Why are businesses holding firm to on-premises data centres amidst cloud surge?

Hyderabad: In a landscape where cloud computing is rapidly gaining ground, businesses worldwide are steadfastly retaining their in-house data centres. Despite the exponential growth in expenditure on public cloud services, the dominance of tech giants like Amazon Web Services (AWS), Google Cloud Platform, and Microsoft Azure has not dissuaded companies from maintaining their on-premises data infrastructure.

In 2023, global spending on external or "public" cloud services skyrocketed to nearly $230 billion, marking a significant leap from the figures of less than $100 billion recorded in 2019. The remarkable growth trajectory of the industry's top three hyperscalers—AWS, Google Cloud Platform, and Microsoft Azure—continues, boasting annual revenue surges of over 30 per cent. These tech titans are now rolling out sophisticated artificial intelligence (AI) tools, harnessing substantial resources for development.

However, despite this pervasive shift towards cloud adoption, a palpable reality persists. A substantial number of enterprises, regardless of their scale, continue to harbour in-house computing systems. This observation underscores a prevailing trend across diverse sectors, where nearly every entity retains some form of internal computing infrastructure.

Factors anchoring businesses to data centres

Control: The imperative to maintain direct management of mission-critical IT assets remains a paramount concern for enterprises. Instances of explaining system downtimes or network invasions to stakeholders reinforce the hesitancy to entirely entrust systems and data to third-party providers.

Security and Governance: Industries subject to rigorous regulations, such as healthcare, finance, and insurance, grapple with compliance issues when relying solely on third-party cloud systems lacking comprehensive audit reports. Consequently, many opt for colocation, striking a balance between cost-saving measures and preserving control over their systems.

Vendor Relationships and Intellectual Property Protection: The absence of direct agreements with underlying data centre providers amplifies liability exposure during outages, underscoring the need for comprehensive contracts. Moreover, businesses safeguarding proprietary custom applications favour in-house systems to prevent sharing their intellectual property with other clients in multi-tenant cloud computing models.

Uptime, Disaster Recovery, and Expertise: Persistent concerns regarding system synchronization, performance, and internal expertise drive companies, especially those in high-demand industries like hospitality and aviation, to maintain or co-locate their systems for rapid response times and system resilience.

Hybrid Cloud Adoption and Future Projections

Although the public cloud services market is forecasted to grow significantly, a notable trend emerges. A considerable 85% of companies are embracing multiple clouds in their IT strategies. This surge in hybrid cloud strategies, amalgamating private cloud, public cloud, and on-premises computing, showcases the durability of an internal data centre presence.

Businesses are finding a smart way to handle their tech stuff by mixing different types of cloud systems. This mix includes private cloud, public cloud, and doing things in-house. It’s a good way to keep your data centre while also using the benefits of cloud systems. It looks like this way of doing things is here to stay because it gives companies the freedom to choose what works best for them, even at a time when everyone’s crazy about the cloud.