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Pressure grows on enterprise datacentre operators to wind-down investments

Long-term investments in private datacentres could leave enterprises at a competitive disadvantage, warn experts

Enterprises need to wise up to the fact that long-term, private datacentre investments could put them at significant competitive and financial risk later down the line.

That’s according to Mark Thiele, executive vice-president of US datacentre developer Supernap. Thiele discussed the problems enterprises leave themselves open to when embarking on multi-year datacentre strategies at the Datacloud Europe event in Monaco.

In a discussion with Jan Wiersma, vice-president of global cloud services at SDL, Thiele suggested operating a private datacentre doesn’t make good business sense for a lot of firms.

“If there’s one thing you should worry about most when making a 15-year investment in costly infrastructure, it's the fact that you don’t know what you’re going to be doing two years from now,” he said. 

“By spending tens or hundreds of millions of dollars on a datacentre strategy by virtue of cost and the fixed nature of your physical infrastructure, you’re effectively defining a 15-year business plan for your company.

“I’ve never built a business plan for a company I’ve been a part of that’s been longer than six to nine months,” he added.

Extracting the value

To get the maximum value for money out of a datacentre investment, businesses need to consider it as a sub-system of their IT department and their overall business, but few enterprises – in Thiele's experience – do.

“In all my time working in the enterprise, there wasn’t an organisation or company ready to treat the datacentre in the way I felt it needed to be treated,” he said.

“We didn’t have financial or business strategies that looked at how the datacentre applied to the long-term health of the company and, without that, I felt the idea of running a datacentre in the enterprise was a lost cause,” he added.

This is a point of view many public cloud suppliers – including Amazon and Google – share, with the explanation being that money tied up in infrastructure takes up funds that might be better spent on business innovation.

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Wiersma picked up on this view when explaining how he’d come to the same conclusion as Thiele while managing a datacentre in a previous job.

“In 2011, I was responsible for a large government organisation in the Netherlands, running all its datacentres and experiencing significant issues around running those at scale with a lot of operational costs,” said Wiersma.

“We were up to the point where 80% of our budget was on operations and 20% on innovation, and that’s when we decided we really needed to step back and address this,” he said.

Co-location suppliers cash in

It’s not just public cloud suppliers that stand to benefit from enterprises calling time on their datacentres, as datacentre co-location provider Equinix said it’s a trend – along with the rise of the internet of things and hybrid cloud delivery models – that’s fuelling demand for its services too.

Speaking to Computer Weekly at the event, Eric Schwarz, Europe, Middle-East and Africa president of Equinix, cited the reasons outlined by Thiele and Wiersma, but said the shortage of people with datacentre skills is also increasingly becoming a factor.

“If you count up all of the datacentres in the world, three-quarters of them are in-house, corporate-owned and operated, and we’ve benefited from this trend where businesses are deciding to do less or get out of the business of managing their own data completely,” said Schwarz.

“It’s capital-intense and skills-intense. The people who have the skills needed are retiring or are being outsourced, while there’s this broader enterprise trend going on where people are realising operating their own datacentre isn’t necessary or strategic to their business any more,” he said.

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