Data Center Departure
Because of this, many companies today are shuttering their own data centers as they move applications, platforms, and infrastructure to the cloud. In fact, analyst firm IDC predicts that 50,000 corporate data centers will disappear by 2016. At the same time, data center space will increase significantly, from 611.4 million square feet today to 700 million square feet by 2016. Most of the extra capacity will be absorbed by cloud service providers.
"Momentum is definitely swinging toward the hosting companies," says Rick Villars, vice president of data center and cloud research at IDC. "It's tied to companies making the decision that they do not want to rebuild their data centers and they would rather go with a cloud service."
This is especially true of CRM applications, which Villars says will be built "more and more on the service provider foundation."
The SaaS model also has some predicting the end of company virtual private networks (VPNs), which use public telecommunication infrastructures, such as the Internet, to provide remote offices or individual users with secure access to their organizational networks. Typically these networks have built-in security procedures and tunneling protocols (creating a secure pipeline in an untrusted network) that carry encrypted data between the two end points.
Shahin Pirooz, chief technology and strategy officer at CenterBeam, an IT managed services provider, is among those who see the cloud replacing VPNs.
"Greater use of cloud solutions is giving more employees the opportunity to access corporate resources remotely through their iPhones, iPads, and Android-based smartphones and tablets," he stated in an email to CRM magazine. "With mobility driving worker productivity, enterprises are looking `at even more cloud services to support new and innovative use cases, which then spur even greater use of mobile technology. And that snowball will keep gaining speed until client-based VPNs become completely obsolete."
Further reducing the need for client-based VPNs, many software vendors have recently launched private cloud offerings that, like VPNs, typically employ encryption, tunneling, and other security measures before data can be transferred between the cloud services provider and a corporate client. This essentially turns the provider's multitenant architecture into a single-tenant architecture.
A handful of vendors offer this. Oracle, at its OpenWorld Conference in early October, launched the Oracle Private Cloud, in which all the critical components are installed in the customer's own data center behind its own firewall, with Oracle owning and managing the infrastructure and storage. "We own it. We manage it. We upgrade it. You pay a monthly fee for what you use," Oracle CEO Larry Ellison explained.
Company president Mark Hurd called the private cloud "a big deal," bringing "all the benefits of the cloud without any of the privacy or security issues."
Not to be outdone, Microsoft recently acquired StorSimple, a provider of cloud-integrated storage solutions, to help customers embrace hybrid cloud computing. IBM and AT&T in early October announced a business agreement to deliver a network-enabled cloud service that uses private networks rather than the public Internet. The joint IBM/AT&T product, to be made available this year, combines AT&T's VPN architecture with IBM's SmartCloud Enterprise to create a highly secure shared cloud service. With it, a financial services firm, for example, could move and manage critical customer data between its own data center and IBM's cloud without the data ever leaving the VPN.
Because of ongoing security concerns, many investment banks remain committed to the idea of private clouds. Bank of America, Merrill Lynch, Deutsche Bank, Goldman Sachs, JP Morgan Chase, Credit Suisse, and Morgan Stanley all take this approach, according to published reports.