For the last several months, DCK explored the various ways colocation providers are positionig themselves to take advantage of the hybrid cloud trend. Here's a summary of the key learnings from this series. Be sure to also read previous articles from this series, which zero in on the hybrid strategies of QTS, Equinix, Cologix, CyrusOne, Evoque, Cyxtera, DataBank, Flexential, and Digital Realty.
How can colocation providers remain competitive in a world where businesses increasingly expect the ability to integrate colocated infrastructure into hybrid cloud architectures?
The answer, it turns out, varies widely from provider to provider. As we learned in a series of interviews with colo companies about their strategies for thriving in a hybrid-centric world, data center operators’ hybrid initiatives diverge quite a bit. This points to the nascency of this particular intersection between colocation and public clouds, where at this point there appear to be more questions than answers.
Some data center providers are focusing on connectivity solutions that allow their customers to optimize network performance for workloads that span their colo facilities and the public cloud. Others are investing in management platforms that allow users to manage colocated workloads using the same type of API-centric approaches they would use in the public cloud. Others have chosen to put managed services at the heart of hybrid strategy.
Here are the key takeaways from DCK’s conversations over the last several months with some of the leading colocation providers about their strategies for going after the opportunity presented by the hybrid cloud trend.
The Shift From Public Cloud to Hybrid Via Colocation
First and foremost, all colocation providers agree that catering to customers who want to build hybrid architectures is key to winning business from enterprises that have come to realize that the public cloud alone does not meet their needs.
Jacob Smith, VP of bare metal at Equinix, said Equinix was seeing strong growth from “cloud natives going hybrid.” In other words, many companies that built their applications in the public cloud from the beginning now see a benefit in having a blend of cloud resources and colocated infrastructure they can control.
Interestingly, colocation providers were less concerned about their long-standing customers deciding to move some workloads out of colocation facilities and into public clouds, which would leave them with a hybrid strategy. The consensus is that the flow is generally in the opposite direction, with companies shifting public cloud investments into a hybrid model that involves colocation.
Interconnection as a Cornerstone of Hybrid Cloud
A majority of colocation providers we spoke to pointed to their connectivity offerings as at least one key component of their strategy for meeting the needs of customers who want to invest in hybrid architectures.
QTS has built an entire interconnection platform, Switchboard, dedicated in part to this use case. CyrusOne COO John Hatem told us, “The biggest thing we offer for hybrid cloud is interconnect.”
Chris Sharp, CTO at Digital Realty, which recently announced a major new initiative and partnership around interconnection, said that “interconnection is foundational” for hybrid cloud.
That’s not surprising, of course. Robust interconnection is a cornerstone of colocation providers’ value proposition and a prerequisite for hybrid cloud. What has changed, though, is that interconnection with public cloud platforms has risen sharply in importance among all other types of interconnection companies may use inside colocation facilities.
Mixed Feelings about Managed Services
Colocation providers’ opinions on the role of managed services in hybrid cloud differ widely.
Some have invested heavily in the ability to offer managed design and support services to customers building hybrid environments. Evoque, for example, recently acquired a cloud consulting firm, Foghorn, just for this purpose. DataBank has “an entire integration and migration team dedicated to hybrid cloud.”
Others, however, don’t view hybrid-specific managed services as a valuable investment at all. As Sean Baillie, executive VP for connectivity at QTS, put it, “We don't do managed services, and we're not going to.”
New Players Innovate to Differentiate
The difference in their views on managed services may reflect the fact that smaller and/or younger companies look at having a broader set of offerings as a way to differentiate from the established players.
Most of the big colos focus on connectivity and data center real estate, letting customers build whatever types of hybrid environments they want.
The smaller or newer colocation providers tend to emphasize differentiated hybrid offerings more. Cyxtera, founded in 2017, has built custom APIs customers can use to manage workloads running within its data centers. Evoque, formed in 2018, has invested in consulting services.
The larger colos have an inherent advantage in the hybrid cloud market, because more data centers and bigger, established interconnection ecosystems translate to more agility when building hybrid environments. They also face less pressure than the newer providers to excel at the hybrid game as a way to build their businesses.
The Future of Colocation and Hybrid Cloud
Hybrid cloud strategies of all of the collocation providers are still taking shape. We continue to see major new announcements on this front. When talking to colocation executives, one gets a sense that they’re still in experimentation mode, not yet sure exactly which parts of their hybrid strategies will prove most effective.
So, expect this story to continue as we watch the intersection between the colocation industry and hybrid cloud.