Will the Data Center Cost Model Get Disrupted by Cloud? (SlideShare)

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Will the Data Center Cost Model Get Disrupted by

Cloud?

It looks like enterprises are in love with the cloud today. They can get elastic computing resources when

they want, where they want, and on a pay-as-you-go basis.

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This last aspect is a big factor for many cloud users, allowing them to turn their usage on or off, and

account for their cloud consumption as operational

expenses, rather than capital investment.



By comparison, the data center cost model may not seem so flexible. Data

center leases and numerous colocation agreements are built on longer, fixed

periods of time.



Will the cost model for data centers stand up to the onslaught of cloud service providers, or is time to rethink value, financials, and pricing? Here are six factors to take into account before

rushing to redo your pricing and business model spreadsheet.



1. Do data center operators and colocation service providers serve the same customers, compared to cloud computing service providers? The freedom and flexibility of the cloud attract non-IT department users, eager to meet needs with instantly available resources. On the other hand, IT departments may find cloud solutions lack the control they need, and prefer a data center solution instead.



2. Legacy systems still abound in enterprises and organizations, and cloud providers often cannot accommodate such systems. In this case, the right external solutions will be data center or colocation leasing.



3. Cloud cost models do not always work out to be less expensive than those of traditional solutions. It is still important for customers to sit down with a calculator, and make a cost comparison for the volume and duration of the data and processing power concerned. As usage grows, some cloud models simply end up more expensive.



4. Cloud computing is still based on offering “chunks” of data center resources to customers, albeit with massive virtualization and automation in order to keep costs and, therefore, prices down. If lower prices are an issue, automation of certain services in a data center could help better align data center pricing with cloud provider pricing.



5. Better and more personalized service may help protect your current data center cost model. Even “Shadow IT” users, those non-IT department users that see the cloud as their business savior, may end up finding they need more than the push-button, recorded message, 100% human-free interfaces of the cloud.



6. Finally, offense may be a good form of defense as well. If cloud providers seek to tempt IT departments and CIOs to make a switch, remember that colocation business opportunities are growing at the low end. Retail colocation offerings on a slot by slot basis may make as much sense to small and medium businesses, as setting up in the cloud.



Overall, by clearly identifying the customers served, their needs, and what

data centers and colocation providers can do better than the cloud, the data

center cost model can be conserved. Or tweaked. Or revamped. But now you

have a choice, instead of being pushed one way or the other.



Has your data center cost model or marketing changed

significantly in the recent past?



Tell us about your motivations to make those changes with a

line or two in the space for comments below.



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Will the Data Center Cost Model Get Disrupted by Cloud? (SlideShare)