Pulling the plug on small in-house data centers

As IT workers with key skills grow scarce and the costs of upgrading data centers rise, many CIOs are replacing in-house ops with cloud-based services.

Virtualization and cloud services are making it easier for companies to shift IT infrastructure operations to service providers, and that is exactly what many organizations are doing.

The trend is most prevalent among small and midsize companies, many of which are shutting down internal systems and shifting IT workloads to external providers because they want to save money and because they're concerned that it will become difficult to find people with the skills necessary to run data centers.

Large public- and private-sector organizations have been consolidating data centers for years by better optimizing in-house operations; the federal government, for example, is shutting down hundreds of data centers. But most of those enterprises only use cloud services at the margins.

"We are definitely seeing a trend away from in-house data centers toward external data centers, external provisioning," said Gartner analyst Jon Hardcastle.

Insurer OneAmerica is transferring its data center operations to a service provider because it's concerned that one day it won't be able to replace the experts who run its vital systems, said CIO Gene Berry.

By June, the company expects to complete the transfer of all of its IT services to T Systems North America, while cutting the size of its internal data center to 2,000 square feet from 25,000 square feet. The in-house facility will mostly support networking and will be managed by T Systems.

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