Build? Buy? Another Perspective on Data Center Ownership

Build? Buy? Host? It’s not a new debate for managed service providers (MSPs) and IT service providers. MSPmentor research has found most providers have opted out of running their own data centers, with the exception of very large service providers. What’s more, many MSPs say if they were starting over today they’d start as a born-in-the-cloud company.

For another perspective on this question, MSPmentor recently caught up with executives from Venyu, a company known for its data centers, but also a provider of cloud computing, managed hosting, and other services. And guess what? They pretty much agree with what we’ve found. Here’s what they told us.

The trouble with hardware ownership

“A lot of organizations are realizing that it’s a detriment to own the hardware,” Brian Vandegrift, EVP of sales and innovation told MSPmentor. “It requires them to be making decisions about maintenance cycles, doing bakoffs, making buying decisions. All of that pulls IT, and MSPs, away from core mission of their business.”

Maybe that’s why Venyu saw an uptick in business from MSPs — 30 percent year-over-year growth — last year, Vandegrift told me.

“We are their data center. They have their own cloud monitoring in our data center facilities. We also have our own cloud services,” he said. Venyu’s biggest competitor is customers trying to own the infrastructure themselves.

TCO

In that case “it always comes back to a total cost of ownership discussion,” he told me. “What is the best use of their talent that they have on staff?”

This shift to outsourced infrastructure begged another question for me. What does it mean for vendor sales and reseller sales that have typically focused on enterprise customers?

“You are finally seeing a lot of movement from the big hardware providers,” William Sellers, senior innovation engineer at Venyu told me. “They are all working more closely with [data center providers]…They are letting their sales force embrace the cloud instead of fighting it.

Vendor response

“A lot of people just don’t want to own the hardware anymore. I also see them developing products for smaller and smaller customers because now they are seeing people who don’t want to buy the entry level hardware will just do the cloud.”

That shift is driving the push to hyperconverged infrastructure, Sellers told me, as big hardware vendors are looking to consolidate compute, networking and storage in a single box and sell it at a lower price to smaller buyers.

Advice for MSPs shopping for cloud providers

For MSPs putting their services in the cloud, Venyu has the following advice: look at the service level agreements and terms of service

“Not all clouds are created equal,” Sellers said.

“So few of our customers dig down to the terms of service and the SLAs that are being provided,” he said. “You need a robust facility with redundancy in place.”