Why to Keep a Data Center Mentality

Scalability, agility, ability to avoid capitalization of hardware and software over the long term, and efficiency have been reasons why companies are moving more information technology to the cloud. This has led industry analysts like Tracey Wu of Forrester to say, “It is well understood that using the cloud is essential to staying competitive. The most important question is when and should we move all workloads to the cloud?”

It is possible for a total move away from data centers to happen – but that doesn’t mean that data center thinking stops.

Inside the data center world

A data center is a physical work center filled with computing and the people who run it.

It is an ecosystem, where hundreds of decisions and processes are made and implemented every day to keep the business going. Data center managers primarily think about these areas:

  • Operations: What processes and services need to be performed every day, every week, every month, and every year in the data center? Is governance updated, and do we have the skilled staff to operate our IT?
  • protection: Do we know and monitor who has access to the physical data center, and do we also issue and monitor access to networks, systems, storage and applications? Have all of these information assets been properly inventoried and secured – and do we have records showing who accessed systems and facilities from where, when, and what they did?
  • Efficiency and Sustainability: Are we improving the use of data storage and processing and our entire network? Is the physical data center set up to reduce energy use while maintaining equipment integrity?
  • Costs and Allowances: How much does it cost to run individual networks, systems, and applications? Do we have a cost recovery system that distributes the cost to different user departments based on usage, or are our costs centralized? Are we getting an adequate return on investment (ROI) from our IT assets?
  • Continuity of work: What happens if a data center outage occurs? Do we have a failover plan that can dispense with mission-critical systems to keep the company running? For day-to-day issues, what is the data center’s record of mean response time and mean time to resolve the issue for end users?
  • Budgeting: What do we need for next year’s budget? Do we capitalize or spend, and how do we convince the administration to fund it?

How is the cloud changing data center thinking?

Cloud computing is changing the thinking of the data center because from an IT point of view, the cloud is not under direct management. Instead, the cloud is managed by the third-party vendor you subscribe to. This takes a lot of the day-to-day management work out of the hands of IT and tends to erode the data center’s day-to-day thinking in the cloud.

Does it matter?

In a 2021 survey, IT executives reported that their cloud costs were 23% above budget, and that 30% of their cloud spending would be lost. Even worse, 30% didn’t know how to fix the problem, 47% predicted it would get worse in 2022, and they expect spending on clouds will continue to grow.

If I were a CIO, CFO, or CEO, my tendency would be to look at cloud performance and compare it to what my data center was doing.

Executives in industries that require security-intensive measures, such as banking, agree. They lack confidence in cloud-based security, are unsure if some of their platforms can function effectively in the cloud and are concerned about data privacy. In contrast, Gartner stated that “cloud services can initially be more expensive than running on-premises data centers. [However, it also proves that] Cloud services can become cost-effective over time if organizations learn to use and operate them more efficiently. ”

The problem is that organizations must learn to use and operate cloud services more efficiently. In 2021, 23% of IT executives said their cloud costs were over budget, 30% said their cloud spending would be wasted, and 30% didn’t know how to fix the problem!

Move data center thinking to the cloud

IT departments will improve cloud performance if they manage their own cloud like their data centers. At the same time, there are reasons why IT data center thinking has not moved to the cloud. These include:

  • End users purchase cloud services independently which may not be known by the IT department.
  • To centralize costs, all cloud costs are allocated to IT, whether IT buys all cloud services.
  • When providing and managing cloud resources, overworked IT employees rely on third-party cloud vendors to do these tasks for them.
  • Small and medium-sized businesses do not have leverage with cloud vendors to force these vendors to adhere to their own security and governance standards.
  • Cloud pricing structures are very complex and it is difficult for IT staff to understand or interpret ROI.
  • Many IT departments have not updated their DR plans for cloud computing, and in some cases, it is difficult to test DR plans with cloud vendors, even if the IT department has a plan.

Ultimately, these challenges become risks if IT does not put its arms around cloud operations, efficiencies, and costs.

Best practices for spending and executing on the cloud

Organizations can better manage and implement their cloud spending if they bring tried and proven systems and practices into their data centers.

Here are four of the core best practices for cloud computing spending and implementation:

  1. Develop direct cost accounting and ROI formulas to assess the value of the cloud. This may include sitting with cloud vendors to develop simplified pricing models.
  2. Collaborate with Finance to review cloud spending accounting. In some cases, cloud spending is aggregated into a central IT category, even when users (not IT) subscribe to cloud services. The risk is that these costs increase in the IT budget, and then the IT department finds it difficult to obtain funding for other projects. While it is possible to put some of these cloud costs back into user departments, a better way might be to see how these user-driven cloud costs have increasingly inflated the IT budget, and then “rise” the budget to absorb these costs. Cost centralization gives everyone greater insight into what organizations are spending on cloud resources. It also opens the door for IT to be the central “manager” of the cloud. The value in this is better overall control of cloud resources and spending.
  3. Review service level agreements annually with cloud vendors. Are your cloud services meeting the performance levels you set for them? Where do they work and where do they fall short? Did you get the latest IT security audit from your cloud vendor? What about continuing to work? Do you have an annual DR and failover exercise that you run with the vendor to ensure that cloud-based systems can failover if there is an outage? All of these elements should be written into your contracts with cloud vendors as appendices if they are not in the texts of the contracts themselves.
  4. The Upskill team and the use of cloud-powered tools. There is no reason why organizations should take less security and governance in the cloud than in the data center. All major cloud providers have an abundance of security and governance tools that IT can use to implement security and governance. The problem in the past has been that IT (or end users) save in the cloud, and then forget to do all the security and governance work they do in their own data centers.

The security and governance practices in the cloud and the data center should be the same.

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