Cloud to Enterprise: Resistance is Futile

At the end of its Journey to the Cloud, will an enterprise still be running its own data center?

Perhaps, but if it does, it will be much, much smaller. It will be the Private Cloud part of a Hybrid Cloud that will run only a small portion of enterprise workloads. On the other hand, many enterprises will live entirely in the Public Cloud.

Consequently, most of the enterprise data center capacity in the world will disappear, assimilated by the Borg, that is the Public Cloud.

Why is the gravitational pull to the Public Cloud so strong?

One reason is that the price-performance of the Public Cloud is much superior to that of a dedicated data center, even one with Private Cloud. And the gap is widening all the time.

At the heart of this price-performance advantage is scale and specialization. The kind that takes Public Cloud service providers to places like Prineville, Oregon to build massive chiller-less data centers with custom-built servers.

Facebook’s done exactly that. There is a fascinating, if somewhat dated piece in Wired magazine, which goes into a lot of detail on Facebook’s data center in Prineville. Needless to say, the scale and level of specialization is such that every single element of cost and energy coinsumption is highly optimized. Not something an average enterprise can or should be spending their time on.

Facebook’s not an enterprise cloud service provider (yet?). But Amazon, Google, Salesforce.com and Microsoft will undoubtedly have the same laser focus on cost and performance.

Cost advantage also comes from “pooling” – the simple notion that the capacity required to run a pooled data center is less than the sum of the capacities of the individual data centers. Pooling is a powerful cost driver in many services from electric power to limo services. It has nothing to do with specialization, but the cost savings are quite real.

But it’s not just about price-performance. Over time, specialized cloud service providers will add product features that will simply make them better. Or allow customers to do things they couldnt do before. Big Data is certainly shaping up to be one of those areas.

This has happened before. A close analogy would be how Salesforce.com started out by being the cheaper, easier to implement SaaS competitor to on-premise CRMs, but is now functionally a superior product.

Better price-performance and superior feature-function may be quite enough to explain the exodus to the cloud. But there is actually an even bigger force at play here. Something that doesn’t lend itself well to ROI calculations, but nevertheless, CEOs understand it very well.

Running a data center is not core to any large enterprise. Its business is selling widgets or serving customers. And for it to be the best in the world at what it does, it needs to focus on what makes it good. Running a data center is not one of those things.

Which is why if I was a data center today, I would be saying my prayers. Resistance is futile. Prepare to be assimilated.