Hosted infrastructure is quickly becoming the preferred means of application and data support, a sign that the enterprise no longer has any illusions about its ability to confront the challenges of a digital economy with its own data center.
According to 451 Research, the growth of enterprise spending on hosted and cloud services will more than double the growth of total IT budgets in 2017, increasing 25.8 percent compared to 12 percent. This trend presented itself across nearly every vertical market and company size, although it was most pronounced in large businesses of between 1,000 and 10,000 employees, which expect hosted/cloud spending growth to top 33 percent. The study’s author, Liam Eagle, noted that the data suggests organizations are looking to the hosted model both for new development projects and the migration of existing workloads.
Given the advantages that hosting brings over traditional data centers, it’s easy to see why many organizations would embrace it for expanding workloads, says Salesforce’s Sujain Thomas. Particularly when it comes to supporting e-commerce sites and databases, the hosted model provides better security, ease of management, lower costs (both capex and opex), greater scale and usually better performance. Small businesses in particular should employ hosted solutions because it allows them to compete with larger rivals without having to risk a substantial up-front investment in infrastructure.
Given this emerging growth market, it is easy to understand why someone would want to buy the cloud and hosting service businesses from existing providers, but why would anyone want to sell? That’s what happened recently when Verizon handed over its service unit to IBM for an undisclosed sum. IBM, of course, has been trying to shed its reputation as a data center hardware and platform vendor for years, and is still struggling to come up with a successful service-based revenue model. But Verizon has made no secret of its desire to provide software-defined cloud services to the enterprise. Verizon exec George Fischer, however, notes that the company is pursuing a number of strategic initiatives with IBM involving network and cloud services, which sounds similar to the company’s recent move of selling its data center business to Equinex and then striking a deal to resell those same colocation and interconnect resources to business users. (Disclosure: I provide occasional content services to IBM.)
And increasingly, it appears that hosted service providers are becoming the preferred market for leading virtual and cloud platform vendors. Nutanix recently saw its Enterprise Cloud Platform form the backbone of a new suite of managed hosting, virtual desktop and cloud services from Leeds, UK, provider Firstnet Solution. The company will provide end-to-end cloud solutions using the Nutanix Prism management system for compute and storage resources. Clients who use Nutanix on-premises, meanwhile, will be able to leverage built-in replication, backup and disaster recovery through direct connection to Firstnet’s hosted infrastructure.
For the most part, the rising popularity of the hosted model is a reflection of the fact that business leaders now realize that it is possible to do more with less using both virtualized and cloud infrastructure. And with Big Data and the IoT putting increasing pressure on the enterprise to transform its business models, the race is on to scale resources to extreme levels without blowing the budget.
Hosting allows someone else to deal with the messy process of building and maintaining infrastructure, leaving the enterprise free to concentrate on optimizing its service portfolio.
Arthur Cole writes about infrastructure for IT Business Edge. Cole has been covering the high-tech media and computing industries for more than 20 years, having served as editor of TV Technology, Video Technology News, Internet News and Multimedia Weekly. His contributions have appeared in Communications Today and Enterprise Networking Planet and as web content for numerous high-tech clients like TwinStrata and Carpathia. Follow Art on Twitter @acole602.