and will continue to attract new customers.

As far as we can see, internal data centers will continue to play an increasingly focused role in the shadow of the cloud.