Trip back to earth solves a cloud vs. data center debate

When the leader in online deals started to hit the big time, the company realized cloud computing was no longer its best option and began to move into its own data center space.

Cloud computing is not the answer for all companies, and confronting the move from the cloud to a data center migration...

creates questions that don't always have easy answers.

Just ask Harmail Chatha, director of global data center operations for Groupon. He recently fielded questions about how a company can move away from cloud computing at an informal meetup in Silicon Valley, Calif.

"There isn't enough knowledge available about it," Chatha said. For example, he was at DatacenterDynamics Converged in London in November last year, where there wasn't a single session about moving out of the cloud.

"People just assume that if you are a tech company, you know how to run a data center," he said.

Once a company starts to spend $200,000 to $250,000 per month in the cloud, they should look at the other options, according to Chatha. He advised to "run the numbers and talk to some data center providers," adding that the numbers will vary by enterprise.

Some companies may not know how to start comparing cloud versus data center operations, how to move off cloud or how to select a data center provider. Others may feel they lack the necessary talent to run a data center, or may struggle to figure out their power needs.

Nevertheless, "at a certain point of maturity, they just have to pull the trigger," he said.

Groupon's story of growth is not uncommon, Chatha said. Most small companies start out in the cloud, just as Groupon did, because it allows companies to quickly deploy and get to market.

"There are economies of scale once you get bigger," Chatha said of running a data center versus cloud computing.

Groupon began its move out of the cloud in 2011, three years after the online deal website was launched.

"The biggest driver was cost," Chatha said. "It was not economically feasible for us to stay in the cloud."

A motivating factor for some companies to move to the cloud is the ability to pay for it as an operating expense, rather than a capital expense. Today, base rent and utilities payments for colocation space can be treated as Opex, and hardware can be financed and paid as Opex, too, he said.

Groupon's needs are more diverse than Netflix, for example, which has generated headlines about its complete move to Amazon Web Services (AWS). Netflix has its greatest need for storage, Chatha said, while Groupon needs everything, from virtual machine hosts to databases.

Currently, 95% of Groupon's production environment is in data center colocation space, and 5% is with AWS. Chatha wouldn't say exactly where Groupon has its data centers around the world, but said each one of its facilities is at least 1 MW and more than 1,000 square feet.

Recently, RagingWire Data Centers said Groupon has taken 1 MW of power and 5,000 square feet of space in its new CA3 data center in Sacramento, Calif.

In RagingWire's data center, Groupon has a showcase-worthy cage, according to William Dougherty, RagingWire senior vice president and CTO.

The data center's executive briefing room sits 16 feet above the Groupon cage, looking down on the color-coded cables -- which, in addition to adding visual appeal, cuts down on mistakes, Dougherty said.

The greatest challenge was to find a way to meet Groupon's specific power needs to allow for high density and high racks. The company uses a cold aisle containment system and all-white infrastructure in its wholesale space. A Groupon-developed linear programming model optimizes space, power and cooling.

"[Groupon] wanted [their space] all the same, but they have different providers all over the world," Dougherty said.

Groupon runs in active-active mode, with another California data center to serve customers in North America and Latin America.

The company moved into Vantage Data Centers' V3 data center in Santa Clara, Calif., and have expanded twice since 2011.

For companies that don't run infrastructure efficiently, cloud computing often works well versus data center operation. Groupon has the scale and know-how to manage its own data center, plus it has the size to get good prices on hardware purchases, said Vantage COO Chris Yetman.

"They understand their utilization rate very well," he said.

Cloud computing can be attractive to many organizations faced with managing a fleet of servers. If a company can manage its own virtual machines, though, they can get the economy of scale of cloud providers in a data center, Yetman said.

"If you are a few megawatts or more, you can do what [infrastructure as a service providers] are doing without the margin," Yetman said.

Netflix has figured out how to best use AWS with its "bursty" workloads and developing renderings for every device for the most commonly requested films and shows, Yetman said.

Netflix can also make use of lower prices, off-peak "spot instances," while Groupon has a more consistent workload, Yetman said. AWS offers a good console to help customers plan and stack utilization -- something that works for Netflix, but isn't needed by a company such as Groupon.

Robert Gates covers data centers, data center strategies, server technologies, converged and hyper-converged infrastructure and open source operating systems for SearchDataCenter. Follow him on Twitter @RBGatesTT or email him at

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