Home > Cloud Computing > QuickQuip: Don’t run your own data center if you’re a public IaaS < Sorta…

QuickQuip: Don’t run your own data center if you’re a public IaaS < Sorta…

Patrick Baillie, the CEO of Swiss IaaS provider, CloudSigma, wrote a very interesting blog published on GigaOm titled “Don’t run your own data center if you’re a public IaaS.”

Baillie leads off by describing how AWS’ recent outage is evidence as to why the complexity of running facilities (data centers) versus the services running atop them is best segregated and outsourced to third parties in the business of such things:

Why public IaaS cloud providers should outsource their data centers

While there are some advantages for cloud providers operating data centers in-house, including greater control, capacity, power and security, the challenges, such as geographic expansion, connectivity, location, cost and lower-tier facilities can often outweigh the benefits. In response to many of these challenges, an increasing number of cloud providers are realizing the benefits of working with a third-party data center provider.

It’s  a very interesting blog, sprinkled throughout with pros and cons of rolling your own versus outsourcing but it falls down in being able to carry the burden in logic of some the assertions.

Perhaps I misunderstood, but the article seemed to focus on single DC availability as though (per my friend @CSOAndy’s excellent summarization) “…he missed the obvious reason: you can arbitrage across data centers” and “…was focused on single DC availability. Arbitrage means you just move your workloads automagically.”

I’ll let you read the setup in its entirety, but check out the conclusion:

In reality, taking a look at public cloud providers, those with legacy businesses in hosting, including Rackspace and GoGrid, tend to run their own facilities, whereas pure-play cloud providers, like my company CloudSigma, tend to let others run the data centers and host the infrastructure.

The business of operating a data center versus operating a cloud is very different, and it’s crucial for such providers to focus on their core competency. If a provider attempts to do both, there will be sacrifices and financial choices with regards to connectivity, capacity, supply, etc. By focusing on the cloud and not the data center, public cloud IaaS providers don’t need to make tradeoffs between investing in the data center over the cloud, thereby ensuring the cloud is continually operating at peak performance with the best resources available.

The points above were punctuated as part of a discussion on Twitter where @georgereese commented “IaaS is all about economies of scale. I don’t think you win at #cloud by borrowing someone else’s”

Fascinating.  It’s times like these that I invoke the widsom of the Intertubes and ask “WWWD” (or What Would Werner Do?)

If we weren’t artificially limited in this discussion to IaaS only, it would have been interesting to compare this to SaaS providers like Google or Salesforce or better yet folks like Zynga…or even add supporting examples like Heroku (who run atop AWS but are now a part of SalesForce o_O)

I found many of the points raised in the discussion intriguing and good food for thought but I think that if we’re talking about IaaS — and we leave out AWS which directly contradicts the model proposed — the logic breaks almost instantly…unless we change the title to “Don’t run your own data center if you’re a [small] public IaaS and need to compete with AWS.”

Interested in your views…


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  1. Dmitri Kalintsev
    January 10th, 2012 at 02:05 | #1

    > “Don’t run your own data center if you’re a [small] public IaaS and need to compete with AWS.”

    A bit off-topic, but don’t small public IaaS providers have better things to do then directly compete with AWS? By “compete” I mean “go after those customers for whom AWS is a 90-100% fit”.

    • January 10th, 2012 at 02:13 | #2

      That’s a totally fair comment.

      My point was that by generically discussing IaaS as a whole, leaving out the leader and then suggesting that nobody with the marbles intact would run their own DC…

      …well, I assume you get the point.

      Yours, however, is a reasonable one. Outsourcing your DC (as many have) allows focusing on core competencies — but it can be a fickle mistress…


      • Dmitri Kalintsev
        January 10th, 2012 at 02:28 | #3

        > get the point

        Yes. Quite often it is people forgetting to clarify what they mean when they are saying things like “public”, “cloud”, “IaaS”, etc.

        Regarding the original article, I left a comment there mentioning pre-fabricated modular DC architectures, like BladeRoom, which may be a something of a middle ground for an aspiring service provider with the desire for tighter control over their facilities but no fat purse to pay for a full-blown DC upfront.

  2. Allen Baranov
    January 10th, 2012 at 03:27 | #4

    This sounds like one of those religious debates which has no clear cut answer like Linux verus Windows.

    Or more like Apple vs Wintel. (Totally controlled perfection versus open and best of breed)

    Amazon started back when there were no large Internet hosting providers. And certainly none that would be able to give Amazon what they needed at the price they were willing to pay. Remember that Amazon had to compete on price initially. The only way they could do this is to run their own datacenter and watch the costs themselves.

    Zynga is an interesting example – they ran their own servers initially. They then moved “to the cloud” which allowed them to scale up easily. They are now (considering?) moving to their own infrastructure again.

    In South Africa we have 2 major (and a few minor) insurance companies who are proud to say that they have “cut out the middle man” and eliminated the need for a broker. Hence saving you money. However, the other companies point out that the money saved goes into advertising and call centers.

    CloudSigma obviously are punting the idea that they are better because they can just swop from one DC to another and have no problems doing so. You do pay a premium for this and you could do the same by hosting with different cloud providers. And pure-play providers could emulate this by running different DCs as totally separate units, moving data from site to site when needed.

    In my mind “Cloud” is less about technology and more about business. Just as software like SCCM and SCOM allow economies of scale to make outsourcing viable, VMs allow DCs to scale similarly and allow for “cloud”. The point is that the decision is always: “What works for your business?” (and in the case of Zynga “What works for your business, right now?”)

  3. Ewan Leith
    January 10th, 2012 at 04:27 | #5

    The interesting data centre designs being produced by Facebook, AWS, Microsoft and so on are being turned into competitive advantages by those organisations (e.g. reduced cooling is delivering improved operating margins), but I’m not sure it’s allowing those people to do anything that they couldn’t do before, just the same things at a lower cost.

    If I were going to compete with AWS as a public IaaS provider (which would be daft), I’d be looking at opening multiple data centres is regions where AWS customers are currently under-served, and perhaps not having physical DC ownership would be a needed step for that.

    AWS currently runs in 8 regions, but there’s huge areas where they have little or no presence, and if you were able to find suitable DC operators in those regions, you might be able to leap-frog AWS and get into areas where they don’t currently have an operation (current map here http://aws.amazon.com/about-aws/globalinfrastructure/ )

    If you launched a public IaaS with a similar price and services model to AWS in areas like Beijing, Moscow, Pretoria and Dubai, before AWS got there, you’d have an opportunity to become the defacto standard of those regions, and then use that base to expand west into Europe, avoiding the Amazon strong hold of Virginia.

    Whether or not it would work, I don’t know, but I’m pretty sure you couldn’t do it without giving up ownership of your data centre.

    • Robert Jenkins
      January 11th, 2012 at 04:43 | #6

      I’d agree that there is a lot of innovation and benefit to be had from progress at the rack level, we do deploy our own tailored racks for our clouds. The cost of power and space is however a very small percentage of cost base. Even halving such costs would not have a great impact compared with innovating on our dynamic pricing and recourse allocation engines for example.

      In the US our west coast facility is hosted at SwitchNAP http://www.switchnap.com . We benefit from their innovation and expertise. A data centre like that far exceeds the quality of an AWS one so customers benefit also.

      Best wishes,


  4. Robert Jenkins
    January 11th, 2012 at 03:43 | #7

    I am glad to see the article sparked some debate. I think you can boil our position down to this, surgeon’s shouldn’t run hospitals.

    The same argument and reason why IaaS makes sense for our customers is why running a physical data centre doesn’t make sense for public cloud providers. This isn’t about scale but business focus. Companies like Zynga, Netflix etc. don’t use IaaS because they lack scale, they do it in order to focus and innovate on their core strengths. We argue the same point regarding IaaS cloud providers and physical data centres. This argument holds as long as there is competition in the data centre marketplace thereby allowing the IaaS provider to control costs and focus their capital investment on product innovation.

    I would agree that you can extend this business focused approach to all layers of the cloud, there is a strong argument for PaaS and SaaS providers to build out on IaaS for example.

    Best Wishes,


  1. January 19th, 2012 at 15:02 | #1