The term “hyperscale data center” has seen over 200% growth in the past two years, according to Google Trends. This isn’t surprising, as it reflects the rapid growth of the digital infrastructure industry, with hyperscalers providing the groundwork and services powering that growth. The word hyperscaler refers to major cloud providers like AWS, Microsoft Azure and Google Cloud. These providers have become a go-to solution for companies from all industries due to the scalable infrastructure and variety in cloud computing services that they offer.
Understanding Hyperscalers
Made up of millions of global physical servers, hyperscalers are known for their capacity to maintain high performance while handling large workloads. This capability lets businesses deploy and manage large-scale applications and services without worrying about infrastructure limitations.
In terms of ideal users, hyperscalers are especially appealing for startups and small businesses because these providers offer access to advanced technologies like artificial intelligence. Plus, hyperscalers allow clients to scale resources up or down quickly with ease in response to fluctuating demand while still maintaining low-latency access for a global audience of users.
Why Enterprises are Moving Away from Hyperscalers
Over the last couple of years, hyperscalers have cemented themselves as major players in the digital infrastructure industry. However, some enterprises are now evaluating the benefits of moving away from these providers and towards private cloud infrastructure, a move dubbed cloud repatriation. Reasons for this shift, further outlined below, include ingress/egress costs, lack of control, workload suitability, and security.
Rising Costs
Cost-efficiency was initially a draw that led many to rely on hyperscalers, but it has now become a factor driving enterprises away from these providers due to increasing expenses. As reported by InfoWorld, a study conducted by Citrix in 2024 found that more than 43% of IT leaders saw unexpectedly high costs when moving on-premises data and applications to the cloud. These data egress fees and other hidden costs associated with hyperscalers create long-term expenses that can become a burden, particularly for small to medium enterprises.
Vendor Lock-In
Using hyperscalers can lead to a phenomenon called vendor lock-in, which happens when clients become overly dependent on a vendor’s services. Vendor lock-in is caused by the provider presenting limited interoperability with other systems and/or the user data and workflow being tightly integrated into the provider’s system. These factors can lead to high costs and disruption when switching to an alternate solution and overall, they make it difficult to migrate away from hyperscalers. This ongoing reliance on the provider is not ideal for many enterprises, since it limits the degree of control they have over their data.
Lack of Customization
In a similar vein to that lack of control, the standardized solutions that hyperscalers offer lead to limitations for clients. The size and reach that hyperscalers promise is a draw for many, but it can become a drawback depending on an enterprise’s specific goals. Because hyperscalers have a wide range of clients and users, customization potential when using these providers is limited. Enterprises seeking tailored solutions to meet specific business needs are likely better off with a provider that presents more options for client control over infrastructure, data management, and other elements.
Data Security Concerns
Due to their sizes, hyperscalers take significant reliability and redundancy measures to ensure smooth performance. However, the use of these providers comes with risk, often because of their sizes. These large-scale multi-tenant environments present an increased attack surface that can spell out danger for clients looking to protect their enterprises. In addition, data breaches due to misconfigurations and vulnerabilities on the provider’s part can compound that risk. In 2019, 2020, and 2021, major data breaches were recorded at hyperscalers, leaving private data exposed. This becomes especially important when control over data security and compliance is an organizational priority. When that is the case, enterprises may be more inclined to opt for private and/or local solutions.
The Rise of Hybrid IT Solutions
Hybrid IT solutions are increasing in popularity for enterprises that are seeking the best of both worlds. By combining public and private cloud solutions, hybrid models are flexible and efficient ways to tailor an enterprise’s IT infrastructure to its specific needs. This approach leverages the strengths of public and private cloud services while mitigating some of the limits and risks, putting the enterprise back in control when it comes to cost management and security.
For clients that are seeking solutions outside of public cloud offerings, alternative cloud providers are an ideal option. These providers have lower overhead costs and more competitive pricing models than most hyperscalers while also offering increased customization, enhanced support, and more straightforward operations. The role of alternative cloud providers is growing more essential in the cloud computing industry, as they present enterprises with the opportunity to optimize their cloud strategies to fit their needs.
The Future of Cloud Computing
As the cloud computing landscape evolves, industry trends will likely continue being shaped by the needs of enterprises. Hyperscalers will always play a major role in the industry and the marketplace, but alternative providers are increasingly becoming a popular option. Their coexistence with larger hyperscalers will likely progress; in fact, cases of hyperscalers contracting with mid-tier colocation providers have become more frequent since this arrangement gives hyperscalers the flexibility to quickly meet growing demand without the immediate need to build their own facilities.
For enterprises, assessing cloud needs often depends on priorities. Cost considerations, performance issues, limitations on customization and lack of control over data/applications are a few factors that may drive cloud migration and repatriation efforts, based on the organization’s overall goals. Ultimately, workloads should be strategically placed where they perform best and bring the most value to the enterprise, so planning and detailed workload assessment is the first step when making these decisions.
Diversifying your cloud portfolio can enhance resilience and empower your enterprise to provide improved customer solutions while optimizing costs. There is no time like the present to reassess your enterprise’s cloud approach and evolve your strategy to keep up with the ever-changing digital landscape.
By Jeff Collins, Hivelocity Senior Product Manager