Netflix Closed Their Last Data Center – Should You Do The Same?

by drjim on July 20, 2016

Netflix now runs everything in the cloud, should you be doing this?

Netflix now runs everything in the cloud, should you be doing this?
Image Credit: Televisione Streaming

The Netflix announcement back in August of 2015 wasn’t a very big deal. In fact it probably went unnoticed by most people. However, from the point of view of those of us with the CIO job, it was sorta like a bomb had gone off. The company sent an email out that announced that in a month they planned on shutting down their very last operational data center. What this means is that they are now running their company entirely in “the cloud”. Should you be doing this?

How Netflix Moved To The Cloud

As important as this move into the cloud is, what we CIOs need to keep in mind is that Netflix understands the importance of information technology and has always had a strong commitment to using the cloud. If you think about their business for just a moment, it’s almost a poster child for a cloud-based firm. Every month Netflix attempts to both sign up additional customers for their DVD delivery and, more recently, their video streaming service. At the same time they try to retain the customers that they already have. The end result of all of this is that their IT needs are growing by leaps and bounds.

In their press release, Netflix was careful to point out that for their video streaming service, they have been 100% cloud based for their customer facing systems for quite some time. Netflix’s decision to move all of its operations into the cloud was not a decision that they reached overnight. Instead, this has been a 7 year project that is only now coming to a close.

Netflix made the decision to move all of their IT operations into the cloud after the company experienced a major hardware failure back in 2008. The next year was when they first got serious about moving their company’s applications into the cloud. The first of these applications to make the transition was the company’s jobs page on its website. After this they moved their video player, their iPhone related technology, discovery / search functionality, and their accounts pages. They moved their Big Data platform into the cloud back in 2013 and their billing and payments processing made the trip in 2014.

What It Means To Be Entirely In The Cloud

Netflix’s plan to shut down their last data center makes them unique. They are going to be one of the first big companies to completely move their IT operations into the cloud. According to a recent survey, about 12% of companies currently run all of their IT operations in the cloud. What’s interesting about this statistic is that most of these companies are small or medium sized businesses – nowhere near the size of Netflix. This is changing. The experts predict that by 2022 they believe that 20% of large enterprise companies will be operating entirely in the cloud.

Moving entirely to the cloud is not something that most big companies can do easily. The reason for this is because of the sensitive business software that many larger companies run either in their own data centers or on dedicated cloud resources provided by another company. Any person in the CIO position knows that it’s the legacy applications that we all have that will always prove to be the hardest to migrate into the cloud.

If you want to move all of your IT operations into the cloud, you are going to have to pick the right cloud partner to team with. In the case of Netflix they have selected Amazon and their Amazon Web Services offering to host all of the Netflix applications. Netflix is willing to admit that they are now “… fully reliant on Amazon Web Services…” The advantage of switching to this architecture is that Netflix no longer has to estimate months in advance how many servers they are going to need in order to serve their growing base of subscribers. When they need additional servers, they can just call Amazon and the servers will be turned up that same day.

What All Of This Means For You

Netflix issued a press release that contained some startling information. They are in the process of closing down their last data center and moving the company’s entire IT operations into the cloud. For a company of the size of Netflix, this is almost unheard of. How did they do it?

What we need to realize is that they have been a big user of cloud services for quite some time. Almost all of their customer facing IT operations have been cloud based for a while. Because of their partnership with Amazon, they have been able to standardize the cloud that they are using. This has allowed them to move more and more of their company IT operations into the cloud over the past 7 years. What other CIOs need to understand is that Netflix has found a way to solve the challenge of either swapping out or moving their legacy applications into the cloud.

It’s pretty clear for the rest of us CIOs: we are all going to be moving all of our IT operations into the cloud over time. No, it might not happen this year or even next year, but it will eventually happen. Netflix is showing us the way. If they can solve all of the same problems that we are facing, then we should be able to eventually make the switch. Looks like it’s time to start thinking about an all cloud based future!

– Dr. Jim Anderson
Blue Elephant Consulting –
Your Source For Real World IT Department Leadership Skills™

Question For You: What do you think the very last application that your company would ever move to the cloud would be?

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What We’ll Be Talking About Next Time

I’m pretty sure that you would agree with me if I told you that your enterprise network will just be getting bigger and bigger over time. As the person with the CIO job, it’s going to be your job to find ways for the company to keep building out its network without going broke. Got any ideas on how to go about doing this?

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