Many had the belief earlier that traditional enterprise data centers would become obsolete as businesses were moving rapidly to the cloud. A Gartner analyst predicted in 2019 that 80% of enterprises would have shut down their traditional data centers by 2025. However, things have been not the same as expected or said. Cloud adoption has grown and enterprise data centers too have continued to thrive. Gartner stated that enterprises are still spending significantly on servers, software and the expertise needed to manage their on-premises infrastructure. Global enterprise spending on data centers reached $66 billion in 2024 alone.

On-premises data centers are not disappearing even though hyperscale cloud providers are expanding rapidly. Nnearly 60% of data center capacity was on-premises six years ago and the figure has dropped to 37% in 2024. Hyperscalers are expected to account for more than 60% of total data center capacity by 2029. It is also learned that on-premises data centers may shrink to 20% by the same period. However, the shift is occurring in a growing market and this means that enterprise data centers are not necessarily shrinking in absolute terms while cloud adoption increases. They are instead maintaining stability as organizations continue to find value in keeping some workloads on-premises.

One key reason is that certain applications are better suited for on-premises environments. It is not always practical even though migrating all applications to the cloud is technically possible. Many legacy applications work efficiently within data centers and there is little incentive to move them. Moreover, rising security concerns, stricter data privacy regulations and the need for control as well as visibility make enterprises cautious about moving everything to the cloud. Uptime Institute reveals that 58% of enterprise IT workloads were hosted in corporate data centers in 2020 and the number dropped to 48% in 2023.