To do or not to do, a dilemma between Cloud and On-Premise in corporations

A bottom-up perspective from a former IT consultant

Only a few years ago, cloud did not have another meaning besides "a visible mass of condensed water vapor floating in the atmosphere, typically high above the ground"

Nowadays, when you hear the word "cloud", it leads to a whole new world. Cloud computing and storage have become an integral part of an IT architecture. It is highly scalable and you only pay for what you use. In fact, various researches including Gartner show that many businesses have adopted the cloud technology full-scale or at least in a hybrid form.

Surprisingly, in my own experience and according to Mckinsey Studies, it is the large enterprise environment that shows the slowest adoption of cloud. Corporates, especially those with revenues in billions, have their own unique problems and consideration criteria that many individuals and small organizations rarely encounter.

To incorporate cloud computing to the existing architecture, you actually have to move a mountain!

The core value of an enterprise is solely driven by generating revenue and minimizing cost. However, adopting cloud computing and storage can actually go against their core value.

Large corporations at one point in the last 20 years must have adopted the latest on-premise technology. Usually, on-premise Oracle, SAP or IBM infrastructure costs to a couple million dollars. Enterprises pay for the user licenses upfront every year. On top of that, they have to hire internal/external DBA and implementation consultants to continuously make changes to their systems.

In short, enterprise invested in infrastructure, in recurring licenses and trained internal employees (IT managers & internal developers) to their particular system. It is a big investment of resources - money and time.

Many corporates have grown by M&A. M&A in IT means combining infrastructures. Merging two IT infrastructures is a difficult project, and in some cases, they would rather leave the applications separate, knowing that merging is like opening a can of worms.

Enterprises are very conservative about security. Like really.

Enterprise are skeptical about cloud security. It is not about how cloud computing handles authorization and authentication, but rather the concept that their data is stored somewhere outside and managed by someone else.

Does the physical location of your data have any effect on security? The answer is no unless regulations say otherwise. Whether it is in AWS data centers or in the server room at the basement of the corporate building, the access is still hard for the public. However, many corporations highly pursue total ownership even if TCO (total cost of ownership) is higher.

I have seen corporations mandate employees to go through security screening (just like in the airports) and cover the cameras & mics with stickers that change color if you remove and reapply them. This simply shows the extent of importance corporations put on their database and information. There is the private cloud option, but it costs more.


Looking at the two points above, it seems that corporations might as well not switch to cloud. Nonetheless, we must not overlook one of the greatest advantages of cloud. Among the many advantages of cloud, I want to point out one crucial factor that stands out.

At the end of the day, companies want more efficiency - faster database retrieval time and server processing time. Database grows at an exponential rate which leads to poor performance. To alleviate the problem, many corporate application developers focus on optimizing the applications by restructuring or tuning the DBs.

But what is the point of tuning a database (ex: increase buffer cache hit rate) if the company uses an outdated hardware? According to the report from Oracle CEO, Mark Hurd, "IT expenses is down while legacy systems age" . Hurd stated that the current on-premises systems on average are 20 years old.

20 years! That is years behind. This number clearly indicates two things.

  • First, enterprises do not want to spend money on IT hardware unless it is absolutely necessary.
  • Second, since the hardware is outdated, applications that utilize cutting edge features (or even bleeding edge) will not be able to perform as designed.

As mentioned above, corporates spend millions of dollars on application maintenance, DBAs, external consultants, and IT managers. If they are going to let their infrastructure age which will ultimately lead to performance degradation, they might be better off to take advantage of cloud.

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