The last one out turns off the light

Will cloud services make data centers and IT departments disappear?

Digitization, home office and collaboration tools are driving cloud usage in businesses. But will they make the traditional data center redundant? It's about time to develop a strategy for your own infrastructure and IT department. 


What had been discussed on a purely theoretical level for a long time has become reality virtually overnight: Digital solutions for remote working and video conferencing became indispensable tools for remain operational and in touch with. As a result, our clients are now equipped with state-of-the-art collaboration tools, and mobile working has become the new normal. 

Due to the frantic roll-out, however, a lot of companies failed to implement comprehensive protection measures. There is therefore a great need for improving the current security measures. This includes, for example, state-of-the art zero trust solutions, which constantly verify both the users and the devices used in a corporate network. In addition, they implement a rigorous assignment of rights and network segmentation. 

Security is the main challenge

A lot of enterprises, however, are overwhelmed by this development. According to the latest Campana & Schott  Future IT Report, 64 percent of respondents see the legal requirements for data protection and data security as their greatest challenge in the digital transformation process. As many as 81 percent of participants even mention increased customer requirements in this area. 

And migration to the cloud complicates the situation further, Because, even though various services and applications are now cloud-based, there is usually still a separate data center with legacy applications for hybrid operation or for compliance reasons. According to the Future IT Report, for example, more than 60 percent of companies are struggling with a complex infrastructure that has developed over the years. After all, the once homogeneous on-premise structure is busy disintegrating with each additional cloud service. 

What needs to be done now?

It is a frequent belief among business departments that IT management will be simplified by "outsourcing services". The opposite is usually true, however: The more commodity services you use, the greater the effort for their operation. Each service provides its own management tool. This leaves the IT department less and less time to look at innovations and take care of the requirements of the business departments. How can the situation be approached?  

As a first step, it is important to develop a basic strategy and define which applications and services should be outsourced to the cloud, which are to remain with the company's own data center and which are to be operated as hybrid solutions. In this process, organizations should also abandon legacy investments and view them as ‘ sunk cost ’. Even if a lot of money was initially invested in certain technologies, this does not necessarily mean that you should continue with them. In the context of this initial analysis, it is critical to assess which investments to pursue further – and which not.   

Another decision criterion in addition to flexibility, scalability and fail-safety is sustainability. The 2021 Future IT Report, for example, shows that more than half of businesses already have sustainability goals for their IT. These are often easier to reach by moving services to the cloud. Because cloud data centers have high sustainability goals that they are required to reach and maintain as a result of pressure from their customers as well as compliance requirements. State-of-the-art cloud hyperscale data centers, for instance, have a power usage effectiveness of less than 1.25–whereas traditional data centers have an index of 2. Working with cloud data centers enables organizations to better achieve their sustainability goals than by operating their own data center.  


10 steps for a future-proof strategy

Organizations should put their entire IT to the test to be able to make informed decisions: 

Set the strategic direction towards cloud sourcing.

To do this, it is necessary to first define the direction of the cloud strategy, sourcing strategy and align the IT organization. It is important to be aware that the in-house production depth of a company shifts as services are increasingly purchased. The organization then needs develop the relevant cloud management capabilities.

Design a cloud decision tree for the entire in-house data center.

The second step includes a comprehensive analysis as well as a qualitative and quantitative business case including time line. This is important to make sure an actionable road map is developed with decision and investment milestones over the next two to three years.

Start with small projects.

Companies should first migrate simple applications to the cloud allowing the organization to learn from them. 

Expand the capabilities of the organization in a targeted manner.

This includes building up skills in cloud management and agile development methods in particular.

Lay the foundation for a zero-trust approach.

To this end, an enterprise should integrate devices into their identity and access management (IAM) and introduce multi-factor authentication, at least for user accounts with administrator rights.

Create a basis for migration.

This involves identifying the edge IT services that will remain in the company. All other applications are assigned to a planned migration scenario.

Roll-out of the security concept in parallel and one step at a time.

Each step along the way needs to be coordinated with the zero-trust approach.

Expand cloud governance and management one step at a time.

This requires informing all stakeholders at an early stage.

Adjust the IT organization to the new sourcing strategy.

Based on the change in in-house production depth, appropriate services catalogs need to be created and the service management organization expanded. This also includes re-allocating expenses from mere operational tasks to service and demand management.

Actively involve the IT workforce in the change process.

Failure to do so may create resistance to the stability goals of IT operations and the transformation process. This is why a holistic change management approach is so important.


Within just a few weeks, the pandemic has thwarted the plans of many enterprises. This is why now is the time for them to reorganize and, in the process, fundamentally rethink their IT strategy. Since cloud services prove to be a future-proof investment due to their high flexibility, scalability, reliability and sustainability, enterprises should pursue a step-by-step approach towards migration.  
And yet, the 10-point plan also makes it clear: In-house data centers will be scaled down considerably. The lamps in data centers will go out faster than expected only two years ago. But the light in IT will stay on.   


Sven Kreimendahl

Associate Partner | IT Strategy & IT Transformation

Kai Wiesmann

Senior Manager | Transformation of IT

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Cloud & Digital Platforms
Strategic IT Management