Managing Cloud: Why to Keep a Data Center Mentality

The move of more compute to the cloud and the edge has many organizations rethinking their need for data centers -- yet data centers aren’t going away and neither should ‘data center thinking.’

Mary E. Shacklett, President of Transworld Data

January 31, 2022

6 Min Read
Man standing in a data center, glowing blue lights
Gorodenkoff via Adobe Stock

Scalability and agility, the ability to avoid long-term capitalizations of hardware and software, and efficiency have all been reasons why companies have moved more IT to the cloud. This has prompted industry analysts like Forrester’s Tracy Woo to say, “It's well understood using cloud is necessary to stay competitive. The question most are weighing is when and should we be moving all of our workloads to the cloud?

It’s possible that total moves away from data centers happen -- but it doesn't mean that data center thinking stops.

Inside the Data Center Universe

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

It is an ecosystem, where hundreds of decisions and operations are made and performed each day to keep a business running. Data center managers think mainly about these areas:

  • Operations: What operations and services must be performed each day, each week, each month, and each year in the data center? Is governance up to date, and do we have the skilled staff to run our IT?

  • Security: Do we know and monitor who has access to the physical data center, and do we likewise issue and monitor access to networks, systems, storage, and applications? Are all of these information assets properly inventoried and secured -- and do we have logs that detail who accessed systems and facilities from where, when, and what they did?

  • Efficiency and sustainability: Are we optimizing the use of our data storage, processing, and network fully? Is the physical data center set up for minimizing energy usage while maintaining health of equipment?

  • Costs and allocations: How much does it cost to run individual networks, systems, and applications? Do we have a chargeback system that distributes the cost to different user departments based upon use, or are our costs centralized? Are we getting a suitable return on investment (ROI) from our IT assets?

  • Business continuation: What happens if there’s a data center outage? Do we have a failover plan that can cut over to mission-critical systems to keep the company running? For day-to-day problems, what’s the data center’s record on mean time to response and mean time to resolution for end users?

  • Budgeting: What do we need to budget for next year? Do we capitalize or expense it, and how do we persuade management to fund it?

How Does Cloud Change Data Center Thinking?

Cloud computing alters data center thinking because from IT’s standpoint, the cloud isn’t under direct management. Instead, the cloud is managed by the third-party vendor you subscribe to. This takes much of the daily management work out of IT’s hands and tends to erode day-to-day data center thinking in the cloud.

Does it matter?

In a 2021 survey, IT executives reported that their cloud costs were over budget by 23%, and that 30% of their cloud spend was going to waste. Worse yet, 30% of them didn't know how to fix the problem, and 47% expected it to get even worse in 2022, projecting that cloud spend would continue to grow.

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

Executives in security-intensive industries like banking agree. They lack confidence in cloud-based security, are uncertain whether some of their core systems can run effectively in the cloud and are concerned about data privacy. Pushing back, Gartner states 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 organizations must learn to use and operate cloud services more efficiently. In 2021, 23% of IT executives said that their cloud costs were over budget, 30% said their cloud spend was going to waste, and 30% of them didn't know how to fix the problem!

Moving Data Center Thinking to the Cloud

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

  • End users are procuring cloud services independently that IT might not even know about.

  • To centralize costs, all cloud costs are being allocated to IT, whether IT is procuring all cloud services.

  • In provisioning and managing cloud resources, stressed IT staffs are depending on third-party cloud vendors to do these jobs for them.

  • Small and mid-sized companies don't have the leverage with cloud vendors to force these vendors to adhere to their security and governance standards.

  • Cloud pricing structures are highly complicated and difficult for IT staff to understand or to interpret for ROI.

  • Many IT departments haven't updated their DR plans for cloud computing, and in some cases, it’s difficult to test for DR plans with cloud vendors, even if IT has a plan.

Ultimately, these challenges become risks if IT doesn't get its arms around cloud operations, efficiencies, and costs.

Best Practices for Cloud Spend and Execution

Organizations can better manage their cloud spend and execution if they bring over disciplines and practices that are tried and proven in their data centers.

Here are four cornerstone best practices for cloud computing spend and execution:

  1. Develop straightforward cost accounting and ROI formulas for evaluating cloud value. This might involve sitting down with cloud vendors to work out simplified pricing models.

  2. Collaborate with Finance to review cloud spend accounting. In some cases, cloud spend is being lumped into a centralized IT category, even when it is users (not IT) subscribing to cloud services. The risk is these costs add up in the IT budget and IT then finds it difficult for obtaining funding for other projects. While it’s possible to charge back some of these cloud costs to user departments, a better way might be to see how these user-driven cloud costs have incrementally inflated the IT budget, and then “grow” the budget to accommodate these costs. Cost centralization gives everyone greater visibility of 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 spend.

  3. Review SLAs annually with cloud vendors. Are your cloud services meeting the performance levels that you have set for them? Where are they working, and where are they falling short? Have you obtained the latest IT security audit from your cloud vendor? What about business continuation? 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 these items should be written into your contracts with cloud vendors as appendices if they aren’t present in the bodies of the contracts themselves.

  4. Upskill staff and use the tools the cloud avails. There’s no reason for organizations to tolerate security and governance in the cloud that’s less than what it is in the data center. Major cloud providers all have an abundance of security and governance tools that IT can use to implement security and governance. The problem in the past is that IT (or end users) provision in the cloud, and then forget to do all the security and governance work that they’d do in their own data centers.

Cloud and data center security and governance practices should be the same.

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About the Author(s)

Mary E. Shacklett

President of Transworld Data

Mary E. Shacklett is an internationally recognized technology commentator and President of Transworld Data, a marketing and technology services firm. Prior to founding her own company, she was Vice President of Product Research and Software Development for Summit Information Systems, a computer software company; and Vice President of Strategic Planning and Technology at FSI International, a multinational manufacturer in the semiconductor industry.

Mary has business experience in Europe, Japan, and the Pacific Rim. She has a BS degree from the University of Wisconsin and an MA from the University of Southern California, where she taught for several years. She is listed in Who's Who Worldwide and in Who's Who in the Computer Industry.

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