Thanks to fears about privacy, the NSA debacle, the Patriot Act, and various data sovereignty concerns around the world, there is a strong need for some organizations to keep data locally.
The challenge with cloud is that scale matters – setting up a data center in Iceland, Canada, etc. simply isn’t as economical to compete with the larger data centers that service the world.
Commitment to a location is also a massive capital investment – Microsoft, for example, just invested in building a Dutch data center at a cost of $2.7 billion for a single location!
Culture, laws and local concerns are having an impact on cloud. Concerns about security, privacy and data sovereignty are not going away and organizations such as governments, health care providers, banks, utilities, etc. are expressing the need for a local option before fully embracing the cloud.
There are also technical reasons why local data centers are potentially better – the primary one being reduced latency. While less of an issue in North America, in countries in Asia going through congested pipes across borders can be a significant drag on performance.
For the major cloud players (Microsoft, IBM, Amazon, etc.) there seems to be a recognition that local is becoming a competitive advantage:
- Microsoft today just announced that they would allow foreign customers to store their data on non-US servers.
- Microsoft has announced its Cloud OS Network. The Cloud OS Network is a partnership with existing infrastructure partners to provide essentially a local cloud modeled after the same technology running in Windows Azure.
- Microsoft licensed its technology to an ISP in China to provide local cloud services to one of the largest global markets.
- IBM is now promoting its local data centers as a key advantage to customers wanting to keep their data local.
- Amazon is also now entering the Chinese market, again using local telecom partners.
As the concerns around privacy, data sovereignty and local service continue to be a top concern especially outside the United States, a key competitive advantage will be how data can be kept local while still maintaining the advantages of computing on demand, low cost, etc. provided by the massive scale of the cloud.