LinkedIn pauses migration to Azure and opts to keep physical data centers

LinkedIn, the professional networking giant, has reportedly shelved its plans to migrate its data center technology to Microsoft’s Azure cloud, opting instead to continue using its physical data centers.

This decision marks a significant reversal for LinkedIn, which had announced its intention to switch to Azure in 2019, three years after being acquired by Microsoft for $27 billion.

The project, code-named Blueshift, was intended to leverage Azure’s wide array of hardware and software innovations and its unprecedented global scale.

However, according to sources familiar with the matter, the decision to halt the migration was made last year, with executives emphasizing that the project was being put on hold rather than being canceled altogether.

LinkedIn’s Chief Technology Officer, Raghu Hiremagalur, stated in a memo to research and development employees in June 2022 that the company would continue to use some Azure services while focusing efforts on scaling and innovating its on-premises infrastructure.

He cited the incredible demand Azure was experiencing and the growth of LinkedIn’s platform as reasons for pausing the planned migration to allocate resources to external Azure customers.

Despite the halt in the migration, LinkedIn continues to use Azure to complement its infrastructure needs and is further investing in its data centers.

The company is running 100 employee-facing applications on Azure, leveraging Azure FrontDoor, and working to consolidate its data center locations that are currently spread across multiple buildings under a single roof.

However, issues with the planned migration arose from LinkedIn’s attempt to use its own software tools instead of those readily available on Azure. As a result, LinkedIn is now in the process of constructing an additional data center to handle its computing needs.

This decision represents a setback for Microsoft, which has been counting on cloud technology and services to fuel much of its growth and is currently chasing Amazon Web Services in the lucrative cloud infrastructure market.

Under the leadership of CEO Satya Nadella, Microsoft has moved some of its acquired assets to Azure, including GitHub and Minecraft developer Mojang.

Despite the setback, Azure continues to play a crucial role in supporting and scaling collaboration and productivity for LinkedIn’s teams and delivering value to its members. As of November, LinkedIn reported having reached 1 billion members.

Costs set to soar

With the increasing adoption of cloud services, managing cloud costs has become a top priority for CFOs in 2024.

With 55% of companies spending more on cloud services this year compared to the last, it’s clear that the cloud is no longer a luxury but a necessity. However, managing these costs effectively requires a strategic approach.

A recent study by Vertice, which surveyed 600 finance and technology leaders across the US and UK, revealed that a quarter of companies described their cloud spend as a significant increase compared to last year. Only 5% reported cloud costs to be lower than they were in 2022.

One of the key steps CFOs can take is to create a dedicated cloud cost management team. This team should include members from finance, IT, and other relevant departments.The team’s primary responsibility is to monitor and control cloud spending, identify cost-saving opportunities, and ensure cost optimisation across the organization.

Assigning ownership of cloud resources to specific teams or individuals is essential for effective cost management. By clearly defining cost ownership, organizations can promote accountability and better control cloud spending. Each team or department should be responsible for monitoring and managing the costs associated with their allocated cloud resources.

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