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Large enterprises abandon data centers for the cloud

News Analysis
Dec 06, 20174 mins
Amazon Web ServicesCloud ComputingCloud Management

At AWS re:Invent, big, traditional companies say they want to abandon their data centers.

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Sure, it was a cloud computing conference, and maybe the goal remains a bit unrealistic, but at AWS re:Invent in Las Vegas last week, the number of enterprises expressing a wish to stop running their own data centers was too big ignore.

Even old-line enterprises companies said they weren’t content to create a foothold in the cloud and stay with a hybrid cloud environment, though that’s the situation many currently find themselves in. No, many are looking to exit the data center business entirely, just as soon as they can manage it.

And from the size and quality of the companies signing on to this stretch goal — think PG&E, Expedia, and to some extent even Goldman Sachs — it seemed clear that they represent only the tip of the iceberg.

PG&E: The cloud is the future

John Nichols, director of enterprise architecture at California utility PG&E — on stage during the event’s Partner Summit keynote, was very clear about his intentions: “We’re excited about getting out of the data center business entirely.”

Of course, the “100-year-old highly regulated company “ is still far from that goal, but as of 2018,” Nichols said, “everything new is going in the cloud.”

Calling it “the new way of IT,” Nichols said his immediate objective is to put 60 percent of PG&E workloads in Amazon Web Services (AWS).


“AWS builds the equivalent of a mid-size data center every day,” Nichols said, and they can pass on their expertise and lower costs. Challenged by disruptive forces ranging from power aggregators to home solar, PG&E is focused on innovation and affordability — structural, not just incremental. And the cloud is the common element in both.

“Things may appear similar to legacy data center technologies,” Nichols said, “but the cloud operates in exponential terms. It is radically different.”

Expedia traveling to the cloud

Expedia wants to go almost as far. Mark Okerstrom, CEO of the fast-growing travel technology company told the main keynote audience that his firm plans to run a whopping 80 percent of its mission-critical apps on AWS within two to three years. He’s in the process of spending more than $100 million a year to swap out some 45,000 servers in search of cloud-based resiliency (forget disaster recovery), optimization (developer empowerment), and performance (enabling mass personalization).

AWS started as a data center replacement, Okerstrom noted, but it’s become an incredible ecosystem of services.

Goldman Sachs: Follow the money

Perhaps the most impressive example was Goldman Sachs. Managing Director Roy Joseph also spoke during the main keynote, talking about the high-profile financial firm’s surprising move to the public cloud.

With more than a quarter of the company’s 33,000 global employees in engineering writing 1.5 billion lines of code for more than 7,000 apps running on more than 200,000 servers in a cloud environment, the company claims a surprisingly vibrant technology culture.

“So, why the public cloud? As our businesses continue to grow and evolve,” Joseph explained, “we need to manage more risk. And that need drives a requirement for more computing power. A few years ago, we would have addressed that need by adding a field to one of our data centers. The inflection point had come for us at Goldman to make a real move into the public cloud. We wanted the flexibility, scaling, and innovation … that the public cloud offered.”

Acknowledging that the cloud was “not an easy sell internally,” Joseph noted that Goldman Sachs still requires total data control and data privacy. So, it built APIs to extend its internal control framework into the public cloud. It relies on a Bring Your Own Key (BYOK) approach, which Joseph described as a “safety deposit box” that allows it to store data in a third-party location while retaining full control.

The result of the move to the cloud? As the company looks to expand applications beyond core compute into the cloud, “our ability to innovate has multiplied exponentially,” Nichols said.

With companies like these blazing the trail to the hybrid cloud and beyond, you gotta believe other enterprises are asking themselves, “Why do I want to be in the data center business?”


Fredric Paul is Editor in Chief for New Relic, Inc., and has held senior editorial positions at ReadWrite, InformationWeek, CNET, PCWorld and other publications. His opinions are his own.