Businesses of all types and sizes are rethinking their relationship with the public cloud. This even includes the cloud natives: companies that have grown up with the convenience and scalability of platforms like AWS, Azure and Google Cloud. As these cloud native companies scale and mature, many of them start to feel like they’ve outgrown the public cloud—at least for certain use cases.
They’re discovering that hybrid infrastructure offers unique advantages that complement and even enhance their cloud strategies. Many of them are using colocation data centers as the foundation for their hybrid infrastructure. Working with the right colocation partner, they can deploy their private clouds adjacent to the public cloud, giving them the flexibility to choose the right infrastructure for the right workloads.
While many cloud natives are trying colocation for the first time, most traditional enterprises have been using it for years. These companies have made colocation a key component of their overall infrastructure strategy to help maintain control, while offloading the complexities of data center management. They also know that modern colocation offers more than just space and power; it also provides on-demand digital infrastructure services and ecosystem access. Like their cloud native counterparts, traditional enterprises are now using colocation to enable hybrid infrastructure and optimize their cloud strategies.
In this, the first in a two-part series, we’ll look closer at why both cloud natives and traditional enterprises are converging on a hybrid infrastructure model, and why they’re using colocation to help them implement that model. Then, in a future post, we’ll explore how the journey might look different for cloud natives like Atlassian compared to traditional enterprises like Target.
Cloud natives are realizing cloud isn’t right for everything
Many cloud native companies are just beginning to explore the world of hybrid infrastructure. They’re finding that the public cloud, while powerful and flexible, isn’t always the most cost-effective or performant solution for every workload.
In particular, businesses that have experienced rapid growth in recent years often conclude that they’ve outgrown the public cloud. This realization is leading them to re-evaluate their infrastructure strategies, with many determining that running parts of their platform adjacent to, but not in the cloud, is a viable alternative.
For cloud natives, hybrid cloud architectures that include colocation offer:
- Cost optimization: As workloads become more predictable, the pay-as-you-go model of the public cloud may no longer make sense. Incorporating colocation allows for better cost control on steady-state workloads.
- Performance tuning: Direct control over hardware enables fine-tuning for specific application needs, potentially delivering better performance than generalized cloud instances.
- Hybrid flexibility: Colocation enables true hybrid infrastructure, allowing companies to keep certain workloads on-premises while maintaining seamless integration with public cloud services for other workloads.
- Data sovereignty and compliance: For companies expanding globally or facing stricter regulatory requirements, colocation can help ensure data remains in specific geographic locations.
- Reduced latency: By placing hardware closer to end users or in strategic locations, companies can significantly reduce latency for critical applications.
Enterprises are rethinking cloud-first
For enterprises, colocation offers a middle ground between the CAPEX of building and maintaining an in-house data center and the perceived loss of control that comes with full cloud migration. These organizations appreciate the ability to:
- Maintain physical control over sensitive data and hardware
- Customize their infrastructure to meet specific performance needs
- Leverage enterprise-grade security and compliance measures
- Scale their physical footprint without the burden of facility management
The transition toward hybrid architectures is part of a wider shift in the way enterprises look at public cloud. Many organizations that initially embraced cloud-first strategies are finding that the cloud doesn’t solve all their infrastructure challenges; in some cases, it even introduces new ones. And while many industry observers predicted that cloud resources would grow more affordable due to increased competition, this doesn’t seem to be happening. In many cases, today’s cloud services still fail to meet expectations around cost-effectiveness.[1] This will likely add increased pressure on enterprises to rethink their infrastructure strategy.
For enterprises that are reconsidering their cloud investments, colocation as part of a hybrid infrastructure strategy can be a refuge that helps rebalance their infrastructure mix.
Converging on a hybrid approach
Several key factors are driving both cloud native companies and traditional enterprises to reconsider their infrastructure strategies and explore hybrid cloud, with colocation as a foundational component.
Controlling cloud costs
The escalating cost of cloud services has become a significant concern for many organizations. As companies scale their operations, they often find that cloud expenses spiral out of control, leading to what’s commonly referred to as “cloud bill shock.”
This financial pressure is pushing businesses to seek more cost-effective solutions. For instance, 37Signals, the company behind popular tools like Basecamp and HEY, made headlines when they decided to move away from the cloud due to mounting costs.[2] This trend is prompting many businesses to re-evaluate their infrastructure mix and consider colocation as a means to optimize expenses.
Ensuring compliance
As regulatory requirements become more stringent, companies are finding it increasingly difficult to maintain compliance in pure cloud environments. Issues surrounding data privacy and sovereignty are leading organizations to seek greater control over their data.
Additionally, the risk of vendor lock-in and infrastructure sprawl is becoming more apparent. These concerns have led some companies to take drastic measures. A notable example is Lidl, the German supermarket chain, which took the bold step of becoming its own cloud provider to address these issues and maintain better control over its IT infrastructure.[3]
Managing risk
Security breaches and data protection have also emerged as critical concerns in the cloud era. High-profile security incidents have highlighted the challenges of maintaining visibility and control in cloud environments.
With regulations like GDPR imposing strict reporting and notification requirements for data breaches, the stakes are higher than ever. The reputational damage from cloud-related security incidents can be severe and long-lasting.
One illustration of this risk came in 2020, when the New South Wales government in Australia faced a significant data breach involving more than 54,000 scanned drivers’ licenses stored in a cloud storage system. Outside of their normal IT infrastructure and policies, this resource was accidently left open to the public.[4] Such incidents serve as a wake-up call for organizations to reassess their data storage and security strategies.
These catalysts are prompting both cloud natives and enterprises to reassess their approach to hybrid cloud infrastructure. Colocation data centers are emerging as a critical piece of the puzzle, offering a balance of control, performance and flexibility that pure cloud solutions may lack. By incorporating colocation into their IT strategy, companies can address many of these challenges while still leveraging the benefits of cloud services where appropriate.
Changing organizations must change their infrastructure
As organizations evolve, so too do the demands on their infrastructure. For instance, as an organization moves through periods of rapid growth or cyclical demand, they will appreciate the flexibility and scalability that cloud provides. However, as organizations become more established, they may see their operations level out, where the benefits of hybrid architecture start to bring more value.
Learn more about how colocation at Equinix can help cloud natives get the infrastructure they need for the next step in their business journey: Read our paper The future of digital leadership. And, don’t forget to check back soon for our follow-up blog. We’ll look closer at how both cloud natives and traditional enterprises are diversifying their infrastructure using colocation.
[1] Richard Speed, Admins wonder if the cloud was such a good idea after all, The Register, September 4, 2024.
[2] Georgia Butler, 37signals claims cloud repatriation saved it $1m, Data Center Dynamics, September 20, 2023.
[3] Gabriele Monti, Beyond Bread: How Lidl Became a Cloud Provider, LinkedIn, August 30, 2024.
[4] Juha Saarinen, Over 54,000 scanned NSW driver’s licences found in open cloud storage, iTnews, August 28, 2020.
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