Why Enterprises Still Rely on Data Centers

Why Enterprises Still Rely on Data Centers

By Enterprise Networking Mag | Tuesday, July 21, 2020

The significant growth of expenditure on cloud computing has not reduced the reliance of companies on data centers.

FREMONT, CA: The enterprise IT has witnessed an immense transformation in the last ten years as companies' annual spending has drastically increased on cloud infrastructure services. When the technology was at its initial stage, enterprises were reluctant to adopt it, but with the time that changed and the demand for cloud technology started increasing rapidly.

The fascinating part about the analysis is the core expenditure of IT also doubled during the same period along with the cloud. In the last few years, the average annual spending of the data centers increased by 4 percent, and the growth for the cloud was by 56 percent. In the year 2019, for the first time, enterprises invested more on cloud services. For example, they spent money on laaS, PaaS, and SaaS rather than using it on software and hardware related to the data centers.

However, the most astonishing part is, in spite of the development in the cloud, the expenditure in the cloud is just catching up to or slightly exceeding the expensed of the data center. The significant growth of cloud, and despite predictions that it will soon replace the data centers, the expenses are done on data center did not reduce. Here are a few of the reasons why investment in data centers is more than a cloud.

Few of the most likely reasons for the odd results are:

• The companies are still in a transition period where they have to keep the data centers going while slowly switching over to cloud-based systems. Enterprises are still hesitant to shut down their data centers entirely. If anything goes wrong with the transformation, the companies can easily maintain themselves and revert to legacy.

• It is not easy to stop the investment done in the data center. There may be a time when the data center leases still have years left. Furthermore, there are also sunk costs in equipment, and companies also need to retrain data center staff.

• According to some organizations, traditional local hosting is not scary than the public cloud. Therefore, they refrain from the transformation. Thus, the data centers remain.

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