Colocation and the Cloud: the future is here

Cloud and colocation sound like just more buzzwords in a seemingly never ending chain of new and complex technologies that are begging for attention.

Unfortunately, the end result is that some enterprise owners and their IT teams are putting their hands in the air and saying ‘enough’ - and instead of looking to take on-board new and better solutions and technologies offered by colocation and cloud computing they are opting for the status quo. Similarly, managed services and solution providers and resellers are also asking what they should and shouldn’t include in their packages to clients.

So why should you consider adopting both cloud and colocation? Well, firstly, it can be the ideal ICT combination for you, your customers and your business. Secondly, expert opinion supports these forms of outsourcing as a valid and profitable area of investment.  To see why let’s take a closer look at the benefits of these technologies.

There are many misconceptions about cloud and colocation services. This is not surprising given cloud computing’s relative infancy, so let’s start with the basics.

Research and consulting firm, Deloitte, has produced a report titled Smarter Data Centre Outsourcing - Considerations for CFOs. It states: “Organisations now face combined challenges of dealing with fluctuating demand combined with an expectation that the organisation’s IT department can provide these services in a rapid and cost-effective manner.”

Increasing investment in cloud services has led to resellers and end users alike taking advantage of a vast array of offerings, this explosion of choice has led to no small amount of confusion regarding these services actual ‘cloud’ nature.

The United States Department of Commerce National Institute of Standards and Technology defines cloud as:

... a model for enabling ubiquitous, convenient, on-demand network access to a shared pool of configurable computing resources (e.g. networks, servers, storage, applications, and services) that can be rapidly provisioned and released with minimal management effort or service provider interaction.

Cloud computing can be as simple as having data stored off-site and accessible over the internet.

Drawing distinctions Download article in PDF

Drawing distinctions

Let’s take this a step further and draw the distinction between public and private cloud services. Public cloud is managed by providers such as Amazon Web Services (AWS), Google or Microsoft and is housed off-premise. Private cloud is mostly, but not always, managed internally and is often on-premise.

Public or private, it is not feasible for most organisations to be entirely cloud-based. The nature of business means that the vast majority of organisations, with the exception of those with a very small number of seats, need to have some portion of IT infrastructure in-house.

One solution is colocation - housing private infrastructure in an external data centre shared with other organisations. Unlike public cloud, colocation relies on an organisation’s own servers and so is more akin to private cloud, and the two are frequently spoken of in the same context.

Colocation and private cloud are often seen as vital to organisational operation because they support internal servers that are used almost exclusively by in-house personnel, which means it is often faster, but more expensive, to update infrastructure.

The three main benefits of colocation are space saving, scalability and security, which all lead to cost-reduction. Colocation allows organisations to free up much needed floor space in office environments that can be better used for housing employees or other assets that need to be readily accessed, and considering the prohibitive cost involved with setting up internal data centre environments, colocation offers significant savings when compared to rental cost of traditional office environments.

Colocation can also provide scalability options not available in the traditional office due to space limitations, because many firms simply may not have the luxury of space to expand internal data centres at will, unlike many external services that provide a purpose-built environment.

Data is the most valuable asset for any organisation. Without appropriate security considerations, setting up internal networks can leave firms vulnerable to threats that can seriously compromise precious information, although purpose-built colocation facilities will usually offer superior physical security to in-house data centres.

Informed investment Download article in PDF

Informed investment

The challenge for IT decision makers is to develop a solution that involves an optimal mix of in-house, colocated and cloud infrastructure. The Deloitte Smarter Data Centre Outsourcing report also says,

An informed investment in the right combination of internally and externally provided data centre services can deliver excellent value for money while providing the necessary service, flexibility and security to meet your business needs.

In-house provisioning has traditionally been the method used by large corporate entities in providing data centre services.

The first thing to consider here is the prohibitive cost involved in developing and operating in-house IT environments, which can severely limit the plausibility of in-house facilities for all but the largest organisations. Some may consider these investments worthwhile and in many cases they are. However, in-house means a capital expenditure as opposed to an operational expenditure, which in turn, will increase the company’s asset base but involve considerable cost.

What does this all mean for resellers?

Attempting to leverage cloud services and colocation in a way that meets the needs of individual customers is no small challenge. It requires extensive knowledge of their business and current infrastructure, not to mention an in-depth understanding of the possibilities of cloud and colocation. Resellers should continually be questioning their cloud offerings and how they can best leverage the technology for their customers’ needs.

Research firm, Gartner, produced a report in February 2014 titled Market Trends: Colocation and Hosting Market, Asia/Pacific 2014. It states:

With the exception of few developed markets, managed hosting in Asia is still under developed compared with mature IT markets such as the US and Europe. The good news is that demand for managed hosting is growing strongly from a low base, but it will evolve significantly to cloud-enabled managed hosting. The service is delivered on a cloud platform, which includes compute and storage, as well as associated managed services, which will be increasingly delivered in a standardised and automated way.

It is important to differentiate cloud Infrastructure-as-a-Service (IaaS) from cloud infrastructure as a technology platform. Gartner research defines the latter as cloud-enabled system infrastructure (CESI) and for the purposes of distinguishing the two, the definition serves. In the simplest terms, cloud IaaS leverages CESI and makes it available to subscribers. Cloud IaaS is not limited to storage, but often includes compute platforms such as applications.

Balancing offers Download article in PDF

Balancing offers

How do resellers and end users balance these offerings to get the most out of these services? The overwhelming response seems to be hybrid solutions. A hybrid solution is just as it sounds, a combination of on-premise, colocation and cloud-based offerings. It provides the best of both worlds in terms of managing on premise compute and having cloud infrastructure’s flexibility.

The Telsyte Australian Infrastructure & Cloud Computing Market Study 2014 forecasts the total market value for public cloud infrastructure services will reach $650 million by 2018, up from $305 million in 2014.

Telsyte senior analyst, Rodney Gedda, said cloud services present a low barrier to entry for IT infrastructure. Their popularity is growing strongly but this will result in a large gap in how organisations manage on-demand and on-premise services.

Gartner research director, Michael Warrilow, said he has seen growing interest in cloud managed services.

It’s a stepping stone. It is less likely an outsourced customer will jump ship to a public cloud provider. They are more likely to look at a managed cloud from their incumbent or another provider.

According to Gartner, infrastructure and data centre was the second highest priority globally in 2014, but only ranked sixth amongst the Australian and New Zealand (A/NZ) IT decision makers surveyed. Cloud was fifth globally and third in A/NZ.

Warrilow went on to say, “In the last six to nine months it seems a switch got pulled and the focus on cloud has accelerated in A/NZ.”

“The appeal of cloud computing is the appeal of agility.”

Channel challenge Download article in PDF

Channel challenge

Warrilow said the challenge for the channel is to help articulate what aspects of agility makes sense for the client and help them measure it.

Agility is appealing to many decision-makers as it gives them freedom to expand the aspects of compute and storage they feel is necessary at a given time.

Telsyte research shows that twice as many Australian enterprises adopted cloud IaaS in 2013 than over the previous year. Gartner predicts the sector will grow at a CAGR of 24.8 per cent in the coming years. These figures would seem to suggest that the sector is growing at an alarming rate. However, they also reflect the relative infancy of the sector compared to datacentre services that have been a mainstay in the industry for over a decade.

Even though the adoption rate of cloud IaaS is likely to slow in coming years, due to that infancy, the ANZ region is uniquely poised to leverage the technology. This is due in part to these nations’ tendency toward early adoption, but also to the upcoming entry of major players such as Microsoft into the local data centre market. As with so many other market sectors, competition will lower costs for customers and also allow resellers to expand offerings to suit the growing and evolving needs of partners.

Click here for more information on becoming a NEXTDC partner Download article in PDF