

The end of corporate computing - westwardho
http://sloanreview.mit.edu/the-magazine/articles/2005/spring/46313/the-end-of-corporate-computing/

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jaydub
I do believe that we will see more and more companies go without their own
physical data center footprints and will rely on a more fluid, "cloud"
infrastructure.

The initial costs associated with building a data center seem enormous. The
maintenance costs also must be staggering. Does anyone know what percent of DC
construction/maintenance is spent on redundancies? (e.g. backup generators,
UPS, multiple carrier services, etc).

Abstracting away the physical infrastructure for a 'logical' infrastructure
(if you will), seems very attractive to me. Particularly if I can have an on-
line balance between compute cost and benefit.

One major concern with this approach is security, both physical and
otherwise...

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arethuza
I think that is a false dichotomy - it's not a case of either you use the
cloud or you build a data center. There are a lot of options where your kit is
in someone elses data center - from part of a rack, through to cages with a
few racks right up to pretty big rooms.

You pay your money, get your own private space in a DC, they provide the
power, cooling and physical security and you supply the kit and buy
connectivity from one of the ISPs/telcos that infest these places.

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jaydub
Sorry for not making it more clear, but I did not mean to suggest that is
merely a binary option.

Yes, firms can co-locate their equipment in other firms DCs but its not a
silver bullet either. You still run up heavy costs associated with renting the
physical space, and hardware maintenance. If we're talking about a company of
significant size that is going to be part of a paradigmatic shift -- the
cost/benefit of co-locating doesn't scale well (and that's why you'll see many
sizable non pure tech companies that own and operate their own DCs)

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patrickgzill
Of course, not mentioned by the tech-focused author is the effect of tax law -
expenses such as rental (of space or servers) can be written off immediately,
while construction of a datacenter, and the purchase of equipment such as
servers and switches must follow a depreciation schedule over a number of
years.

[simplified] Example: $1 million to outsource to a provider = $1 million that
can be written off in that year.

Build a DC, install servers etc. at capital cost of $2 million and yearly
operating costs of $250K - you can only write off perhaps $200K of
depreciation plus the $250K in operating costs = $450K per year that can be
written off.

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donaq
The comparison to generators does not seem valid. Outsourcing your electrical
needs is not the same as outsourcing your IT needs. I don't think many
companies would (or should) outsource their data storage, for example.

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blueben
Ok. Why?

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jaydub
While electricity is pretty much fungible, data is not.

Imagine there exist two companies who are competitors, A and B. Now company A
outsources its data with a third party service. When company A managed its own
hardware infrastructure it had tight control over physical access to every
machine. Now that its data is hosted with a 3rd party, there is a greater
possibility that the data becomes physically compromised.

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mnemonicsloth
Data is not fungible, but storage capacity is. Go ask Google if you don't
believe me.

Also, your A/B argument works about as well against commoditized electric
power as it does against commoditized data storage. Why is it a no-brainer for
company A to give up its generating infrastructure but not its server
infrastructure?

Yes, there will be a few exceptions like hospitals, which keep generators on
site and have very strict confidentiality rules to observe. But in the main,
if a factory can risk a temporary loss of power to all its machines and still
come out ahead by dealing with a utility, why can't an office supply company
also come out ahead by risking temporary loss of access to its CRM data?

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jaydub
First of all, the electrical grid
(<http://en.wikipedia.org/wiki/Electrical_grid>) is by this point a pretty
well hardened and redundant infrastructure in major metropolitan areas.

I do think that for startps and smaller companies, receiving and paying for
storage/compute power like electricity is the way to go.

But back for a moment to the A/B example. My point here is really with
companies that are dealing with sensitive information. Let A = JP Morgan & B =
Morgan Stanley.

JP Morgan, I would guess (somewhat wildly) probably owns and operates in the
neighborhood of 18,000+ servers. At least half of those (roughly), probably
contain mission critical programs and data. The other half, that don't contain
_mission critical_ data per se, probably contain either 1) backups of mission
critical applications for emergencies, 2) email, documents etc of every single
employee (sensitive data).

Now as long as JP gets the electricity that it needs who care where it comes
from? It just needs to run its business. But the moment it lets important data
out the door, all bets are off. Who accessed what? Is the network secure? Is
the building physically secure from intrusion and corporate espionage? Does
Morgan Stanley now know the JP automated trading strategies? and so on...
Which is why I would say its not a no brainer to simply give up control of
server infrastructure.

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jff
I remember how once upon a time MIT, along with other participants, proposed
making a computer system that would be "just like the electrical system"--you
just plug into the wall. The Multicians would probably smile to see this
analogy resurrected 40 years later.

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Flenser
The analogy to power generation might not hold up in the long term. Solar
cells improvements follow Moore's law so maybe power generation will
eventually come full circle and companies will start generating their own
power again.

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gaius
There is an absolute bound on how much energy you can get from a solar cell
tho', as in, you can't make the sun shine any brighter. Even if you
concentrate it with mirrors, it's still a function of actual square metres
occupied.

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Groxx
Maybe a logarithmic version of Moore's law exists where there's a definite
upper limit? Where every <time period> the X value doubles, moving it ever
closer to the limit (until not financially viable)? It seems to fit to me, as
many techs like this skyrocket at the beginning, with huge expectations, and
then growth slows until it becomes a steady crawl.

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dzlobin
So in the last 5 years, how close has this come to being true?

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blueben
Service based IT companies such as Amazon and friends have seen massive
growth. Governments and large corporations are building clouds to share
between offices, campuses, and divisions. Hundreds, perhaps even thousands, of
startups and businesses have never expended a single capex dollar to buy and
install a single server despite utilizing dozens and hundreds of them.

So yeah, getting closer all the time.

