Not 100% in the cloud - what are the advantages of an existing IT system?

The success story of the cloud can hardly be denied. Scalability, flexibility and the possibility of implementing new processes in companies in a very short time clearly speak for "cloudification". It is therefore not surprising that, according to a study by Bitkom and KPMG, three quarters of all companies are already using cloud services and it is increasingly becoming a substantial part of the IT landscape. The cloud is often perceived as a driver enabling a company to push digitalization of internal processes even with little technical expertise and few human resources.

Accordingly, Gartner already predicted the slow but certain demise of local data centers in Germany in 2019. Much to the surprise of the analysts, however, the latest survey results suggest a completely different trend. According to the Enterprise Cloud Index 2019, 73% of respondents said they would move some applications that are currently stored in a public cloud back to the in-house data center. This trend is also confirmed in the Enterprise Cloud Index 2020, according to which a hybrid solution is the ideal IT model for 86%. These figures suggest that IT managers have a conservative attitude in certain areas. But where do those apprehensions come from? What are the arguments for investing in keeping or expanding an existing IT system? Why not put everything in the cloud?

Existing IT: more transparency and higher data protection

A key consideration when deciding on an IT strategy is data security. While many companies considered their data safe in the cloud, headlines about security breaches and irreversible data losses of established public cloud providers kept coming up in the media in recent years. This is also reflected in the findings of „2019 Cloud Data Security Reports“. According to the report, 75% of the organizations surveyed worldwide that stored personal data unclassified in the cloud experienced at least one security incident. In 36% of cases, it was not possible to trace where this issue originated. This compares to only 8% in 2018.

It is becoming clear where one of the decisive advantages of an existing IT system lies. Whereas with cloud applications the specific location of the servers is often unknown and the on-site access controls are not visible or controllable for a company itself, there is a completely different level of transparency in the in-house data center. Physical access control policies can be determined and, if necessary, flexibly adapted. The same applies to the virtual level. Thus, with cloud applications, there have not infrequently been scandals regarding vendor login, i.e. regarding the question of who is authorized to access the systems. According to this line of argument, the use of a company's own IT does not, as is often assumed, go hand in hand with a loss of flexibility. Quite the opposite: due to the immediate proximity to the infrastructure, it is possible to react quickly to new requirements and security regulations can be better monitored. Two points that have a positive impact on cyber security. Not least because complete transparency also offers room for optimization.

On-premise data processing: minimal latency through on-premise IT

Another vulnerability of cloud services, was particularly exposed during the early days of the Corona crisis. Overnight, companies around the world switched to home offices. The result was unexpected spikes in demand that caused outages of leading public cloud providers. A disaster especially for production or manufacturing processes and Industry 4.0 applications that rely on minimal latency to run smoothly.

This incident underlines the advantages of an internal corporate IT. Whereas with the cloud there is a certain dependency in capacity allocation, with an in-house infrastructure resources can be allocated independently in a dedicated manner. In addition, on-site data processing can minimize latencies and exploit synergies in similar processes. Also, the development of in-house IT expertise should not be underestimated, which will certainly pay off in the long run as a competitive advantage in the dynamic market.

CapEx vs. OpEx: Better cost planning in the in-house data center

Another much-discussed issue at the moment is cost. While many companies have switched to the cloud under the guise of cost savings, this argument is now being questioned. According to the IDG study „2020 Cloud Computing, 40% of respondents stated that it is a great challenge to keep control of the costs incurred by public clouds. The origin of this certainly lies in the fact that users have no influence on the pricing structure of the providers. In addition, the agreed prices are tied to certain terms. While OpEx (operational expenditures) are the main factor for cloud services, CapEx, i.e. costs for acquisition and commissioning, are the main factor for existing IT. In other words, a larger capital base is needed here. The advantage, however, is that with a company's own data center the monthly costs as well as the required capacities can be planned quite precisely.

Hybrid models on the advance: what strategies do exist?

Driven by cost pressure, data protection guidelines or latency requirements, the data center market is undergoing a very dynamic development. While the cloud was considered the ultimate only a few years ago, the trend is currently moving towards hybrid models. But which strategy is the right one? Expansion, conversion or relocation of the IT infrastructure?

Are you also currently looking at consolidating your existing IT? Then be curious about our next blog post.

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