Dell: Channel Customers Saving with On-Prem Hosting

The chairman of Dell Technologies reported to 13,500 company delegates that businesses are moving from the public cloud to a hybrid cloud of both public and private cloud services. Michael Dell spoke at Dell EMC World in Las Vegas and reported that public cloud customers are making a switch from public cloud to more of a hybrid, along with using software as a service and managed services.

Dell said that companies that operated by using only the cloud would find themselves not as competitive as other companies that had at least some software component of their system. The reason is simple—using the public cloud costs more which affects profitability.

One thing that makes diverse systems more economical is the fact that it is easier to keep them modernized because software is an important concept in making adjustments to services. Software allows systems to be updated, automated, and systems can be made more efficient. It is more expensive to create the same result with public cloud systems only. The same things cannot be accomplished as part of the public cloud.

Dell stated that many customers have already reported that the public cloud is not only more expensive, but that it costs twice as much as other solutions. This is especially true for the “predictable” part of the work, and most companies find that the “predictable” makes up 90% of what they do.

Dell also told the crowd in Las Vegas that customers are going from an onsite server system to the public cloud and now they are returning or at least moving off the public cloud, creating what he referred to as the boomerang effect. People switched to the public cloud thinking that it would save them money, then they discovered that it cost them twice as much as they were spending before the initial switch. Now they’re moving to a private cloud option, or in some cases back to servers onsite.

Actual Growth of Hybrid Cloud Options

When looking at the changes in the cloud to a hybrid option that was both on premises and somewhat in the cloud, a recent survey by RightScale saw a large increase. In 2016 the hybrid cloud adoption increased from 58% of businesses to 71%. Another shift is moving to private clouds as 31% of all enterprises reported a presence on the private cloud in 2015, compare to 22% from the year before.

Part of the increase in expenses can be found in management of the cloud and data store on it. In 2013 only 18% of the respondents reported that cost management was a challenge in managing the cloud. IN 2015 that number had increased to 26%. Part of the management costs increase is due to companies discovering a need to optimize the costs of the services they were using. Managing the cloud including shutting down unused workloads or choosing lower-cost cloud services.

Another hybrid option with use of the public cloud was adding the use of private cloud networking too. Nearly 77% of the public cloud users also had the private cloud as part of the infrastructure, which was up from 63% the year before. This has helped make hybrid cloud computing a tool in 71% of all businesses, while 95% of all businesses use the cloud for some work.

As a complicating factor, and perhaps surprising to many who have been following the field, security is no longer the top concern of businesses when discussing the cloud. Apparently, because of a lack of efficiencies, the Cloud Report now lists a lack of resources and expertise as the largest concern that companies have regarding the use of the cloud. It is presently still unclear if this new top concern will be best addressed by providing more training to IT staff, or if it will be more important to have more people trained to become IT professionals.

Security is now the number two concern for companies moving to the cloud, but another concern is similar and that is remaining in compliance for different industries. It is important for most companies to keep data safe and away from those who would want to steal it, and part of that reason involved being in compliance with industry regulations.

One concern that is getting smaller is performance. In 2015, 17% of all companies with a presence on the cloud were concerned that performance would suffer once they made that transition. In 2016 that number dropped to 15%. The reason for the decrease seems to be that professionals know that the cloud is, generally speaking, every bit as safe and well-regulated as older forms of computing.

As Michael Dell reported, there is more to gain by moving to a private cloud and public cloud hybrid. Data is secure, updates are easier to perform, and performance is relatable and reliable. It seems that is the direction the industry will be heading to more on premises hosting for the next several years.

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