Board Advisory: The Cost of IT Datacentre Centralisation

Executive Insight

Over the last decade, businesses have centralised IT into cloud and colocation to drive cost and scale. But in doing so, they’ve created a new systemic risk. A large proportion of global commerce, banking, SaaS and government systems now sit in shared datacentres, connected by highly concentrated fibre and subsea cable routes. The issue isn’t cyber, it’s physical infrastructure concentration.

The Reality

In key hubs like London:

• Multiple platforms share the same buildings
• Fibre routes converge into the same exchanges
• “Resilient” systems often rely on the same underlying infrastructure

Result:
A small number of physical points underpin a huge part of the economy.

The Risk

Disruption doesn’t require advanced capability.

• Cutting key fibre routes into major exchanges
• Disrupting power or connectivity into datacentre clusters

No casualties. No but BIG headlines & even BIGGER impact.

But:

• Payments stop
• Ecommerce fails
• Banking platforms go offline
• Supply chains stall

Economic impact: £billions within hours

Cloud: Misunderstood Resilience

Many organisations believe they are protected because they are:

• Multi-zone
• Multi-cloud

In reality:

• Zones are often in the same metro
• Providers share infrastructure paths
• True independence is limited

At the same time:

• Cloud & SaaS costs have risen sharply
• Customers are often locked in due to migration complexity

Strategic Implication for PE

This creates:

• Operational risk (service disruption)
• Valuation risk (EBITDA / SLA exposure)
• Cost opportunity (cloud rebalancing)

What Needs to Change?

The solution is decentralisation.

• Bring critical systems back into controlled environments
• Ensure true DR in separate locations you control
• Implement multiple, physically diverse network routes
• Reduce reliance on single metro / shared infrastructure

What Happens Next

We are already seeing early movement away from cloud-first:

• Rising costs
• Vendor lock-in
• Growing resilience concerns

Prediction:

A shift back to on-premise and distributed IT will accelerate, faster than many expect.

Bottom Line

We centralised for efficiency. We now need to decentralise for resilience.

This is no longer an IT decision. It’s a board-level risk and value protection issue.