The CIO’s Dilemma: On-Premise, Colocation, or Public Cloud? | Cloud Concepts

The CIO's Dilemma: On-Premise, Colocation, or Public Cloud?

Many CIOs today are deeply concerned over the recent technological dilemma imposed to them. Companies of all sizes are currently thinking about the role of cloud computing in their IT strategy and how it will change the way they run their IT operations and businesses. Nebulai decided to write this article to clear up some doubts and pave a path for decision makers to start embracing the possibilities ahead.

Let’s review the three different technology deployment models (On-Premise, Colocation, and Public Cloud) before we start comparing them.

On-Premise: Relates to any software technology running in the company’s physical premises. In other words, software technology deployed at the company’s data centers.

  • Why companies use this model: One reason was that on-premises deployments were “de facto” deployment model for many organizations for the past few decades. In other words, there was no other alternative. Additionally, many companies liked the ability to fully control their IT operations.
  • Why companies do not use this model: Even though having control over their IT operations was a good benefit for some, it was not enough to ensure that an organization would efficiently operate their IT infrastructure. Companies started to find that scaling their applications required IT administrators to predict potential demand which led to resource over commitment. Even if IT administrators were capable of somehow predicting future demand, they had a lot of operational challenges just provisioning new infrastructure in time for the business to quickly react to customer demands. Also, companies needing a global presence had to buy and operate datacenters in many geo locations which added even more logistical complexity. Thus, many organizations started to try to find ways to make things more efficient or somehow outsource the operations of some of the infrastructure layers to other third party providers.

Colocation: Relates to a datacenter which organizations can use to rent rack space needed to deploy their technology infrastructure such as compute, networking, storage, etc. A colocation facility provides management for the real state (datacenter building), cooling, power, racks, electricity, internet service, etc. Organizations would then manage everything from the racks and up.

  • Why companies use this model: Using a colocation facility helped organizations to have additional datacenters without having to invest in all the necessary components up front. Therefore, trading capital expenditures for operating expenditures. However, these organizations still had full responsibility of the IT operations and availability of the applications deployed in these colocation facilities. Colocation facilities did improve the overall IT services availability for many companies, but it did not solve the challenge of having to rely on the old on premise model for the core IT infrastructure components.
  • Why companies do not use this model: Colocation facilities still had the same limitations as the on premise model, it just reduced the responsibility and confined the respective limitations to anything below the racks. Hence, IT administrators still had to predict demand, handle the provisioning of IT infrastructure, and manage the availability of their applications.

Public Cloud: Relates to a set of interconnected datacenters managed and operated by a third party service provider such as Amazon Web Services, Microsoft Azure, Soft Layer, etc. The service provider then will rent compute, networking, and storage resources to companies looking to leverage their public cloud offerings and charge them typically on a pay-per-use billing model.

  • Why companies use this model: Public clouds allow organizations to delegate the control of most of their IT infrastructure to a service provider and reduce the complexity of managing multiple datacenters, colocation facilities, etc. Besides, delegation of responsibility, organizations can benefit from the expertise of these service providers and get additional IT provisioning benefits such as the ability to deploy a server in minutes, shut down servers when not using them without being charged for them, scale across multiple geo locations without having to buy or operate multiple datacenters, leverage technologies which would normally be available to large companies with heavy investments in IT infrastructure, etc.
  • Why companies do not use this model: A lot of the recent successful technology-based companies are running their IT operations from the Public Cloud. However, there are some things to take in consideration before making such decision. Some organizations have concerns over how international laws define “data ownership” and to what extend a service provider can access customers’ data without previous notice. Another concern, is that you are relying on a single or a few set of service providers to run your infrastructure. Thus, normalizing technological competitive advantage across all companies using a Public Cloud. Now, since this is sort of a new trend, it also poses a significant advantage over competitors that are not using Public Clouds. Furthermore, service providers are the ones that decide on the features and capabilities that will be added to their service; most of the time, customers have little say on their roadmaps. Finally, the ability to migrate to another provider could be a complex process which creates a certain level of lockdown to the chosen Public Cloud providers.

Overall, the benefits outweigh the potential challenges. Public Clouds are here to stay, until a new model arises to displace it. For the time being, organizations that wait too long to embrace this new technological deployment model will sacrifice a lot of capabilities which translates into a reduction of their competitive advantage and potentially their ability to stay in business.

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