Information Technology Management with a Purpose

Jul 16 2012   9:08AM GMT

Are the days of ‘in-house data centers’ numbered?

S R Balasubramanian Profile: S R Balasubramanian

Yes, I would think so, though quite a few of my fellow professionals might differ. The trend is fairly visible now and though it had a slow start a few years ago. I have visited quite a few professional data centers and have been amazed to see an array of servers there belonging to various organizations. These spaces are occupied by banks, financial institutions, brokerage houses, telecom companies, large public and private sector organizations, small and medium sized organizations and so on — you name it and you will find it there. The extent of this change cannot just be perceived, it has to be observed in person.

The initial thrust

In the beginning, when companies moved their servers to external data centers, it was for one of the following reasons:

  • For external facing applications: These included applications like CRM, SRM, field sales operations, etc., as these were essentially accessed by users outside the organization. Issues of connectivity could be overcome as these sites had robust networks.
  • Lack of space for expansion: Organizations in main cities had paucity of space and could not add on more servers and hence preferred to host them elsewhere.
  • Problems faced on servers at remote locations: Many enterprises placed their servers at the factory sites as most of the transactions emanated from there and there was ample space to place them. However, issues of maintenance and delayed resolution during emergencies forced these companies to consider hosting them at external data centers.
  • Turning wise after a mishap: We often see light of the day when we are hit by an undesirable incident. Some companies make emergency calls to service houses after their in-house data centers are struck by short-circuits / destroyed by fire.

The scene now

Companies have moved quite a distance since then. Hosting servers or hiring computing facility is more out of choice than being forced by circumstances. Managements today are more aware and CIOs more willing to shift facilities outside than they were in the earlier years. Their decision is based on the following considerations:

  • Lean staff strength: Corporates are no longer in favor of having a large army of people installing and maintaining data centers. They are also wary of committing scarce organizational resources for ensuring power, physical security and fire safety requirements.
  • A revenue model rather than owning assets: The whole rigmarole of buying servers, storage, software, et al, paying AMC for them every year and finally replacing them with newer equipment on obsolescence or at end of life, has become too much for organizations to handle. They now prefer arrangements where they can hire facilities as and when they want.
  • Flexibility and agility: The nature of the markets today force organizations to be responsive to ever changing needs. Companies therefore can’t afford the luxury of time to provision resources, they want extra resources as and when needed and on demand. Virtualization, the ‘cloud’ model, etc., have made this possible.
  • Safety and reliability: Tier-3 data centers today have strong measures against unauthorized intrusions, fire hazards, etc., and have round-the-clock monitoring. They also offer disaster recovery solutions with a parallel server placed in one of their data centers in another geographical zone.

As I speak to organizations including those from the SME sector, I find them more amenable to hiring external facilities and the resistance from the old guards is slowly dwindling. Greenfield setups clearly start with a clear direction towards hiring and provide no budgets for owning IT equipment. It is because of these trends I am prompted to state that the days of in-house fortified data centers are numbered and they may get extinct in a few years from now. Resistances may prolong their life but can’t prevent the inevitable — let us discuss the roadblocks in the next piece.

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