FOR THE FUTURE OF DATA CENTERS?

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1 WHAT DOES THE CLOUD MEAN FOR THE FUTURE OF DATA CENTERS? A WHITEPAPER BROUGHT TO YOU BY SEI

2 WHAT DOES THE CLOUD MEAN FOR THE FUTURE OF DATA CENTERS? files via the Internet to a hard drive located in a data center or server farm, users can access the data from any Internet-connected device. What is the cloud? In our technology dependent world, the cloud represents a newer model for creating and delivering IT resources and services to deal with unpredictable workloads and exponential growth. So as businesses weigh their options regarding whether or not to move some (or all) of their data to the cloud, it s important to understand what it is and isn t. Gartner defines cloud computing as a style of computing that provides scalable and elastic IT-related capabilities as a service to customers all using Internet technologies. By transferring With cloud computing, a company s computing resources live on remote machines, often in a shared environment. Simply put this means that rather than installing software applications on a computer, businesses can run these applications from a hosted server. The same is true for data: instead of keeping everything on your own computers or servers, data is stored and backed-up remotely on a server or storage device in the cloud at a different location. Many businesses find cloud services convenient because their data now resides on a server that is easily accessed from any location around the world with an Internet connection. At the same time, however, it s important to realize that utilizing the cloud also requires entrusting your data to a remote service over which you likely have limited or no influence.

3 Not ALL clouds ARE CREATED EQUAL The cloud isn t a one-size-fits-all option. Businesses and organizations may choose to place their workloads in any or all of three types of cloud environments: Public cloud: A public cloud is a shared-service environment accessible to any buyer. This option offers economies of scale, but concerns about security, privacy, trust and control limit mission-critical uses, according to Gartner. Public clouds are the most widely used option and work well for growing businesses that need immediate access to services to meet rapid increases in storage needs or computing demand. Programs like SalesForce and Dropbox are public cloud services. Private cloud: With a private cloud, an organization has exclusive use of an isolated server or storage device by offloading to a cloud provider s virtual private environment, or housing the servers and storage devices in their own data center. Private clouds are usually the most customizable and secure option. They are also the most expensive solution, making them cost-prohibitive for most small businesses. An example of this cloud model would be insurance companies with a large telecommuting workforce. They house all of their data on a private cloud within their company data centers, and remote employees access this cloud through their home computers. Hybridcloud: this option combines elements of both public and private clouds. Businesses can take advantage of the scalability and cost savings related to a public cloud, but also implement the security features and customization of a private cloud. For instance when Netflix runs on a typical day, they are using their own cloud service housed in their own data centers. When Friday and saturday night come along, the demand increase is great enough that Netflix will use the computing power of a remote cloud to increase their bandwidth. This allows Netflix to stay lean enough to be profitable, while also having the space they need to meet customer demand on highvolume days. 2

4 Who s moving to the cloud and who isn t? THE CLOUD COMMUNITY When researching a move to the cloud, it s important to take a look at who s already made the jump while also reviewing the potential risks and rewards for your own business. Current cloud usage among businesses varies greatly from simply using Salesforce to storing images on Dropbox to running an entire company out of a third-party cloud data center. Many companies are mixing and matching their solutions to fit their own needs. According to TechRepublic, some companies are avoiding the cloud entirely due to mandated requirements, internal decisions based on strategy, or security concerns about privacy or lack of data control. Businesses of all sizes are using cloud-based services, but small businesses are adopting them in greater numbers than larger enterprises. Larger companies tend to be more Many companies are mixing and matching their soultions to fit their own needs. concerned with the security issues that may arise from using cloud-based services. A recent Intuit report predicts, 78% of small businesses will use the cloud by This is likely due to the free or low-cost options available and lower barriers-to-entry for leveraging the cloud. For small businesses, cloud computing also offers an opportunity to offload the hassle and costs associated with IT management. For mid-to-large sized businesses, cloud adoption has been limited and has not reduced their need for on-site server and storage equipment. Dan Levin, chief operating officer of Box, says the public cloud is a game changer for small businesses because it gives them access to enterprise-level applications. The private cloud, however, is better suited to larger companies with dedicated IT staff, data centers and the resources to invest in infrastructure. Security issues related to business data being transmitted via the Internet is a top concern for mid to enterprise businesses, though cloud services can actually improve security for small businesses since many cloud service providers have more resources and offer levels of security the average small business cannot afford. 3

5 THE CLOUD COMMUNITY The Cloud Security Alliance offers some helpful statistics regarding cloud adoption: Globally, 86% of companies are spending at least part of their IT budgets on cloud services. Only 39% of companies in the Americas spend more than 20% of their IT budgets on cloud services. The size of the organization has a significant impact on how much budget is allocated to cloud projects versus on-premises software. Enterprises with more than 5,000 employees spend a lower proportion of their IT budget on the cloud compared with smaller companies. Of companies with more than 5,000 employees, 36% spend more than one-fifth of their IT budget on cloud services, compared to 49% of companies with fewer than 5,000 employees. Networking software firm Spiceworks State of SMB IT report also explored global technology trends in companies with fewer than 1,000 employees: 61% of their IT professionals are using cloud services today. Cloud adoption is especially pronounced among organizations with less than 250 employees. They were more likely to be using cloud services, as well as using a greater number of them. Status Status Status 4

6 It s easy to overlook security because of the virtual nature of the cloud. SECURITY IN THE CLOUD Faced with questions about data security, many IT professionals have been hesitant to take a cloud-first approach to new technology projects, according to the Cloud Security Alliance s January 2015 Cloud Adoption Practices & Priorities Survey Report: We asked survey participants to describe their company s overall attitude toward cloud services; 33 percent described their attitude as being full steam ahead when it comes to cloud services while 41 percent are moving forward with caution. Another 15 percent of companies are in the early stages of investigating cloud services, while 11 percent of companies do not consider cloud a priority. Thomas Trappler, a corporate IT security adviser and director of software licensing for UCLA, told the Seattle Times: It s easy to overlook security because of the virtual nature of the cloud, but really your data is going over the Internet to another computer and not to some magical world where everything s going to be fine. What particularly troubles Trappler is that not every company considers security issues before agreeing to move consumer data in to the cloud. He suggests companies consider encryption methods and reliability of the storage computers as well as background checks of the cloud provider s employees and clear notification policies in the event of a breach. As one Gartner analyst says, the biggest concern should not be that data could be compromised in the cloud, but rather that there may be a cloud outage that could lead to data loss. Therefore, while breaches of data do occur for example the Sony data leaks and the Anthem Healthcare hack more common and under-reported are losses of data due to outages at cloud computing centers. For example, Gartner cited Amazon Web Services, the market-leading cloud provider, has experienced three major outages in the past two years. One such event knocked big name customers such as Reddit, Foursquare, Hoot Suite, Quora and others offline, some for as many as four days. 5

7 Pros and cons to making a move IS THE CLOUD FOR ME? According to Gartner, it s important for businesses to understand what cloud computing is, how it will evolve, and under what circumstances it can offer value. While cloud services have numerous benefits for small businesses, including helping businesses avoid the need to manage and protect their own internal servers, they also carry limitations. Below are several pros and cons to consider when it comes to cloud services: Advantages: 1. Cost: Cloud services can significantly lower overall IT expenses for small businesses. By eliminating investment in stand-alone software or servers, companies can save on licensing fees while eliminating expenses associated with data storage, software updates, software as a service development costs, and management. Many providers also offer scalable models that allow you to pay as you go, making services affordable for smaller businesses that do not have access to the capital necessary to hire their own software developers. 2. Convenience & Mobility: The public cloud allows users easy access to information and applications no matter where they are. This makes collaboration simple, allowing even remote teams to easily review and modify shared documents and files. Cloud services are not only accessible via PCs, but also smartphones, tablets and other devices. 3. Backup & Recovery: Since data resides on the cloud, backing up and recovering data can be simplified. Most cloud providers offer comprehensive capabilities in this regard, with data backed up in multiple and geographically diverse data centers. 4. Scalability & Storage: Because cloud infrastructures can easily support scaling of applications, capacity can be allocated as needed, and on demand. The massive size of remote cloud servers can also make it easy for businesses to scale up in response to seasonal spikes or as the company grows. 6

8 IS THE CLOUD FOR ME? Advantages continued: 5. Quick Deployment & Ease of Integration: Companies must be able to respond to opportunities and changes in the market, and because cloud services can be up and running quickly, rapid deployment is a key benefit. Businesses can also add new users to the system instantaneously, eliminating waiting periods. Software integration is usually automatic so you will not need to spend time customizing applications. Disadvantages: 1. Possible Downtime: Cloud computing is dependent on your Internet connection and when it is offline, you are offline. And if your connection is slow, your services will run slow, affecting your business output. Even if your cloud provider takes great care to provide uptime, the risk remains, so when choosing a provider, be sure it is reputable and dependable. Another example cited by Heisler on networkworld.com was when Evernote lost the data of 6,000 customers in 2010 and Carbonite lost a portion of its customer s backups in 2009 due to an Elastic Compute Cloud (EC2) outage. 2. Security, Compliance & Privacy Concerns: Cloud-based solutions are exposed on the public Internet, and as a result, are more vulnerable to attack by malicious users and hackers. By using cloud services, you re essentially giving your service provider access to your private data and relying on them to manage, protect and retain it. Organizations that require compliance (such as HIPAA) necessitate additional considerations to ensure data security as well. There have been several hacks to Godaddy.com servers, putting millions of customer s data in jeopardy. 3. Unpredicted Costs: A cloud computing application may appear cheaper than an in-house software solution, but these services can also be pricey in the long run. Be sure the cloud application has the features your company needs. It is also important to analyze the plan and fee structure since some services claim to be utility based, only charging for what you use, but that is not always the case. The key is to look closely at each plan and consider the lifetime expense of storing your data. 7

9 IS THE CLOUD FOR ME? Disadvantages continued: 4. Inflexibility & Loss of Control: Since cloud applications and services run on remote, third party virtual environments, you have limited control over the function and execution of the hardware and software. Remote software usually lacks the features of an application running locally, so you may be locked into using their proprietary apps or formats. Also be sure you can add or subtract cloud-computing users as your business grows. 5. Data Ownership: Cloud providers create their own terms and conditions, which are constantly changing, and it is often unclear who actually owns data maintained by the cloud service (uploader or provider?), so be sure to read and understand the terms. 6. Vendor Lock-in: A major disadvantage can be your dependency on your provider. Consider your move carefully and conduct thorough research before choosing because it is difficult and sometimes impossible to migrate from one vendor to another without losing time, money, and possibly data. 8

10 WHAT DOES THE CLOUD MEAN FOR THE FUTURE OF DATA CENTERS? Although the cloud can offer computing and software resources for users, this does not mean the end of data centers, or an end to the need for on-site hardware. In fact, servers and data centers remain even more essential to managing and processing the massive amount of big data created around the world each day. Whether information is stored on-site or in a remote location via cloud services, servers remain responsible for the heavy lifting of storing and processing everyone s data, and the need for servers and storage will increase for mid to large sized businesses. Cloud vs. Data Center A cloud is a form of computing that stores data on servers and storage hardware. Cloud providers use data centers to house their services, and they usually own multiple data centers in various geographic locations to safeguard data. Cloud systems are scalable with potentially unlimited capacity, depending Servers and data centers remain even more essential to managing and processing the massive amount of big data created around the world each day. on the vendor s offerings. By using a cloud provider, businesses must be willing to give up some control because the provider manages the system. And unless you have a private cloud, you ll be sharing resources with others in a public cloud. With the cloud, you re also entrusting your security to a third-party, so if your cloud resides on data centers in multiple locations, each one needs proper security. A data center is on-premises hardware that stores data within your local network. It is typically managed by an in-house IT department and is ideal if you need a customized, dedicated system that gives you full control over your data and equipment. If you run many applications and have complex workloads, a data center is often a more suitable choice. Data centers are also physically connected to your local network, making it easier to ensure security. While the cloud has become a suitable and increasingly popular option for small businesses, mid and enterprise level businesses use it in moderation and continue needing data centers and hardware on-site. As a way of offsetting these increasing costs, many businesses are turning to third-party hardware maintenance providers. 9

11 If you have questions about your data center or cloud services in general, we d love to help answer them. SEI has a team of experts ready to service both internal cloud servers and co-location servers. Contact us for a quote: or INSIDE THE CLOUD 101:

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