As cloud services have proliferated in the last decade, companies are increasingly asking themselves if they really need to have their own in-house datacenter. The digital footprint and budget for small companies often does not warrant the cost of acquiring and maintaining a datacenter. Very large enterprises all have one or more in-house data center and they are tied to them for a number of reasons, such as security, performance, or complex proprietary applications ill-suited for the cloud.
Middle market companies, are mostly unencumbered by large legacy computing workloads, but find that increasing their leverage of digital technology is essential for growth, competitiveness, and cost reduction. They must decide where to best house their expanding computing infrastructure. If they already own datacenter capacity, should they expand it, acquire more, or look at hosted, or cloud services? This is the first in a series of blogs that unravel the answers to these questions.
Where are we today?
If you own/lease your datacenter, take stock of what you currently have in them. It’s easy to let equipment build up and lose track of what you have and how effectively that equipment is being used. Datacenters are notoriously like that storage section in your basement or garage. You will be surprised with how much has accumulated over the years. What is the constraining factor in your datacenter capacity: floor space, power, cooling, network bandwidth, or something else? How long will this capacity last you? What factors limit your ability to increase capacity? From a risk management view, how exposed is your facility to natural disasters, power outages, cyber-attacks, etc? What is your spend on your datacenters as it relates to your revenue and your budget? Do you have mature processes, tools, and staff with the right skills sets to cost effectively operate your own datacenter, or is this a distraction from investing in your core mission?
Perhaps you have engaged a hosting service or cloud provider for your computing services. What drove you to do so, and is the provider meeting those needs? Do you get clear visibility into what resources you are using and what you are being charged for? How effectively are you utilizing those resources and can you release them when not in use? When an incident or outage occurs, how well does your provider integrate with your problem resolution processes? How about during new releases?
More and more, we see companies leverage a combination of on-premises and cloud or hosted services for their datacenter needs, often engaging more than one provider. Management of this hybrid environment requires careful orchestration.
Where should we be?
Think of datacenters in terms of the services you need from them and how these are best addressed.
Compute workloads – Highly sensitive data, highly customized systems that require specialized hardware or software, or transaction intensive applications tightly coupled with other in-house systems, favor in-house implementations. Governmental regulations may dictate where your data is physically located. Internet users based across a wide geography, high spikes in seasonal demand, high availability for a very distributed user base are all factors that make cloud an attractive option. The answer may be a combination of the above.
Core competencies – Does operating your own datacenter fit in with, or detract from your core competencies and mission?
Financials – Do you currently own/lease data center facilities? What is their total cost of ownership? Can you take cost out of the business by using cloud services to accommodate seasonal elastic demand?
Business Continuity and Disaster Recovery – Does a cloud solution provide a more effective solution to your Business Continuity and Disaster Recovery needs?
Service Management – Do you have the processes, tools and metrics needed to gauge consumption, utilization, and demand forecast of your computing resources? How about for problem and release management? These are essential whether you have your own data center or rely on cloud/hosted services, and are even more so when you have a hybrid environment.
How should we get there?
Clear requirements, KPIs and supporting processes are key to developing and implementing an effective datacenter strategy and a playbook to support it post-implementation. The strategy helps you select a combination of the right service providers, replace or add to them if required, and meet the needs of your business while getting to the lowest Total Cost of Ownership.
If you would like to take guesswork, cost and angst out of managing your datacenter and cloud providers please send us an email at firstname.lastname@example.org. You may also contact the head of our Digital Technology Practice, Shirish Néné at email@example.com or call him at 703-201-3936.
Group50 has translated years of experience into assessments and methodologies to capture your data center and cloud service needs, and put in place the processes, tools, and personnel needed to develop, implement, and maintain a datacenter strategy that is cost effective, scalable and reliable.
You can read other Group50 articles related to Digital and Information Technology here.
About the Author: Shirish Néné is the head of Group50’s Digital Technology Practice. Shirish and the Group50 team are a cadre of veteran executives with a track record of leveraging people, process, and technology into the next wave of productivity, game changing strategies and tactical advances across a wide range of industries, ranging from start-ups to Fortune 50 companies. Our experience is reflected in a field-tested methodology and framework for establishing Digital Technology in its natural role of a strategic corporate asset. Our perspective from the trenches to the boardroom has instilled in us a respect for, and the ability to fit into a variety of corporate cultures.
- Lean Supply Chain Management – 2022 and Beyond – Supply Chain Hierarchy of Needs ™
- Objectively Picking The Right Manufacturing Location
- Using the Supply Chain Hierarchy of Needs ™ to Plan Next Steps
- Supply Chain Hierarchy of Needs™
- Strategy Realized – The Business Hierarchy of Needs® – Talent Optimization
- 8 Things You Need for Recession Planning – Making the Right Choices Now
- Video Explanation of the Business Hierarchy of Needs®
- Strategy 5.0™ – Defining the Appropriate Organization Design for a Digital Future
- Strategy 5.0™ – Where to Play, How To Win, Most Important Goal
- Cost Takeout as a Strategy