The cloud is currently seen as the Next Big Thing in IT: from enterprises to data centre providers, businesses are welcoming the cloud into their organisation with open arms. After all, the potential to provide IT services or infrastructure at the flick of a switch is very appealing, while hosting companies can see this as a new way to raise revenues. However, both hosting data centre businesses and, to a lesser extent, CIOs within enterprise operators, need to remember one vital fact. The cloud is a disruptive technology, and that disruption won’t always benefit you.
Once it’s virtual, it can go anywhere
Essentially, every time someone virtualises a software application, they sever the sticky link between software and physical hardware, making it trivial to move that application. Previously, moving IT infrastructure to another provider meant a massive engineering effort, and almost always some downtime for vital business IT assets. Now the move, whether to new hardware in the same data centre or out to the cloud, is much simpler. Whether we’re discussing public, private or hybrid clouds doesn’t matter; the real danger is that it’s child’s play for a business using data centre space to simply pack up its bags and leave.
For the majority of data centre investors, the underlying issue is that the real cloud providers, such as Google, Amazon or Microsoft, have a set of major advantages. They have the people; with the ability to develop, maintain and operate IT management platforms that would gobble up the profit margin of any smaller operator that tried to imitate them. They have the scale; able to buy everything from land to “no-brand” servers to network devices in huge volumes, benefitting from huge economies of scale and buying power. And they aren’t saddled with ageing “Enterprise Tier III” data centres in expensive locations, but can build cheap cloud data centres in the most economically attractive site possible. After all, while the country a cloud data centre is in matters, the state or city does not: it could as easily be in central New York as in Grangeville, Idaho.
Essentially, the real cloud providers can threaten to steal your business away by offering the same services for the lowest possible price. In doing so, they will cruelly reveal any inefficiencies and expose your margins to potential customers who will be weighing up the options. This makes one thing crystal clear; the cloud is an aggressive, merciless competitor, and should be treated as such.