The growth in Cloud doesn’t mean the end of On-Prem
Cloud Computing

The growth in Cloud doesn’t mean the end of On-Prem

Public Cloud companies are expanding at rapid paces - even smaller players such as Alibaba and Oracle are making announcements about new markets – while the likes of AWS, Azure, and Google announce healthy profits and a steady release cycle of new products.

IT budgets are generally going up, and much of the spending is going into the Cloud. However, a new research note from Morgan Stanley is suggesting IT hardware is about to get ‘a Second Life’.

“Several catalysts are converging to give IT Hardware a second life—and drive double-digit earnings growth in 2018,” according to Katy L. Huberty, Head of North American Technology Hardware Equity Research. “With plans now coming into focus, companies are ready to make necessary upgrades to their IT Hardware.”

“One of the biggest detractors of growth hasn't been the actual migration of computing to Cloud, but rather decision-making around the Cloud.  For the last few years, enterprises have been putting IT Hardware spending on hold while they grapple with decisions around how, when and how much of their workloads to move to the Cloud.”

The most recent analyst figures suggest the prediction is on point. According to Gartner, Server shipments in the 4th quarter of 2017 saw 8.8% growth compared to the same quarter last year, while almost all of IBM’s recent revenue growth has been down to the company’s latest z14 mainframe.

 

Going all in vs Hybrid

The Morgan Stanley piece notes that while many companies still plan to migrate a larger share of their workloads to the cloud, “they aren't abandoning on-premise computing.”

“Instead, many are adopting a Hybrid IT model in which applications move between a Public Cloud and their own internal data centers.”

According to a report from the Uptime Institute last year, 65% of enterprise workloads reside in enterprise owned and operated data centers; a figure which has remained largely unchanged since 2014.

Given that some organizations will always want to keep a tight grip on some of their data and processing, companies are beginning to offer Cloud-like capabilities as close to home as possible.

Microsoft now offers a hybrid ‘Private Cloud’ version of Azure, and offers governments something even more localized. Oracle has an on-prem ‘Cloud at Customer’ service, Google’s Cloud software can be run on-prem through Cisco, and Rackspace are partnering with HPE to deliver something similar.

Even ‘born in the Cloud’ startups recognize the benefits of on-prem. Dropbox is probably one of the most notable examples of a company moving away from the Cloud and onto its own infrastructure. In 2016 the Cloud storage company announced it had moved the majority of its users off AWS and onto its own custom-built infrastructure. According to a recent filing, the move has saved the company almost $75 million over two years. Dropbox still uses some Cloud components, and very rarely are the answers to any question ‘put everything on the Cloud’, or ‘keep everything On-Prem’.

The Cloud will almost certainly continue to grow. But traditional on-premise IT hardware still has plenty of life in it yet it seems.

 

Also read:
What does hybrid cloud mean in practice?
Last of the Mainframers
What hybrid IT really means for your organization
Nutanix plots a second act in the Hybrid Cloud
Why the retreat from the Public Cloud?

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Dan Swinhoe

Dan is Senior Staff Writer at IDG Connect. Writes about all manner of tech from driverless cars, AI, and Green IT to Cloudy stuff, security, and IoT. Dislikes autoplay ads/videos and garbage written about 'milliennials'.  

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