The Rise of Hybrid Cloud

Data Center News

By Adriaan Oosthoek, Chairman Portus Data Centers

Date: March 2024

Driving Demand for Regional and Edge Data Centers

For many reasons, including cost, access, control, security and regulatory concerns, enterprises are increasingly turning to Hybrid Cloud solutions to meet their diverse computing needs. This strategic approach combines the flexibility and scalability of public cloud services with the lower cost, better control and security of a private infrastructure. As businesses embrace hybrid cloud models, demand for regional and edge datacenter facilities is growing. Let’s delve into why this trend is emerging and its implications for the data center industry.

Hybrid cloud environments offer businesses the best of both worlds. They enable organizations to leverage the agility and flexibility of public cloud platforms for certain workloads while keeping stable workloads, sensitive data and mission-critical applications in private clouds or servers. This approach provides flexibility and scalability but also control over data management and regulatory compliance and enables organizations to combine the best features of public cloud and dedicated private infrastructure set-ups.

So what does the increase in hybrid and private cloud adoption mean for data centers?

Data Center concentration or diversification

Data centers in Europe, and across the world, have tended to concentrate in certain cities due to initial network constraints and concentration points when the industry started in the late nineties. In Europe the phrase FLAP was coined many years ago: Frankfurt, London, Amsterdam and Paris. Whilst cities like Berlin, Dublin and Madrid have also become large data center hubs, the landscape is still extremely concentrated.

However, this is starting to change as IT architecture developments, scarcity of land and power and logistics drive increased demand for IT infrastructure housing closer to end users. Whilst there are a lot of enterprises in the ‘extended FLAP’ locations, there are far more enterprises and other organizations that are located elsewhere. Looking at GDP output for example, Frankfurt, whilst boasting the largest concentration of data centers in Europe, only comes in 4th place in terms of GDP output in Germany – at about 50% of the GDP of either Munich or Hamburg.

As enterprises adopt Hybrid Cloud setups, they are increasingly looking for data centers that are near them, avoiding the expensive, constrained and often far away data center locations of the FLAP. This is particularly true in Germany as its GDP is very distributed across the country.

Regional data centers have many functions. They serve as intermediary hubs between centralized cloud regions and local edge locations. They offer low-latency connectivity and data processing capabilities closer to end-users, making them ideal for applications requiring real-time responsiveness and high-bandwidth requirements. By strategically placing their IT infrastructure in data centers that are in key regional geographic locations, enterprises can reduce latency and improve the overall performance of their Hybrid Cloud environments as well as have greater control and a more cost-effective solution.

Edge data centers, such as those owned by
Portus Data Centers
bring computing resources closer to end-users. These facilities are essential for applications that either generate and transport very large volumes of data or demand ultra-low latency, such as autonomous vehicles, augmented reality, industrial automation, and certain IoT devices and use cases.

Edge data centers enable data processing and analysis to occur locally, minimizing the need to transmit large volumes of data back to centralized clouds. This not only reduces latency but also alleviates bandwidth constraints, reduces network costs and enhances data privacy and security.

The adoption of Hybrid Cloud architectures can therefore be seen to be driving the proliferation of regional and edge data centers. There are several reasons for this:

  1. Private cloud instances often require more direct management by an organization’s IT technicians, and hence organizations want those deployments closer to home for greater ease of access and control resulting in increased performance.
  2. Transmitting large volumes of data is costly and difficult, especially over larger distances. Regional data centers alleviate this burden by reducing the distance the data needs to travel. This optimizes bandwidth utilization and reduces network congestion. Often, even dedicated fiber connections to the regional data center are available at a reasonable cost addressing cost, latency, volume and security concerns.
  3. Regulatory requirements, such as GDPR, mandate strict data sovereignty and compliance standards. Regional data centers allow enterprises to store and process data within specific geographic boundaries, ensuring compliance with local regulations while maintaining data residency requirements.
  4. Distributed data center architectures can enhance resilience and fault tolerance by dispersing workloads across multiple locations. In the event of a network outage or hardware failure at one location, redundant infrastructure set-ups (in diverse edge data centers) should ensure uninterrupted service delivery.
  5. For certain applications like video streaming, online gaming and financial transactions, minimizing latency has become paramount. Regional and edge data centers enable businesses to deliver seamless user experiences by reducing the distance between data processing and end-users.

Regional and Edge data centers play an increasingly important role in enabling enterprises to deploy modern IT architectures that meet their varying requirements. These distributed computing facilities play a crucial role in controlling cost, optimizing performance, ensuring compliance and enhancing the resilience of Hybrid Cloud environments. They also serve to reduce the burden on the areas where data centers are now so very concentrated and which are increasingly congested. The demand for regional data centers is expected to continue to grow for the foreseeable future as enterprises seek highly secure, professionally managed, sustainable housing for their IT infrastructure, in close proximity to their key business locations.

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