A business' data is still its most important asset, but that doesn't mean it every company needs to spend millions of dollars building and maintaining its own datacenters. The cloud has grown up, and the days of the company-owned-and-operated datacenters are numbered.
In the pre-PC days, computers were sprawling and temperamental beasts requiring constant care and feeding. Mainframes lived in climate-controlled, secure facilities with round-the-clock surveillance and redundant power and bandwidth connections. Over time, most mainframes were replaced by more modular, inexpensive servers, but the operational requirements remained: a cold, secure room, redundancy and 24/7 management.
During the prosperous '90s, IT managers with datacenter blueprints and wads of cash set out to build their own data fortresses. Data was a critical asset that could not be left to chance, so businesses wanted to keep it safe and close. The number of in-house datacenters exploded, and to IT managers of the 1990s or early 2000s, datacenter vendors like Avocent, Veracode, and EMC were every bit as familiar as Microsoft or Oracle.
Until the past five years or so, outsourced data management was generally thought of as a "little guy" option, conjuring all-to-accurate visions of system outages, sloppy security and spiky performance. But datacenter complexity has risen and the cloud has grown up, so more and more businesses - even really, really big ones - are getting out of the in-house datacenter game and leaving it to the pros.
Datacenter management has always been tricky, for two related reasons: servers are hot, and all technology eventually fails. All other datacenter issues (cooling, power consumption, physical space management, redundancy, and monitoring) stem from these. If anything, progress has made things worse. Every year, server manufacturers pack more processing into smaller footprints, and datacenters pack more servers into each square foot. Higher processing density has tripled heat levels in recent years.
Balancing heat density and floor temperatures is not a game for the faint of heart. 60% of datacenter costs are electrical and mechanical, and that adds up to real money. Upping your floor temperature just one degree can save 4% in power costs, and companies have reclaimed millions of dollars per year simply by tweaking cooling. But those gains aren't free. Raising temperatures just a few degrees can reduce your time to respond to outages and increase the risk of catastrophic failure. That's a lot of responsibility to place in the hands of an IT department that's probably better at (and more interested in) software and networks than HVAC.
Even a datacenter operating at peak efficiency might cost more than its worth. Few businesses have the kind of predictable, linear growth best suited to a datacenter construction plan. Mergers, opportunities, new regulations or unexpected setbacks can all influence the scope of data under management, and that can change on a dime. Not enough capacity is a logjam. Too much capacity is wasted money. The standard logic regarding outsourcing goes like this: "If it's core to your business keep it in-house." But if you're an information company, are refrigeration and construction really core to your business?
Once upon a time, managing your own data center was the only way to ensure adequate Quality of Service and data security. Businesses assumed the painful realities of in-house management to keep their customers happy and their data safe. These days, that claim is pretty tough for most businesses to make. Netflix, which already runs its consumer business in Amazon's cloud, plans to move more than 95% of its internal servers to the cloud, dropping from 2,500 in-house virtual servers to about 50. The quality is there, and unless you're NORAD, so is the security. In fact, the US federal government, will close more than 1,000 datacenters by 2015 through consolidation and migration to the cloud.
Larry Tabb, founder of the research firm TABB group, summed it up nicely in an interview with Advanced Trading: "Just because it's a shared datacenter, that doesn't mean it's any less safe than your own datacenter. If Citi can get hacked, and the big banks can get hacked, and Sony can get hacked, it can happen to anybody."
Cloud vendors have advantages due to economies of scale and domain expertise, and they've reached parity or better on security and QoS. In the long run, in-house datacenters in all but the rarest circumstances are done. As Axcient's CEO Justin Moore pointed out, though, migration to the cloud is a gradual process. More entrenched companies with massive investments in datacenters won't move overnight, but newer businesses that have not made major investments will be hard-pressed to build any infrastructure. Over five to ten years, as aging hardware and support systems in established datacenters come due for replacement, most larger businesses will begin to consolidate in the same manner as the federal government – pulling key data close, migrating non-critical data to the cloud, and eliminating excess capacity.
Can This Technology Be Saved?
The datacenter itself isn't going away – just the paradigm of running it internally. As storage technology continues to improve, datacenter management will become increasingly prohibitive, and frankly, fewer and few CIOs will want the headache. It's possible that a few high-profile hacks of cloud service providers might slow the tide for a while, but ultimately, outsourcing management just makes sense.
Previous Technology Deathwatches
Point-and-Shoot Cameras: No change
Video Game Consoles: The utility of bundles apps like Netflix and Vudu seems to be slipping. An NPD Study showed that one in five consumers who view streaming video on their TVs do so without a peripheral device.
Blu-Ray: The same NPD study reveals that "online video is maturing” as users migrate to watching streaming media on their TVs.
QR Codes: It's been a mixed bag. While Bank of America is testing QR codes for mobile payments (good news for the technology), a security researcher demonstrated how a malicious QR code could be used to wipe a Samsung smartphone.
For an update on our baker's dozen of company Deathwatches, check out our updated ReadWriteWeb DeathWatch Update: The Unlucky 13.
Map image from Whitehouse.gov.