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It is nearly an indisputable fact that companies are migrating more and more of their workloads to the cloud. After all, the cloud offers significant benefits in terms of operational flexibility and scalability and has driven tremendous strategic and financial value for companies of late. Cloud adoption has seen a significant uptake as companies were forced to switch to remote work and push for faster digital transformation in the wake of the pandemic. The global data center colocation market is expected to grow from $47.02 billion in 2021 to $56.36 billion in 2022 at a compound annual growth rate (CAGR) of 19.9%. But much of this growth is driven by the cloud. Cisco’s Global Cloud Index report (PDF) estimates that cloud traffic is likely to constitute 95% of total data center traffic by 2021. The study also estimates that global cloud data center traffic could reach 19.5 zettabytes (ZB) per year by 2021, up from 6 ZB per year in 2016 at a CAGR of 27% from 2016 to 2021.

All of this is happening in a context where traditional data center investments have largely stayed the same. The growth in the global enterprise colocation market is expected to remain steady – from $6.6 billion in 2021 to $7.2 billion in 2024. The “Global Data Center Survey” conducted by the Uptime Institute in 2020 found that, “The enterprise data center is neither dead nor dying. The switch of critical loads to a public cloud is happening slowly, with more than half of workloads expected to remain in on-premises data centers in 2022.” It is clear that despite the industry’s headlong rush to migrate to the cloud, many companies have continued to maintain critical IT assets on premise. In this article we will try to explore why.

Why are Businesses Hanging on to their Data Centers?


Cost and lack of optimization for workloads

Despite the overwhelming positives about cloud computing, many businesses have realised that their particular workloads may not be entirely optimized for the cloud or end up being exorbitantly expensive. While cloud is likely to remain the optimum solution for use cases that are latency sensitive or public facing, such as gaming, streaming, advertising technology, and retail. But if the consumable compute forecasts prove to be inadequate at the end user, the costs could prove to be exorbitant. In fact, as many companies have realised this, along with a host of concerns including regulatory compliance, performance issues, and security concerns, they have started to commence on massive cloud repatriation initiatives. A survey conducted by the Uptime Institute in 2020 found that 30% of respondents had already moved workloads back from a public cloud to a private cloud or traditional data center environment. For more information on this, please consult IT Support Vermont


There are many legitimate issues when it comes to control over enterprise data in the cloud. These can be classified under:

  • Data sovereignty. This refers to a business’ right to keep its data within a country of its choosing, rather than subject it to an external jurisdiction. This is particularly relevant if the business has concerns about government surveillance or other privacy issues.
  • Data privacy. Enterprise data is typically a combination of sensitive information about the company, sensitive client and employee information including Personally Identifiable Information (PII), health records or financial information that have a very low tolerance for abuse. While cloud service providers are committed to protecting their client’s privacy, there are nuances about jurisdiction involved depending on where the data is stored. If the place has weak or non-existent data privacy laws, this could expose your data to unauthorized disclosure, theft, and misuse.
  • Localization benefits (e-discovery/compliance). In highly regulated industries, governments might stipulate regulations on how to protect customers’ personal information. Cloud services may fail to meet the bill in such cases.

Security and governance

In cloud-based systems, the security and governance of enterprise data is a shared responsibility between the company and the cloud provider. The cloud provider does not have control over what happens to your data once it leaves their facility, which means they are not responsible for protecting it in any way. While there are many similarities between all cloud services (they are all accessed through the internet), each one operates differently and therefore faces different threats than others. For example, Apple uses military-grade encryption on their iCloud service while Dropbox does not encrypt data at rest (i.e., when stored) at all! If you’re looking for an environment where security is one step ahead of hackers—and where everything from physical access controls to software patches are consistently applied—then consider using a private data center instead of going with a public or third party provider like Amazon Web Services or Microsoft Azure Cloud Platforms. Managed IT Services Vermont could help your business find the right solution.

Lack of transparency in cloud-based systems compared to data centers

In cloud-based systems, companies have less control over their data, who has access to the data (without explicit access control systems), and where the data is stored. Cloud providers may not always be transparent about data location. This lack of transparency can make it harder for businesses to determine whether the cloud provider would honor legal requests made by law enforcement agencies for access to their business’ sensitive information stored on their systems.

Safekeeping of intellectual property

Handing over their intellectual property in the hands of another party is one of the biggest risks a company can take with cloud services. CSPs, such as IT Outsourcing Vermont are responsible for not only storing the data, but also to protect it from all external and internal threats including hackers and insider threats. However, reliability among CSPs vary and at the end of the day, they don’t have nearly as much at stake as their clients in the case of a breach or a hack. For CSPs, the impact could be limited to losing the client in case of a breach while clients might loss data permanently.

Uptime and failover

Cloud services are also more susceptible to outages and downtimes and fixing the power or cooling issue quickly may be out of the hands of your business. Many cloud providers lack adequate failover planning in case of outages that may lead to them shutting down everything until things get fixed – leaving clients in a fix meanwhile.

Steve Loyer

With over 25 years of sales and service experience in network and network security solutions, Steve has earned technical and sales certificates from Microsoft, Cisco, Hewlett Packard, Citrix, Sonicwall, Symantec, McAfee, Barracuda and American Power Conversion. Steve graduated from Vermont Technical College with a degree in Electrical and Electronics Engineering Technology.

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