Kicking Data Centers To The Curb

The number of corporate data centers is about to peak as businesses look to such alternatives as co-location and service providers as a way to control costs and focus on business issues instead of IT infrastructures, according to solution providers and analysts.

For one company, that peak has already passed.

DirectBuy, a Merrillville, Ind.-based membership-based consumer buying club, has over the past 12 months closed its two data centers and consolidated its IT operations to a co-location facility with the help of Komodo Cloud, a solution provider specializing in IT transformation and cloud services.

When Armin Roeseler took over as CIO of DirectBuy in December 2013, he found himself dealing with two data centers with no synergy between them. At the same time, DirectBuy was preparing a massive business transformation to better serve its customer base, a transformation that would not work with its existing IT infrastructure.

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Roeseler told CRN that about 5 percent of the sales of DirectBuy and its seven franchisees came via online purchases in 2008, but that figure had grown to about 60 percent by 2013. At the same time, foot traffic to the franchisees fell 50 percent.

"That big shift was thanks to Amazon," he said. "Consumers were getting used to purchasing from their bedrooms on their iPads."

[Related: If You Build It: The Rise Of The Mega Data Center]

At the same time, DirectBuy was moving from a sales model that included signing up customers via 90-minute face-to-face presentations to offering free 30-day trial memberships with access to the company's entire portfolio of products, Roeseler said.

"That really cemented my belief that I needed to make major changes," he said. "We needed to consolidate our data centers."

Thanks to the past 10 to 15 years of evolution of the cloud business model, moving DirectBuy's IT infrastructure to the cloud was a no-brainer, especially given the company's then-current infrastructure issues, Roeseler said.

"Our infrastructure was aging," he said. "About 17 percent of the infrastructure was already unsupported. If we needed parts, we went to eBay. Forty-five percent of our equipment was five years old or older and out of warranty."

Unfortunately, Roeseler's upgrade budget had no room for refreshing the IT. Meanwhile, he said, his company was spending $1.2 million per year for hosting and support. The cost of refreshing DirectBuy's end-of-life equipment was estimated to be $2.5 million.

While the cost of a refresh was high, it was not the only factor in the decision to get rid of DirectBuy's data centers.

"The business value of the cloud is it offloads the need to run my own infrastructure," Roeseler said. "In this day and age, running our infrastructure is a distraction. I want to focus on running the business. Running the infrastructure should not be a core competency."

Roeseler called on Los Angeles-based Komodo Cloud for help. The four principals of Komodo Cloud had all worked for Roeseler in the past, and so he knew them and their capabilities well. "When I needed the expertise to move into the cloud, they were the first people I called," he said.

That's not to say Roeseler didn't do his due diligence. "We had three competing proposals," he said. "We wanted to be clean. But Komodo had the best quote. And I knew they could do it. To me, these guys are the A-Team."

Next: Big-Time Savings

Komodo Cloud came up with a proposal that not only saved the $2.5 million in IT refresh, but cut the annual hosting and support cost by about half, Roeseler said.

"I put the numbers together for a presentation to the board of directors," he said. "It was the easiest presentation I ever made to the board even though I had to ask for a temporary bump in the budget to run the old infrastructure during the migration."

Eric Hughes, managing partner at Los Angeles-based Komodo Cloud, said his company was with DirectBuy from the moment it started looking at moving from its own data centers to the cloud.

"We were the boots on the ground when looking at the infrastructure and how to deploy," Hughes told CRN.

DirectBuy was looking at the economics of its data center, along with its speed to market and the ability to increase performance for internal users, Web users and franchises, and the cloud proved the better alternative, Hughes said.

"It all comes down to, why buy the cow when I can buy the milk," he said. "The original infrastructure was an old cow. We came in, and worked hand-in-hand with them on their technology requirements and their road map."

Despite having an IT infrastructure that was not virtualized, Komodo Cloud was able to help migrate DirectBuy's IT infrastructure to cloud services provider Peak in only 60 days, Roeseler said.

"Komodo acts as a cloud broker for me," he said. "I don't interact with Peak. But I see the Komodo-Peak relationship as awesome. We originally underestimated the amount of storage we needed. Komodo contacted Peak, and in 15 minutes we had it."

DirectBuy's original 100-Mbit data pipe was not enough to handle the migration, but within one day Peak, working with Komodo, provided an additional 50-Mbit connection on a pay-as-you-go basis, Roeseler said.

Komodo was also irreplaceable when it came to DirectBuy's application migration.

"When we moved the apps, they didn't play well in the new distributed environment," he said. "Komodo could have said, 'Armin, getting the apps ready is your job.' But Komodo dug in, looked at our apps, and helped make them work. We couldn't have done it without them."

Roeseler has recommended Komodo Cloud to his peers, and even did a presentation to 8,000 CIOs at the Gartner Symposium in October.

"I had many discussions with my peers on our move to the cloud," he said. "Only then did I really appreciate what Komodo did. A lot of CIOs are still stuck in discussions about what to do. I tell them I had discussions with the board, and got started with the migration in 20 days. And we finished 60 days later."

This article originally appeared as an exclusive on the CRN Tech News App for iOS and Windows 8.