It takes an AWS outage to prioritize diversification

For years, I’ve warned about the dangers of enterprises relying on a small group of dominant cloud providers such as AWS, Microsoft Azure, and Google Cloud Platform. These platforms underpin the operations of many businesses worldwide, and each has a history of issues stemming from overdependence and centralization. However, cloud and AI technologies move so quickly that most enterprises prioritize adoption and optimization over potential vulnerabilities in their cloud strategies.

AWS’s latest outage, caused by a data center malfunction in Northern Virginia, didn’t just disrupt its direct customers; it served as a stark reminder of how deeply our digital world relies on a select few cloud giants. A single system hiccup in one region reverberated worldwide, stopping critical services for millions of users. Thousands of organizations scrambled for hours as everything from financial software platforms to social media services was disrupted. This wasn’t the first time and it likely won’t be the last because cloud computing is structured in a centralized, consolidated way, making it susceptible to single points of failure. Still, there’s a silver lining. Enterprises are confronting hard truths about their infrastructure strategies and seriously considering diversifying their platforms.

Over-reliance on big cloud

The convenience and utility of hyperscalers cannot be overstated. These platforms revolutionized how enterprises consume IT resources. Shifting from traditional on-premises systems to cloud systems helped businesses embrace flexibility, avoid large upfront costs, and scale operations as needed. But that convenience bred complacency, and complacency led to overconcentration.

The AWS outage is part of a broader pattern of instability common to centralized systems. Today, Amazon controls about 30% of the market, followed by Microsoft at 20% and Google at 13%. The dominance of these three providers creates a fragile digital ecosystem. When a hyperscaler stumbles, whether due to a technical glitch, misconfiguration, or unexpected hardware failure, the impact is significant. Azure and Google Cloud have experienced their own failures recently, demonstrating that no system is foolproof, regardless of reputation or size. Yet enterprises rely on them for nearly everything, making risk mitigation a much lower priority.

Another critical downside to sticking with a single cloud provider is vendor lock-in. Many organizations have found themselves trapped, unable to exit due to complex architectures, prohibitive data-movement costs, and substantial knowledge dependencies. Combine this with geopolitical and regulatory risks—particularly the dominance of US-based providers—and you find the current system leans heavily in favor of the providers over their customers. This isn’t just inconvenient; it’s untenable for organizations that value operational resilience and compliance with international data sovereignty laws.

How to diversify

The AWS outage has reignited a longstanding argument for organizational diversification in the cloud sector. Diversification enhances resilience. It decentralizes an enterprise’s exposure to risks, ensuring that a single provider’s outage doesn’t completely paralyze operations. However, taking this step will require initiative—and courage—from IT leaders who’ve grown comfortable with the reliability and scale offered by dominant providers.

This effort toward diversification isn’t just about using a multicloud strategy (although a combined approach with multiple hyperscalers is an important aspect). Companies should also consider alternative platforms and solutions that add unique value to their IT portfolios. Sovereign clouds, specialized services from companies like NeoCloud, managed service providers, and colocation (colo) facilities offer viable options. Here’s why they’re worth exploring.

Sovereign cloud providers are especially attractive for organizations operating in regions with strict data sovereignty rules. These clouds are designed specifically to comply with local regulations, giving companies confidence when managing sensitive information. This is particularly important in industries such as finance, healthcare, and government. NeoCloud is one such provider that maintains specific compliance standards, offering a customized alternative to the more general options offered by hyperscalers.

Managed service providers can deliver custom solutions that directly address a business’s needs, providing greater customization, personal support, and accountability. Instead of a one-size-fits-all approach of hyperscalers, MSPs enable organizations to build systems that better align with their unique processes and goals.

Colocation providers remain an appealing option for combining cloud computing with on-premises hardware. Colocation allows enterprises to control critical infrastructure and gain cloudlike scalability at lower costs. These options also give companies more control over their expenses, help avoid the often-high egress fees charged by hyperscalers, and reduce dependence on remote, centralized systems that are vulnerable to disruptions.

The challenges for IT leaders

Diversification may sound like an obviously better approach, but achieving it requires more than flipping a switch. The current reliance on hyperscalers didn’t happen by accident. It’s the result of years of investment, integration, and adaptation. IT leaders now face the challenge of untangling these dependencies, developing distributed architectures, and finding providers that can align with the technological and regulatory expectations of their businesses.

The biggest challenge might be psychological rather than technical. Many companies have internalized the idea that the hyperscalers are the only real options for cloud infrastructure. It will require courage and strong leadership to break free from this mindset, challenge industry inertia, and adopt smaller, alternative providers to improve resilience. IT leaders need to push for budgets and strategies that reflect the true cost of maintaining a robust, diversified infrastructure instead of focusing only on short-term savings often linked to hyperscaler-only setups.

Enterprises must look beyond immediate convenience and start building a model that emphasizes resilience and agility. Cloud diversity isn’t a future trend; it’s an emerging necessity as outages, regulatory frameworks, and geopolitical issues continue to influence the market. Those who don’t act now risk being unprepared for the next incident.

Sleeping through your wake-up call

The AWS outage served as a painful yet crucial reckoning. It is sparking conversations long overdue. For enterprises that prioritize risk-free operations, it’s time to consider alternatives such as sovereign clouds, MSPs, colo providers, and multicloud strategies. It will require effort, bravery, and investment, but doing nothing is not an option. The risks are so clear that inaction is a choice few can afford.

This is the perfect moment for enterprises to redefine their cloud strategies. It’s time to demand better, cheaper, and more flexible systems while reducing the risks of over-reliance. As businesses look ahead, the question is simple: Are we prepared to make the changes required to future-proof our infrastructure, or do we wait for the next outage and hope its fallout doesn’t cause irreversible damage?