Traditional data centers are a burden on today’s businesses. The format of massive data storage facilities requiring three to five years of fixed planning with a limited lifespan that will probably fill up too early is being replaced by moving corporate workloads to more flexible cloud based solutions. Oracle CEO Mark Hurd predicts that within ten years, 40-50% of data will be in the cloud.
Moving data to the cloud is about optimization and consolidation; ultimately creating efficiencies, increasing security, and saving capital for large organizations including private companies and governments. Of course, there is no such thing as a free lunch; cloud expenses become operational in nature versus the previous capital intensive mode.
Consolidating data can dramatically improve customer experience. For example, imagine a person has a credit card stolen. What is the best way to prevent fraud? Before consolidation, a company may have to individually sift through multiple data points stored in multiple databases to determine where the threat lies. Consolidating to the cloud gives the company access to advanced analytic tools like Google BigQuery or Amazon RedShift, allowing them to implement advanced Machine Learning, which can identify threats faster and immediately alert the customer, which is what Capital One was able to do. These capabilities are not only about efficiency, but can also lead to increased customer satisfaction and eventually increased profit by way of reduced costs and higher revenue.
With data center strategy is moving in this direction, we determined five big reasons for a company to consolidate their data centers:
- Reduced Real Estate Costs
Last year, 15% of data centers shut down in the United States. This shows an ongoing trend of companies reducing or eliminating their on site data centers in exchange for the cloud. The Federal Data Center Consolidation Initiative(FDCCI) is doing just this since 2010 for the federal agencies. On the private sector side, Fidelity reduced their number of facilities from 80 to 20, which cut real estate costs by 50%. By eliminating the need for physical data centers, large organizations are able to save significant costs on real estate.
- Reduced Operational Costs
One of the drawbacks to not investing in consolidation is more spending on integration. Since most companies use a range of applications, there needs to be an efficient method of pulling data from different sources. By consolidating data centers, large organizations have been able to cut operational costs in addition to real estate. For example, the FDCCI has led to a total of $2.8 billion in saving from 2011 to 2016 and has predicted a total of $8.2 billion by the end of 2019. Netflix was able to switch 100% of their data to the cloud, which cut cost per streaming to a fraction of what it was under a data center.
- Increased Productivity in the Workplace
Consolidating data centers means efficient integration of data. This allows developers to focus on building new applications and updating existing ones. Allstate has two data centers which require little to no human assistance. Since the developers are not needed at the data center, they can spend more time coding. Allstate reports that their developers went from coding 20% of the time to 90% with an overall 350% boost in productivity.
- Acceleration of New Technology and Updates
The transition into the cloud has allowed companies easier access to their data and given them more computing power. This means that there has been an accelerated release of new technology, as well as the ability to update existing software more often. When Capital One transitioned, their technology became more scalable and allowed for data transformation and sophisticated data usage. Walmart has been able to make 170,000 changes in their software monthly compared to the previous 100. This increase in productivity has directly led to better products and therefore higher consumer satisfaction.
- Increased Customer Satisfaction and Revenue
An Increase in revenue and consumer satisfaction positive outcome that cannot be overlooked. When looking at consumer satisfaction one can look to Capital One once again. Their transition into the cloud has allowed them to contact the customer the moment that their card is being used. This addresses many consumers needs of having the most secure credit card as possible. Lastly Walmart has had an increase of 50% in online sales as well as their market shares increasing by 49% over the past year. This significant increase in revenue speaks for itself when it comes to if the investments on the cloud was worth it.
More and more companies are choosing to shift away from traditional data storage centers. Instead they are consolidating their infrastructure in the cloud. These five reasons to transition into cloud based solutions are huge factors into why one should consider this strategy. Fewer real estate and operational costs combined with more efficient data management allows companies to focus on what’s most important; their products and customers. Fewer costs, better products, and happier customers lead to higher revenue. Every company is different and each will have their own positives to transitioning away from traditional data centers and leave behind their financial and technological burden.
What other reasons do you know of or have experienced when consolidating data centers?
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