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Five Reasons Companies Retain Their Data Centers

Five Reasons Companies Retain Their Data Centers

Some companies are shying away from data centers and migrating their computing to cloud services while maintaining critical IT assets on-premises.

The cloud now hosts all the hardware and software that was within the data center. As most companies continue to retain their data centers, many enterprise IT data center budgets and server footprints are on the decline.

However, we still have over 70 percent of enterprise workloads running in corporate data centers.

Colocation data centers currently host close to 20 percent of systems and 9 percent of systems in the cloud. DataSite is a colocation data center in Orlando that aims to help their clients in their long term and short term computing goals

The move to the cloud is more aggressive in companies and now almost all companies have some type of in-house computing.

However, there must be an explainable reason why companies are retaining their data centers. Let’s dive into it.

Five Reasons Companies Retain Their Data Centers

Protect intellectual property

Many in the business applications sector, mostly cloud-based vendors run multi-tenant computing models. They have hundreds to thousands of clients that share a common business application.

This can either be ERP, CRM, sales, etc. They have to upgrade the application systems continuously which can either be quarterly or annually, depending on how many enhancement requests they receive from clients.

While companies can sometimes be allowed to customize the caveat is that they must share their new custom code development with other clients.

This is not a safe and acceptable model for companies that develop custom applications that are restrictive and contributory to competitive advantage. Therefore, they prefer to keep these critical systems in-house for the survival of their company or organization.

High IT security and governance

With the adoption of cloud-based applications and mobile devices, companies have had to change the technology they use, especially for security and compliance. Industries like healthcare, insurance, and finance blog write for us have to establish high-security models due to client confidentiality.

With users accessing more networks from different locations and devices, maintaining security is worth taking into account to minimize potential data breach risks.

This is why most industry examiners ask about IT security. Whenever the use of a third-party cloud-based system comes up you will be asked to let them take a look at the cloud provider’s third-party audit report.

However, not every cloud provider conducts an outside audit of its IT since formal audits are quite expensive.

They might, therefore, not have an independent third-party audit that you can share. You will then end up receiving a lower IT security rating from your industry examiner since you might have exposed yourself to more risk.

Companies have a right to worry about cloud security and governance leading to the reason why many organizations and companies using cloud services prefer colocation.

Colocation allows a company to set up its servers, storage and network elements and maintain direct control over its systems. In-house teams have to stay on top of shifting hardware and software trends, especially when it comes to network security and compliance.

Better control

One risk that companies fear is giving up control of their data to a third-party service provider using different data centers in remote places.

Whenever the systems are down or your network’s security is breached, for example, because of a malware invasion, this raises a lot of questions that can be quite difficult to answer.

Data center outages can be quite frightening since server downtime leads to high financial costs and might cost a company millions for every minute their network and data is unavailable.

Apart from high financial costs, there is reduced productivity, loss of brand credibility, lost opportunities, and potential data loss that can affect a business for years to come.

Most companies hesitate from involving third-parties and giving them access to all of their systems and data due to this. With direct access and management of your mission-critical IT assets and companies have better control.

This is why most companies prefer to retain their data centers to lower the risks in the event of a disaster. It’s also safer since you don’t have to store your data next to someone else’s.

Push Back

By retaining their data centers and having full control, companies can determine how to handle their data. Those with special access like the data center manager should be able to work internally without any limitations.

This involves tasks like moving applications from the cloud back internally when the need arises, for example, if the applications don’t perform as expected.

The cost of maintaining data can also be high, especially where major cloud providers are involved and one has to decide what has to be removed or returned to the data center. Even if the services are good the rising costs can be pretty high and discouraging.

IT support and internal skill sets

Many IT staff will attest to how difficult it is to call a cloud provider for support who is worlds apart for assistance compared to doing so to someone just across the hall or building.

Some of the providers use automated phones or chat systems which can be very unreliable. Companies that need their systems to run 24/7 like hotel and airline reservations require rapid response due to the nature of their businesses.

With fine-tuned systems for speed and resiliency with the help of seasoned IT experts on their own IT staffs, they can operate without worry. Most of the IT staff knows the ins and outs of their applications compared to a cloud-based service.

Such companies would prefer to either retain systems in their own data centers or use the cloud with their staff managing these systems.

A cloud-based helpdesk has lots of customers to attend to and the level of service might not be 100%. With the experts on the ground, troubleshooting issues is much faster.


While the cloud is becoming more common, traditional enterprise data centers and colocation facilities won’t be dismissed anytime soon. Yes, some companies run an on-premises data center and others do not. But if you want to protect what you’ve worked hard to build you need to protect your data against cybersecurity.

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