‘On-premise versus cloud’ remains the heavyweight division of digital infrastructure rivalries. And depending on where you look, both sides claim victory.
Cloud is often perceived as a runaway success. As part of report into the domestic cloud services market, UK regulator Ofcom noted that the UK cloud infrastructure market is growing, with overall revenues increasing at a rate of 35% to 40% annually.1
However, analysts Synergy have identified that by 2027, enterprise data centres will still account for more than a quarter of data centre capacity2. And closer to home, a 2024 research project of 350 UK IT leaders, found that 93% of respondents had been involved with a cloud repatriation project in the past three years. Furthermore, 25% of those businesses surveyed have already moved half or more of their cloud-based workloads back to on-premises infrastructure.3
It is, however, important to see beyond these headline numbers. For many businesses, especially scale-ups, high growth SMEs and medium-sized businesses, the reality is that there are two types of “on-premise”. Some organisations (usually within technology) will own their own dedicated data centre. But the majority will simply host their own infrastructure in their office.
As this latter group of companies grows, they typically need a solution that takes servers and racks out of the room next to the kitchen and treats them as the critical asset they are.
Migration patterns
High-growth, scale-up and medium-sized companies are on the move. Driven by increased energy prices, higher borrowing and operational costs, and persistent changes in working patterns, they are reassessing their property portfolios. One sign of this has been the migration to serviced offices.
Commercial property specialists Lambert Smith Hampton cite Mordor Intelligence forecasting: “that the UK market will grow by 8% a year during 2022-27.”4 Elsewhere, Savills reports an ‘exceptional rise in demand’ for UK flexible offices, pointing out not only that such demand is increasing prices by 15 per cent but that enquiries are up 17 per cent5.
However, issues are already beginning to arise. Operating business-critical technology in a shared space presents a range of challenges.
Firstly, serviced offices are rarely equipped with the infrastructure and connectivity that high-growth companies need. The provision of power is shared to the entire building and is often insufficient. Connectivity options and data management capabilities are usually the bare minimum.
Shared offices also suffer from a lack of the necessary physical and cybersecurity. Because of high costs, a serviced office typically has less physical security than a data centre, and people on site are not as comprehensively trained. Technologically, serviced offices use less secure connections to keep costs low, further increasing the exposure to risk.
Lastly, serviced offices offer limited space for businesses looking to grow. Limits on the room size can restrict attempts to scale IT infrastructure, because the office operator needs to prioritise space for offices and desks.
The colocation alternative
High-growth businesses have found themselves stuck between a rock and hard place. They cannot – or do not want to – take on their own, expensive property facility and carry their ever-expanding infrastructure with them. But equally, they see that that moving into serviced offices forces them to relinquish control over technology, systems, and the subsequent processes.
And of course, growth is not a ‘one time deal’. As a business goes beyond its legacy on-premise strategy, or undergoes aggressive expansion in multiple locations, it does not want to move its infrastructure with every opening of a new facility.
By comparison, when moving an organisation, moving IT infrastructure into a colocated space can contribute to business growth and agility.
Firstly, the business can still exploit a move to flexible office space, optimising the blend of capital expenditure (capex) investment and operational expenditure (opex), by owning only what it needs to own. In the modern context, this is often a complete migration to opex as businesses seek to release themselves of expensive liabilities.
Fuelled by this agility, these businesses can expand their operations. They can enjoy the confidence that comes from greater security, and as they evolve, their colocation partner can help them access a wide range of suppliers in connectivity, and an ecosystem of service providers.
Operations are made more resilient as the dedicated colocation provider manages connectivity, power, and cooling issues (also handling sustainability concerns).
For most high growth, medium sized businesses, the issue is to find a colocation partner that is local to the business, able to support development across the UK (and beyond) - and deliver this at a transparent and competitive cost.
By splitting IT infrastructure into a dedicated colocation space, the business can enjoy the best of both worlds: better operational focus, more control over costs and greater flexibility to grow.
The pieces of the puzzle: creating a cohesive single direction
To optimise any IT infrastructure move, businesses need clarity in decision making. This starts with five simple steps: