The world of IT is ever-changing—and by that I mean will it ever make up its mind as to what trend comes next? For instance, just a few short years ago everything was about the fear of moving to the cloud. Then, a few short years (if not months) after that trend, came the fear of not moving to the cloud. Then, as of today, we have a fear of not knowing whether or not to move to the cloud, be a private cloud, or be both—a tough decision for anyone.
However, though the marketing folks of the big cloud providers will tell you that public cloud is the way to go, that’s not necessarily the case for many companies. And though the reasons may vary, many simply cannot move to the cloud due to legal and compliance reasons—no matter how much they may want to.
That said, there are now more reasons why on-prem cloud is becoming the “new thing,” and by that I mean “the old thing”… and by that I mean … ok, let’s move on.
Key Takeaways
- Data centers in 2018 face competing pressures: rising demand for new equipment driven by data growth and digital transformation, while simultaneously needing to control spending and avoid the OEM-driven push toward premature hardware replacement.
- OEM maintenance programs are often priced deliberately high, making replacement appear cheaper than maintenance, which has fueled the growth of an entire third-party maintenance and support industry designed to offset those inflated costs.
- The “network effect” means that individual pieces of hardware, like a server, are worth far more than their standalone cost once connected to a broader network of virtualized systems, workstations, and devices.
- Taking any single network component offline for replacement disrupts a disproportionate share of value, since roughly 85% of a device’s value comes from its role in the network rather than the hardware itself, which represents only about 15%.
- As hardware costs continue to decrease, keeping servers online and available becomes increasingly critical relative to their now-smaller share of total value, making a qualified IT maintenance partner essential to minimizing costly downtime.
This new/old thing is twofold and has everything to do with the concepts behind digital transformation. You see, as companies strive to create highly advanced, data-first applications, the true private cloud world begins to emerge. In fact, it’s these emerging application patterns that revolve around data and advanced analytics that is causing the need for on-prem equipment. With the advent of cloud-based technologies such as IoT, AI, and more—the subsequent weight of data begins to grow exponentially.
It’s this growth that is an important aspect of the need for private cloud. For instance, when AI is introduced into the enterprise environment, chances are that it is being used to analyze and track data, as well as augment the cumbersome aspects of data administration—the constant battle between operations and engagement. In fact, when you calculate the usage of IoT and AI alone, reports show that more than three exabytes of data per day are being produced already. A number that will continue to grow as usage of the technology continues to be implemented.
As an outcome of this data and its cumbersome nature, it’s estimated that close to 90% of that data will ultimately reside inside a private cloud environment, with only 10% being pushed out to public cloud options. This is where this cloud trend becomes far more interesting. The outcome is simple—with new technologies the concept of all companies going hybrid-cloud is a necessity—creating the need for internal infrastructure growth and the adoption of public cloud for some things, just not all.
Here’s an example: Going back to the origins of cloud, the idea that applications could be hosted in the cloud (off-prem) along with data and more was a fantastic idea—one that is still viable to this day. However, the cloud is becoming something far greater than the sum of its parts. Beyond just an off-site storage dump and expansion tool, now cloud represents innovation and disruption within markets through everything from IoT, DevOps, containers, AI and machine learning, and so on. It’s this innovation, paired with the subsequent growth in data that has pushed companies back inside their own four walls for many of their processes.
So, what are companies to do? Hybrid-cloud is an inevitable move for almost every company. The need to offset costs of data storage and many daily processes are all a perfect fit for public cloud consumption. However, the flip side to this is that if companies are to innovate and leverage cloud for all its worth, the private cloud component must be well planned and architected in such a manner that the roll-out of new business models and offerings is not hindered by the speed of the public cloud scenario.
And like everything else, the tipping point of social consumption of new technology happens in the blink of an eye. The question becomes: Is your company ready for that tipping point?
FAQs
Why do OEM maintenance programs often cost more than third-party alternatives?
OEM maintenance programs are frequently priced high because manufacturers are primarily incentivized to drive new equipment sales rather than support existing hardware long-term. This pricing structure makes replacing equipment appear more cost-effective than maintaining it, even when the existing hardware is still fully functional. Third-party maintenance providers operate with a different business model built specifically around service rather than hardware sales, which is why they can often offer significant savings while supporting mixed, multi-vendor environments under a single flexible agreement.
What is the “network effect” and why does it matter for data center hardware?
The network effect refers to the way a product or service’s value increases based on how many other systems, users, or devices it’s connected to, rather than its standalone cost. In a data center, a single server using virtualization technology is effectively its own network, connected to numerous other servers, workstations, and devices. This means the hardware cost of a server, often only around 15% of its total value, is dwarfed by the 85% of value tied to its role within the broader connected environment, which disappears entirely while that server is offline for replacement or repair.
Why does taking hardware offline for replacement have such an outsized business impact?
Taking any individual piece of network hardware offline disrupts a disproportionate share of its total value because so much of that value comes from its connections to the broader network rather than the hardware itself. While the physical hardware may represent a small percentage of a server’s total worth, the operational value it provides while connected and running is far greater. This is why simply replacing inexpensive hardware without considering its network role can create costs and disruptions well beyond the sticker price of the equipment itself.
How can businesses balance IT budget constraints with the need to maintain critical hardware?
Businesses should look not just the simple line-item hardware costs but also factor in the broader network effect and value that connected systems provide when setting IT budgets. Partnering with a qualified third-party maintenance provider can save businesses significant costs compared to OEM post-warranty pricing, while also minimizing the downtime risk that comes from taking network components offline unnecessarily. Having this kind of partnership and budget strategy in place ensures businesses control costs without compromising the operational continuity that connected hardware ultimately provides.
