The business landscape has undergone a transformative shift in the last few years, marked by a surge in remote work culture, the advancement of big data technologies, and the growth of Software as a Service (SaaS) solutions. This period has also witnessed a notable trend: The migration of workloads and applications to the cloud. Particularly, there has been a remarkable rise in the demand for managed cloud hosting – a market projected to grow from $46.50 billion in 2019 to $129.26 billion by 2027, showcasing a compound annual growth rate of 13.8%.

Companies reliant on hyperscalers, such as Amazon and Microsoft, are now veering toward a more customized approach to cloud services. This shift raises fundamental questions about the nature of different cloud infrastructures and why businesses are moving away from standard public cloud models.

Not All Clouds Are Created Equal

Let’s start with public clouds. Public cloud services are hosted by third-party providers, offering resources such as storage, applications, and services over the internet. This means that companies can avoid the costly and time-consuming process of having private servers on their premises with a dedicated IT team running operations. These services are sold by cloud service providers (CSPs) such as Amazon Web Services (AWS), Microsoft Azure, and Google Cloud. 

On the other side, there are private clouds. Private clouds are dedicated, bespoke environments used exclusively by a single organization and its IT team. While more costly on a smaller scale, the private cloud offers companies far more control over their data and applications, improving both performance and security. There is also a tipping point at which the larger-scale infrastructures become more cost-effective on private cloud dedicated hardware. This is a crucial consideration for larger platforms, which can become notoriously expensive when hosted on public cloud environments.

Hybrid clouds combine elements of both public and private clouds, providing businesses with the flexibility, scalability, and cost-effectiveness of public cloud while also maintaining the control, security, and compliance of private cloud.

Drawbacks of Public Cloud and the Rising Concern of Cloud Concentration

Despite the initial allure of public cloud services, a recent IDC survey indicates that their popularity is waning. The survey shows a consistent trend of data repatriation, with around 70% to 80% of companies retrieving at least some data from public clouds annually. In short, issues such as hidden costs, shared hardware risks, and the security concerns associated with storing sensitive data in public environments have led to a shift. 

Cloud concentration poses a significant risk for organizations reliant on public cloud hosting. Sharing hardware resources among multiple entities presents security and operational challenges, prompting a reevaluation of data storage options. In addition, popular private cloud services can be difficult to exit. Enterprises often face vendor lock-in challenges, which pose significant security and financial risks.

Could Owned Data Centers Be a Viable Alternative?

Although owned data centers might seem appealing, they present their own set of challenges. The considerable costs associated with infrastructure setup and maintenance, combined with the need for a specialized in-house team, makes this option inaccessible for many, especially small and medium-sized enterprises (SMEs) lacking extensive IT resources and expertise.

Managed Hosting: Bridging the Gap

Enter managed hosting – a tailored cloud solution that combines dedicated servers and hardware with external management by service providers. This approach offers an array of value-added services, including backup and disaster recovery, load balancing, security measures, physical data center security, maintenance, and continuous monitoring.

Managed hosting grants businesses peace of mind, ensuring that their cloud infrastructure is managed efficiently and adheres to the highest regulatory and compliance standards. Crucially, it eliminates the necessity for in-house cloud expertise, which is difficult to source in light of the current IT skills gap. The approach lets companies focus on core operations without the intricacies of cloud management.

The Need for a Nuanced Approach

The evolving business landscape demands a more nuanced approach to cloud hosting. Public cloud solutions served as a gateway to digital transformation, but their limitations and risks have galvanized the rise of alternatives such as managed hosting. As companies strive for more control, security, and tailored services, the shift toward managed cloud hosting appears to offer them a blend of flexibility, security, and peace of mind in an increasingly digital world.