While the peak of energy prices may have passed, they are still way above historic levels. Moving IT infrastructure to an off-site data centre, rather than on premises can still bring financial benefits to businesses, but there are many other reasons to consider making the move.
Data centres are big business: global spending is expected to reach $222 billion in 2023, and growth is expected to continue for the foreseeable future. It’s not surprising: with the amount of data that businesses are producing ever-increasing, so is demand for data centres.
Data centres have many advantages over maintaining servers in-house. “Businesses can reap many advantages by utilising off-site data centres rather than maintaining in-house servers,” says Manja Thessin, market manager, enterprise at AFL Hyperscale. “This approach can significantly reduce costs associated with purchasing expensive hardware, infrastructure and maintenance.
“Moreover, off-site data centres offer flexible scaling options for IT infrastructure. With advanced security protocols in place, data is safeguarded from possible threats. Accessibility is also enhanced as data can be accessed from anywhere with an internet connection, making remote work and collaboration more efficient. Additionally, off-site data centres can serve as a crucial component of disaster recovery by facilitating swift data restoration in the event of any disasters.
Mitigate price rise effects
Data centres can also help customers to mitigate the effects of price rises, Manja adds. “In addition to helping IT infrastructure run more efficiently and being transparent with pricing, data centres can assist customers in mitigating the effects of price rises by providing scalable solutions to adjust to changing business needs, backup and disaster recovery services to prevent downtime and data loss and implementing energy-efficient practices to reduce energy expenses,” she says.
“Furthermore, flexible pricing models such as pay-as-you-go or negotiated contracts, insights into usage patterns and optimisation opportunities and leveraging cloud computing and virtualisation technologies to minimise hardware and maintenance costs can also aid in reducing overall costs. Disaster recovery solutions and data backup services are also offered to minimise the risk of data loss and protect against unforeseen events that could impact business operations.”
Joe Morgan, VP of cloud, Virtuozzo, agrees it can help to mitigate the effects of energy price rises. “As an infrastructure specialist, your data centre provider ought to be ahead of the game when it comes to things like energy management and optimising power consumption,” he says. “This is also about economies of scale, in terms of energy contracts, as well as smart hardware and cooling choices – and offering platforms within the data centre that help you move towards consumption-based usage, flexible scaling, micro-services and containerisation and an IT strategy where you’re not constrained to just your in-house IT: you can scale down as well as up, move workloads to cheaper infrastructure if need be, and combine outsourced datacenters with your own IT for a hybrid strategy.
“Using off-site data centres also removes the need to train your own staff on data centre services and infrastructure, which may not be your core business,” he adds. “Together, these benefits can help free up cash for other areas of your operation.”
Physical vs cloud
Of course, there are different benefits between physical and cloud-based data centres, although as Joe notes, it is a complex topic. “Most data centres today provide a mix of dedicated (bare metal) and cloud-based servers. What kind of IT suits your business best – and your workloads and data – is going to vary from business to business, and if you don’t have a full understanding, you should seek advice from your provider.
“In broad terms, the cloud model enables infrastructure as a service, which implies more usage-based pricing (but doesn’t have to be) while the traditional dedicated server model typically gives you a chunk of hardware infrastructure for a fixed price per month.
However, most cloud services offer reserved instances for fixed pricing too. There are many shades of grey in between. Cloud offers the benefits of greater scalability and flexibility, because you can adjust IT resources according to your needs – but it is not always cheaper, especially if your IT is being provided by one of the very large public cloud providers. Many cloud offerings are massively overpriced, and for smaller businesses, you’ll get a much better deal – and more personal advice and support – if you partner with a local MSP or CSP, which can help with the whole migration process.”
That said, cloud-based solutions such as Azure are a popular option and, as Will Ominsky, VP of MSP sales at Nerdio, notes, there are numerous benefits of using it. “Customers are moving to Azure for increased infrastructure flexibility, access to data from anywhere and improved security,” he says. “When you move your infrastructure to Azure you are not locked into specific hardware, like on-premise or even in some private data centres. Microsoft is always upgrading their equipment, which allows you to make changes any time you want.
“With on-prem equipment we have a sunk cost, and most businesses want to hold on to that sunk cost as long as possible to realise the maximum ROI. Microsoft has also built unique user access methods not available anywhere else like Azure Virtual Desktop (AVD) and Windows 365 to allow end-users to access their cloud infrastructure in a user-friendly manner while keeping data protected and secure.
“One of the great benefits of Microsoft Azure is the pricing transparency and ability to custom-build an infrastructure solution tailored to your own business needs in terms of performance and costs. Because of their scale Microsoft can negotiate lower rates and invest in green technology, which can keep costs down for one of the most expensive components in running a data centre – power.
“Azure provides benefits of costs and convenience because of its proprietary technologies like AVD and Windows 365. These technologies allow users to access a familiar Windows desktop from any device, in any location. Once the user logs in to their virtual desktop, they have access to anything their IT administrator allows them to see in Azure. AVD and W365 are not only powerful for end-users, but they are extremely cost-competitive compared to other solutions.”
But many businesses do still want to make the move to off-site data centres, although migration from on-premises can have its challenges. “It is not something to be taken lightly,” says Joe. “It’s critical to have a full understanding of the infrastructure you want to migrate, the workloads and data you need to move, the outcomes you want to achieve and how you will minimise or eliminate the risk of any downtime.
“Even moving from on-premises bare metal to third party bare metal is not a trivial process, and if you’re moving from in-house IT to the cloud, you need to understand how that might impact compliance as well as cost, and your whole operating model. Even if you have specialist staff in-house it’s highly recommended that you work with a partner who can handle most or all this process for you. This might be your data centre provider, specialist MSP or a managed cloud services provider.”
Manja agrees that this requires meticulous planning, testing and implementation. “The complexity of the migration depends on various factors such as the extent and intricacy of the infrastructure, the level of personalisation required and the availability of proficient personnel to oversee the process,” she says. “Collaborating with a reputable data centre provider and enlisting the services of skilled IT experts can help achieve a smooth and successful migration.”
When considering moving from an on-premise solution to an off-site one, there are legal aspects that have to be factored in too, adds Tim Wright, tech and regulatory partner at law firm Fladgate.
“One key consideration for any data migration is the need to comply with data privacy laws such as the GDPR,” he says. “In addition, financial services firms will also need to comply with sectoral regulations that apply to outsourcing and cloud computing. For example, in the UK, firms must comply with the Financial Conduct Authority’s Handbook, in particular chapter eight, which provides that firms must ensure they take reasonable steps to avoid undue operational risk and cannot outsource operational functions that would impair the quality of internal controls or the regulator’s ability to monitor compliance.”
This is something that businesses must take seriously and mitigate against, Tim adds. “Fines under the GDPR can be eye watering, with Meta recently fined €1.2 billion for breaching data protection laws, which is the biggest such fine to date,” he says.
“A smaller, but still significant fine totalling £48.65 million, was issued last year by the Financial Conduct Authority against TSB Bank for operational risk management and governance failures, including management of outsourcing risks, relating to the bank’s IT upgrade programme.”
Always more cost-effective
But despite the physical and legal complexities of moving to off-site data centres, they will always be more cost-effective than on-premise, regardless of energy prices, says Joe. “It always costs less to use a properly equipped third party infrastructure provider,” he says. “Their hardware is more modern and efficient than yours. You can guarantee their energy contract is cheaper than yours. Their cooling is way more efficient than yours. If they make use of cloud technologies, they are probably better at optimising infrastructure utilisation too – in other words, you can get the IT you need with less hardware, less power, less committed consumption, less cost.
“So, whether energy prices rise or fall, a specialist data centre provider will always be cheaper, and greener too. You’re probably using 25% more power to run your own servers and paying at least 25% more for that power.
“Data centres are their business, and most of these infrastructure companies – whether they simply offer data centre infrastructure, or hosting, or cloud infrastructure as a service – are always ahead of a typical enterprise, and certainly a typical small enterprise, in terms of finding ways to optimise density, reduce power consumption and adopt more efficient, cost-effective platforms. Another way they do this, is by moving away from expensive proprietary platforms and adopting open-source based solutions instead – this is a fast-growing trend.”