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Time to Stop Buying Hardware for Data Centers?

I recently attended AWS re:Invent, and while I have seen some pretty impressive business use cases that have bent their strategies toward the cloud, I walked away truly wondering why businesses would ever purchase a piece of IT infrastructure again. Let’s face it, managing IT infrastructure has been one of the most difficult and specialized jobs of IT, and most IT organizations do an amazing job at managing complex architectures, but why continue to do so?

If you are a new company opening its doors, this is a simple decision, and there is very little, if any, reason to own IT gear. The debates, however, are going to land within companies (and the IT infrastructure vendor landscape) that have built business on traditional IT iron. A brief look at history reminds us of how resistant IT organizations were when VMware hit the scene—but take a look now at the number of companies that have massively consolidated data centers.

The good news for IT infrastructure vendors is that this dynamic helped turn the good old hardware refresh cycle crank to produce an impressive run on hardware infrastructure refresh, and introduced some modern architectures that are easier to deploy, manage, and maintain. While better for IT and businesses, I can’t imagine organizations taking these investments much further without a serious cloud strategy that will reduce (and even wipe out) any additional IT infrastructure investments.

VMware Cloud on AWS

This dynamic is further validated by the relationship that VMware and AWS are forming. Companies that have invested in VMware software and certified professionals want a way to easily extend the benefits VMware has delivered without having to purchase more hardware. I’m led to believe that most mature shops will take one of three routes:

  • Move some general-purpose workloads to the AWS side of the house to free up local capacity for new workloads and internal scale.
  • Sophisticated teams will use AWS as burst capacity for temporary use that the current on-premises infrastructure cannot easily support.
  • Development teams will design and test in AWS, with enlightened options to deploy on AWS as IT Ops can help manage.

Less mature shops may run faster as they look toward the cloud as a secure zone, which is safer than anything they can deliver on-premises with existing resources and skill sets. There are three interesting areas to watch as this transition takes place:

  • IT vendors that make a living on selling IT infrastructure are going to play some serious defense, and likely base their justifications on performance, reliability, economics, and avoiding vendor lock in. They will also be faced with a growing wave of senior IT leaders already running toward the cloud.
  • The millennial workforce is starting to land themselves in important IT- and business decision- maker roles—and guess what their mindset is? The cloud. This is a workforce that didn’t grow up unpacking boxes, racking gear, and bit twiddling in the dark world of configuring hardware.
  • An economic tug of war between the recurring monthly cost of cloud and the amortized cost of capital investments is likely to occur. Most IT folks are not finance majors, and this is an area that IT and business finance disciplines will need to tune process and make modifications. Expect every IT infrastructure vendor to claim cheaper solutions than the cloud—and the cloud providers to do the same.

Hybrid Cloud (For Now)

Yes, IT shops will operate in a hybrid mode for some time, but I believe this transition is going to happen quickly. Sure, the AS400 will still suck power, pipe, and ping from the on-premises data center, but companies are rapidly establishing cloud-first policies. It’s also only fair to mention that while AWS has 70+ IT services, they are still thin in certain places—but IT pros appear willing to sit tight while new features are introduced. There is a growing feeling among IT pros that new features are just around the corner, and they are willing to wait—and want to be part of adopting them.

So, ask yourself, do you really need to purchase additional on-premises IT infrastructure? Or is the cloud the answer moving forward?

Mark Bowker is a senior analyst at ESG. Read more ESG blogs here.

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