The rise of Public Cloud services has undoubtedly transformed the digital landscape, but claims of the corporate on-premise data centres’ demise are premature and unfounded.
While Public Cloud remains the favoured choice for new businesses seeking agility and scalability, it may not be the best fit for organisations with legacy applications, complex licensing dependencies, or massive data volumes.
In this blog, we explore the realities of the data centre landscape and the future of corporate on-premise data centres.
Challenges in Embracing Public Cloud
Public Cloud’s allure may not hold universal appeal for established organisations. Migrating legacy applications to the cloud can be both intricate and costly, making it an impractical option for some.
Additionally, touted advantages like multiple site resiliency and failover require applications to be specifically designed and developed to take advantage of this, often at additional expense.
The benefits of Public Cloud are not always automatic; they demand meticulous planning and investment. Done incorrectly they can cost more to operate than the services they replace.
Numbers Don’t Tell the Whole Story
While data indicates a shift in favour of Public Cloud, especially new businesses with no legacy issues, it does not signal a decline in the absolute terms of on-premise data centre capacity, usage, or expenditure.
In their 2023 annual survey, Uptime Institute observed that, on average, 58% of their organization’s IT workloads were hosted in corporate data centres, but in 2023, this percentage fell to 48%, with respondents forecasting that just 43% of workloads would be hosted in corporate data centres in 2025.
This decline in percentage does not mean that on-premises data centre capacity, usage or expenditure is shrinking in absolute terms.
For example, in 2022, the Uptime Institute’s Data Centre and IT Spending found that 62% of respondents reported increased budgets for data centre facilities.
The corporate data centre’s share of all workloads may be dwindling, but budgets and workload volumes are still increasing.
It is no surprise that the public cloud accounts for a growing proportion of workloads today, with a share of 12%, up from 8% in 2020. By 2025, respondents of the survey forecasted that 15% of their organisations’ workloads will be hosted in the public cloud.
The trend towards Public Cloud is evident, but it does not foretell the extinction of corporate data centres.
Hybrid Solutions Gain Ground
As companies navigate the Cloud journey, many are opting for a more hybrid approach.
They retain private cloud platforms or maintain non-cloud core systems within their own data centres. This hybrid strategy allows for cost control, addresses migration complexities, ensures compliance, and supports optimal performance.
Public Cloud Reconsideration
Some studies highlight instances of customers “insourcing” away from the Public Cloud due to unfulfilled cost reduction commitments and licensing issues.
Furthermore, growing concerns about energy efficiency and Environmental, Social, and Governance (ESG) practices raise scepticism about the claims made by Public Cloud providers.
Transparency and accuracy in sustainability practices and reporting are being increasingly requested.
Looking Ahead
Despite the evolving landscape, the corporate on-premise data centre is far from extinct. While the number of corporate data centres may decline, they will remain a substantial part of the data centre population for years to come.
The path forward includes a careful balance of on-premise and cloud solutions, tailored to each organisation’s unique requirements.
Conclusion
The evolution of data centres is underway, with Public Cloud services playing a significant role in modernising IT landscapes.
However, the demise of the corporate on-premise data centre is far from imminent. Instead, the future lies in hybrid solutions that combine the best of both worlds.
Organisations must assess their specific needs, compliance obligations, performance requirements, and cost considerations to chart a course that ensures longevity and efficiency.