Why Cloud Concentration Could Be Bad for Your Business

Why Cloud Concentration Could Be Bad for Your Business

June 23

Both enterprises and small-scale organizations face rapidly escalating IT demands as customers and business partners come to expect more sophisticated and streamlined experiences. For many of them, cloud computing offered an ideal solution to their ongoing capacity challenges. The migration to the cloud began slowly at first, but has steadily gained traction over the years as more and more companies say goodbye to their inefficient on-premises deployments. 

But in the rush to move more of their business operations into the cloud, many of them are realizing that the old advice to “avoid putting too many eggs in one basket” has special meaning when it comes to cloud computing. That’s why the technology industry and regulatory bodies around the world are growing increasingly wary of the phenomenon known as cloud concentration.

What Is Cloud Concentration?

Cloud concentration, sometimes referred to as cloud consolidation, is the trend among organizations to reduce the number of cloud providers they rely upon to host data and application workloads. Rather than using one provider for virtualized infrastructure and core storage (IaaS), another for software development and analytics (PaaS), and many more for various operational functions and customer facing applications (SaaS), enterprises are turning instead to hyperscale cloud providers like Amazon Web Services (AWS), Microsoft Azure,  and Google Cloud. 

These public cloud vendors have the capacity and the development resources to provide a wide range of services that can meet almost any business need. When there’s a solution they don’t already offer, they’re quick to acquire promising startups that help broaden their portfolio. The aggressive expansion of these hyperscalers has had a major impact on cloud strategies, with the number of companies willing to host mission-critical workloads in the cloud increasing by 10 percent from 2019 to 2021. 

Many enterprises have already established exclusive partnerships with hyperscale providers. Bank of America and BNP Paribas rely exclusively on IBM’s specialized financial services cloud, while Morgan Stanley is working with Microsoft to facilitate its ongoing digital cloud transformation. In 2020, AWS and Azure accounted for 68 percent of the total cloud market in the banking sector. 

Benefits (and Risks) of Cloud Concentration

A cloud concentration strategy provides a number of benefits for organizations with diverse operational needs. On the whole, hyperscale public cloud providers are able to implement robust cybersecurity measures to keep sensitive data and applications secure, which is a critical factor for most enterprises. They can also scale capacity quickly to accommodate changing needs and help companies get closer to their customers with edge computing strategies that minimize latency.

In most cases, however, the biggest benefit of cloud concentration is convenience. Rather than migrating assets into multiple cloud platforms, managing multiple vendor relationships, or hiring a team of developers to keep those disparate systems integrated, they can instead consolidate their IT spend with a single provider and spin up any new services they need by provisioning more resources from the same cloud infrastructure.

But there are several downsides to cloud concentration that may not be as immediately evident. In the first place, there is a point at which public cloud platforms cease to be cost effective for larger enterprises with very specialized IT needs. While some organizations might never reach that tipping point where cloud costs become a drag on growth, it’s worth remembering that the very real savings gained from migrating to the cloud are contingent upon operational needs and scale, both of which can change over time. Long term relationships with a single, concentrated cloud provider also creates a high potential for vendor lock-in. While the provider may not make it overly difficult to repatriate assets and data, the sheer scale of the migration project is often a substantial deterrent.

Industry experts also have growing concerns about the potential for severe disruptions to online services due to excessive consolidation. In 2021, outages to Akamai Edge and Fastly’s content delivery network (CDN) services, which help deliver Internet content to users more rapidly, took down multiple cloud services like AWS, IBM, and Oracle Cloud, leaving organizations unable to access the data and applications located there. December of 2021 was a particularly bad month for AWS, which suffered three high profile outages, including one that actually disrupted Amazon’s own logistics network. With more and more organizations consolidating their infrastructure into a small number of hyperscale cloud providers, every disruption has the potential to impact a larger share of the market.

Reliability vs Resilience

The major cloud providers claim to offer outstanding reliability through their diversified services. It’s true that customers can place workloads in multiple cloud instances and back everything up with cloud-based disaster recovery as-a-service (DRaaS) solutions, but this does little to address the resilience of the concentrated environment.

Reliability is a measure of how often a system goes down, while resilience is a measure of how likely the system as a whole will fail and how quickly it can recover. The problem with concentrated hyperscale providers is that they offer very little transparency into their operations and systems. An uptime SLA may provide some reassurances regarding their reliability, but a sudden and widespread cloud outage can have serious consequences as cascading failures bring businesses to a halt.

As technologist Carl Malamud observed following the December 2021 AWS outages, massive cloud consolidation undermines the Internet’s original intent to serve as a distributed network with no points of failure: “When we put everything in one place, be it Amazon’s cloud or Facebook’s monolith, we’re violating that fundamental principle.”

Alternatives to Cloud Concentration

Fortunately, many organizations have already embraced a viable alternative to concentration that affords them much greater versatility and operational resilience. Hybrid and multi-cloud environments that leverage the resources of multiple providers allow companies to build up robust systems without locking their capacity planning in with a single vendor. This approach has the added benefit of allowing them to select from the very best providers when choosing applications and resources for different business use cases.

While hyperscalers may argue that this approach is unduly complex and cost prohibitive, establishing a foundational tech stack within a colocation data center environment can provide the streamline operations and control costs just as effectively. That’s because colocation customers can access direct on-ramps to the cloud through software-defined networking services while simultaneously leveraging more efficient power and cooling infrastructure. They even retain the flexibility to add bare metal servers to their deployment, affording them a level of scalable power, customizability, and security that few cloud providers can match. 

Colocation data centers also frequently provide much better redundancies and uptime SLAs than hyperscale public clouds, which ensures that mission critical data and applications will remain available when it’s needed most. This resilience becomes even greater when disaster recovery services and cybersecurity protections are layered atop the colocation environment.

Even better, colocation doesn’t mean saying goodbye to the public cloud. Customers can still use data center interconnections to access whatever cloud providers they need, which allows them to leverage the power of the cloud without being overly reliant on a small group of vendors.

Diversify Your IT Environment with Evoque Data Center Solutions

With multiple colocation facilities around the world and comprehensive cloud consulting services, Evoque is well-positioned to guide organizations through the most challenging aspects of their digital transformation. By putting the needs of applications ahead of infrastructure, we help companies deploy workloads in the most effective way possible. In some cases, that will call for a complex multi-cloud environment, while in others it might require a bare metal server running in a dedicated data center deployment. Whatever your operational needs require, our experienced data center and cloud specialists will ensure that you’re deploying your technology assets to make the most of their potential.

To learn more about how Evoque Data Center Solutions can help you avoid becoming locked in with a single hyperscale provider and help you build a more resilient, distributed IT environment, talk to one of our solutions experts today.


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