Opinion: Private data centre relevance in a cloud-centric world

With Microsoft joining AWS in offering Australia-based hosting for its cloud, is it yet another sign of the death of the private data centre

There’s no doubt cloud computing is a very real trend. While many organisations keep their core IT assets in-house and under direct control, nowadays you would struggle to find an enterprise that didn’t make use of any third-party cloud service.

From analytics to social networking, cloud services are exploding and IT managers now have options to augment or replace traditional on-premise systems, including the data centres that house them, with hosted alternatives. Despite the cloud excitement, private data centres may not be relegated to computing museums just yet and their place will remain strategic for many organistions.


One bugbear of cloud often cited by a number of CIOs I have spoken with is the tyranny of distance, and bandwidth costs, far outweigh any benefit of moving to the cloud. If applications did not perform as well and networking costs increased (particularly for backups), the private data centre remains the most practical option. We can be as philosophical about IT management as we like, but if a proposed change is not practical it can easily have a negative consequence.

Security and regulation

Security is often highlighted as a reason to be cautious about cloud adoption, however, at a fundamental level there is no reason why a cloud service is inherently more or less secure than on-premise IT. As is with availability, cloud tenants are resigned to a “best efforts” scenario for security and much is left to subscribers to implement their own requirements.

The private data centre allows organisations to over-engineer security to a level not available with shared facilities. That’s not to say the security of shared facilities is bad, but private data centres can be over engineered to a level not available up in the public cloud.

As for regulation, this is keeping many organisations from venturing away from their own data centres, but geographic restrictions on data location does not immediately preclude public facilities, so long as they’re located in a certain region. A combination of security clearance, location restrictions and ongoing policies will make sure the private data centre remains operational.

The cost conundrum

Comparing the cost of running your own data centres and IT services – from the floor space to power, network and people costs – with the hourly rates of computing cycles bandied by cloud providers at first glance looks like a no brainer.

However, the most rudimentary financial analysis will pit the ongoing costs of cloud services against the depreciable capital and operating expenses of in-house IT and the results will vary between organisations. Inefficient IT shops will find savings in the cloud, whereas the leaner companies will be comfortable knowing their own data centres aren’t so expensive after all. In March news out of the US told of a $600 million private cloud contract between Amazon Web Services and the CIA.

AWS is the public cloud behemoth, but it’s still prepared to take on high-value private cloud contract when the opportunity arises. And $600 million is a lot of data centre floor space, even if you’re not building them on the same scale as the big public cloud providers. Conversations centred around cloud computing cost tend to mask the real value and opportunity the cloud presents.

Cloud services won’t run IT for you

Amid the technical, political and financial arguments for and against private data centres, and IT in general, IT managers must not lose sight of the end game – better information management. In some cases moving to the cloud will drastically improve efficiency and agility, and in other cases it will create more complexity and lock-in.

Either way, the private data centre is here to stay and many enterprises are busy keeping an eye on distributed infrastructure located everywhere from branch offices to server rooms and data centres. The cloud presents a valuable option in the catalogue of IT service delivery, but IT managers still need to be on top of their infrastructure landscape to make the best use of everything available.

Rodney Gedda is senior enterprise IT industry analyst with Telsyte

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