In the past decade, the tech industry has witnessed a significant shift in the way businesses handle their data. On-prem data centers have long been the standard for storing and processing data, but now cloud capacity is growing much faster. While on-prem data centers are hanging in, their future seems uncertain as more businesses move their data to the cloud. In this article, we’ll explore the rise of cloud capacity, the reasons behind the shift, and what the future holds for on-prem data centers.
In 2017, on-prem data centers accounted for almost 60% of capacity worldwide. According to Synergy Research, that number is expected to be cut in half by 2027. However, new research from the firm reveals that on-prem data center growth is actually hanging in, and over the next five years, growth will remain essentially unchanged. At the same time, hyperscale data centers operated by the largest cloud companies will continue to grow at a hefty rate.
Today, there are 900 hyperscale data centers worldwide, with that number split pretty much evenly between those facilities that are owned by the cloud providers and those that are leased. On-prem still accounts for 40% of usage. However, Synergy predicts that in five years, the cloud providers will control over half all capacity and the on-prem number will fall to 30%.
The shift to cloud capacity is not surprising, as cloud services offer several advantages over on-prem data centers. One of the main benefits of cloud capacity is scalability. Cloud services provide businesses with the ability to scale their resources up or down based on their needs. This means that businesses can easily adjust their resources to meet changing demands without having to invest in expensive hardware.
Another advantage of cloud capacity is cost-effectiveness. Cloud services are usually priced on a pay-as-you-go basis, meaning that businesses only pay for the resources they use. This eliminates the need for businesses to invest in expensive hardware and infrastructure that may not be fully utilized.
Cloud services are also more secure than on-prem data centers, as cloud providers invest heavily in security measures to protect their clients’ data. Cloud providers typically employ a team of security experts to monitor their systems and ensure that they are protected from cyberattacks and other threats.
While the shift to cloud capacity is good news for cloud providers like Microsoft and Google, it’s not growing as fast as AWS CEO Andy Jassy hoped. Growth has slowed pretty dramatically overall for the cloud infrastructure market, and it has plunged for AWS in particular, dropping into the teens in its most recent report. In terms of market share, that translated into 32% for AWS, still the clear leader, but Microsoft has continued to creep up with 23% last quarter, while Google was in third place with 10%.
However, on-prem data centers won’t go away anytime soon. Some businesses still prefer to keep their data on-premises for security and compliance reasons. In addition, some industries, such as healthcare and finance, are subject to strict regulations that require them to keep their data on-premises.
The shift to cloud capacity is changing the way businesses handle their data, and the future of on-prem data centers seems uncertain. While on-prem data centers are hanging in, cloud capacity is growing much faster, and businesses are beginning to embrace the scalability, cost-effectiveness, and security that cloud services provide. While on-prem data centers won’t disappear anytime soon, they will likely continue to diminish as a percentage of IT spending and data center capacity. As the economy begins to steady, the trend to the cloud will only accelerate, and that will translate into less on-prem data center capacity in the not-too-distant future.
First reported by TechCrunch.