Can’t Move to the Public Cloud? Then the Cloud Will Come to You
It’s no secret that COVID-19 forced many organizations to accelerate their digital transformation efforts. With this rush to the cloud, it’s easy to forget that many companies are still taking their time getting there—and that others have yet to make the leap at all. In fact, a recent SiliconAngle article reports that 96% of the more than $3 trillion IT industry still resides in on-premises data centers rather than on the cloud.
Part of the reason for this is that certain compute workloads are bound by specific compliance and latency requirements that public cloud providers—Amazon Web Services (AWS), Microsoft Azure and Google Cloud Platform (GCP)—cannot yet meet. And in these situations, companies cannot migrate their workloads to the cloud, even if they wanted to do so.
Cloud providers are aware of these challenges and have been working hard to overcome them—and so they can tap into that 96% total addressable market. Here’s where they landed: If organizations won’t or can’t go to the cloud, the cloud will come to them. In other words, public cloud providers like AWS, Azure and GCP are making it possible to install and run their cloud services in an on-premises environment.
In this blog post, we break down why a move to the public cloud isn’t always in the cards for some businesses—and how today’s major hyperscalers are taking the public cloud on-premises to help them still leverage the best of both worlds.
Why the Public Cloud Doesn’t Work for Some Businesses
From a compliance perspective, organizations in highly regulated industries often are required to house their servers within a certain legal jurisdiction. If the public cloud providers don’t have data centers within that proximity, companies are stuck running their workloads on-premises.
When it comes to latency, data transfer speeds are still faster on-premises than in the cloud. And, even though the difference can sometimes be measured in milliseconds, there are some organizations that simply cannot afford even the miniscule lag caused during data transfers to the cloud. For example, hospital workers that need to quickly interpret and act on results from imaging and diagnostic equipment most likely run their workloads on-premises—since they’re typically dealing with large file sizes that can take too long to copy to the cloud for processing.
A New Trend Arises: On-Premises Public Cloud Offerings
To solve some of these compliance and latency challenges, public cloud providers such as AWS, Azure and GCP have brought to market branded kits that enable customers to install and run their cloud services directly within their on-premises data center.
Microsoft released its Azure Stack Hub in 2017, which it says “broadens Azure to let you run apps in an on-premises environment and deliver Azure services in your datacenter.” In 2019, AWS launched AWS Outposts as a “fully managed service that offers the same AWS infrastructure, AWS services, APIs, and tools to virtually any data center, co-location space, or on-premises facility for a truly consistent hybrid experience.” And, most recently, Google announced its Google Distributed Cloud during the Google Cloud Next 2021 conference.
At a high-level, these on-premises public cloud offerings create private availability zones for their customers—think of it as their very own cloud. An organization purchases an industry-standard telecommunication rack full of servers and storage that are preinstalled with software from AWS, Azure or GCP. Then, when they plug the rack into their own network, they get the performance and throughput results associated with a local connection, while experiencing all the benefits of the public cloud.
These cloud provider branded kits address the specific regulatory and latency needs that have prevented so many companies from migrating to the cloud. They create a path to the cloud for traditional on-premises workloads. And, they allow companies to dabble in the cloud without having to go all in from the start.
Analysts Take Notice
While fairly new to the market, these on-premises public cloud offerings are quickly picking up steam, and analysts are taking notice.
Gartner Inc.’s report, “How to Bring the Public Cloud On-Premises With AWS Outposts, Azure Stack and Google Anthos,” states:
“These on-premises public cloud offerings are examples of the broader trend that Gartner refers to as the distributed cloud. In the distributed cloud, public cloud services (including necessary hardware and software) disperse to different physical locations (i.e., the edge), while the ownership, operation, governance, updates and evolution of the services remain the responsibility of the originating public cloud provider.”
IDC is classifying the on-premises public cloud offerings as Dedicated (Local) Cloud Infrastructure-as-a-Service (DClaaS). The firm notes:
“Dedicated (Local) Cloud Infrastructure-as-a-Service (DCIaaS) solutions deliver compute and/or storage resources dedicated to an individual customer that are deployed on customer premises and consumed as a service. This model is essentially a dedicated version of a publicly available cloud offering, modified to run on premises or in a specially certified colocation environment, including outside of a traditional datacenter environment (edge).”
The Cloud Discussion Evolves
For so long, we’ve talked about organizations moving to the cloud, and now we’re simultaneously hearing about cloud providers moving on-premises. And we’ll likely hear about the latter for years to come. In its Dedicated Cloud Infrastructure as a Service, 2019–2025: Market Trends and Outlook report, IDC estimates that the “worldwide annual recurring revenues (ARR) from dedicated (local) cloud infrastructure as a service offerings for compute and storage will increase from $138 million in 2020 to $14 billion in 2025 with a compound annual growth rate (CAGR) of 151.8%.”
No matter where you are on your cloud journey or what cloud provider you’re using, Navisite is here to help. Contact us today to find out how we can help you leverage the cloud to navigate the now of IT change and move your business forward.