The End of the Corporate Data Center?

The idea that a cloud-driven digital transformation is underway in global business is now commonly accepted, thanks in part to years of supporting stats and projections that have established the cloud’s emerging preeminence. Just this month, Synergy Research reported the revenues of cloud operators and vendors in six key cloud services and infrastructure segments grew 25% in 2016 alone, to $148 billion.

Still, there are times when a cloud prediction stands out in the stream of stats, and that was the case when Oracle co-CEO Mark Hurd said that his company expects 80% of corporate data centers to disappear by 2025, as the cloud becomes the primary vehicle for deploying applications and IT services. The thought of 4 of 5 corporate data centers fading into IT lore within a decade really brings home how transformational the cloud will be.

“An irresistible force”

Hurd set up his prediction about the disappearing corporate data center with some other projections, including that 80% of production applications will be in the cloud by 2025. He added that as applications increasingly move to the cloud, a tipping point will be reached when the economic rationale for maintaining independent data centers will become tough for companies to justify.

“This is an irresistible force,” he said at Oracle’s CloudWorld conference earlier this month. “This is not ‘what if.’ This is the way things are going to go.”

Hurd explained that the shift to the cloud hasn’t just changed the way people think about technology, it has also impacted how they view business. Innovation, he said, is now a do-or-die proposition for companies, and cloud has become a critical way to free up funds for innovation by, for instance, reducing capital expenditures and labor costs – exactly what shifting an on-premises data center to the cloud can do.

As Oracle anticipates a continued enterprise move away from corporate data centers, the company has invested heavily in enabling enterprises to take a hybrid cloud approach to deploying their IT. This allows companies to protect proprietary information in a private cloud while still being free to access scalable, more cost-effective computing resources in the public cloud. An example of this increased hybrid cloud investment came last week, when Oracle announced it will add data center facilities in Virginia, London and Turkey by mid-2017 to enable access to its Oracle Cloud platform, making it available in 29 global regions.

Going hybrid

At Equinix, we enable a shift to hybrid cloud infrastructures by providing direct and secure access between private clouds and public cloud providers throughout our global interconnection platform. For instance, customers can access Oracle Cloud through Oracle FastConnect on the Equinix Cloud Exchange, currently available in five metros in the U.S, Europe and Australia. These private connections bypass the public internet, so companies can avoid the security and performance issues that sometimes plague public networks. The result is increased operational efficiency, superior data safety and a better customer quality of experience at the network edge.

Hurd’s disappearing corporate data centers prediction also aligns with something we’ve been saying at Equinix for a while: Traditional IT infrastructures, built around a centralized, on-premises corporate data center, just can’t deliver dynamic applications and IT services to dispersed and mobile end users at the corporate network edge, something that the enterprise must do these days to compete. But companies can adjust by re-architecting their corporate IT infrastructures using an interconnection-first strategy, to gain direct and secure access to cloud-based applications and IT services. This very well could lead to closing data centers in favor of global colocation and interconnection points of presence that leverage an Interconnection Oriented Architecture™ strategy (IOA™) for connecting to multiple clouds.

An IOA strategy is repeatable and proven. Read our IOA playbook to see how this digital transformation is possible.