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Network Computing

Special Coverage Series

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Kurt Marko
Kurt Marko Contributing Editor

Data Center Study: The Big Get Bigger

A new survey indicates that data centers are fast becoming the domain of service providers as smaller enterprises increasingly outsource their data center operations.

Business success goes to those that can strategically and efficiently wield technology, and in this data saturated and hyper-connected age, that requires data centers. The latest Uptime Institute Data Center Industry Survey demonstrates that scale matters and operating data centers and computer rooms, which was never a task for amateurs, is increasingly the realm of those that make data centers their core business.

Uptime's survey, with responses from 1,000 data center facilities operators, IT managers and senior executives from around the globe, shows data center operators are expecting healthy budgets, with nearly a third in the U.S. and Europe seeing increases of 10% or more. Most of the bump is driven by third-party operators, which the Uptime Institute defines as "companies that provide computing capacity as a service in any form: Software as a Service, cloud computing, multi-tenant colocation, or wholesale data center providers."

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Only a quarter of enterprise data center operators report such rapid expansion. That means more people are renting rather than buying their own data center capacity. As Uptime concludes, "This data suggests third-party data center service providers are growing at the expense of in-house IT operations."

The report notes an interesting shift in the "default position" for new enterprise data center operations from in-house to outsourced, whether in a colocation facility or to the cloud via IaaS or SaaS. Again, the implications for IT are significant. "Today, the onus is on the enterprise operator to demonstrate that a new in house data center build is the best choice for the company. The burden of articulating value has shifted from the third-party provider to the internal enterprise staff," Uptime said in its report.

Part of this shift is the fact that third-party providers, being in the actual business of operating facilities and selling data center services, do a much better job of measuring, documenting and articulating their value through cost and performance metrics. The report finds that more than 70% of data center operators report cost and performance information to C-level buyers, versus just 42% of internal IT operators.

[Is your organizations trying to consolidate its data centers? Don't make the same mistakes as the federal government. Read the details in "3 Lessons Learned From Feds' Data Center Consolidation.]

One always must be cautious reading through surveys like this as Uptime's demographic is composed of big data center operators, not SMBs with garage-sized computer rooms. It's like asking readers of the Robb Report luxury goods website how likely they are to buy a Tesla. Still, the survey is instructive in that it illustrates that operating data centers is fast becoming a stand-alone business, not an overhead activity. Data center design, construction, technology and administration is sufficiently expensive, specialized and scalable, both horizontally to bigger facilities and vertically to multiple tenants, that data center operations are increasingly a game for specialists.

Much like the consolidating upheaval that transformed other capital intensive industries like semiconductor manufacturing or even retail real estate construction, data center technology and economics provide structural benefits to large players. For enterprises, it means that unless you're in the Fortune 500, the notion of building and operating your own data center makes little sense.

CIOs analyzing their IT infrastructure plans must heed the changes in data center economics. While the race may not always go to the swift, nor the battle to the strong, when it comes to IT facilities, it increasingly goes to the big, where economies of scale matter. Just as retailers long ago realized that building and operating their own storefronts wasn't economic, enterprises must come to terms with the fact that on-premise computer rooms and small data centers are fast turning into a competitive boat anchor and on their way to becoming anachronisms.



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