Enterprise Data Centers: A Buyer's Market

Recently I wrote about the shift to energy-efficient servers, whereby each new generation packs major improvements in compute power while requiring the same or even less power, cooling and space. That is, compute efficiencyor compute performance-per-watt are improving exponentially.

This server trend, which started around 2005, is being repeated in storage. We've seen a similar improvement in power per terabyte for the past three generations (since 2007), and the current storage product pipeline suggests this efficiency trend will continue for the next several years.

A terabyte of storage on today's devices requires about one-fifth the power as it would on a device from five years ago. And these power requirements could drop even more precipitously with the advent of flash technology. By IBM's estimates, the switch to flash products will reduce power and space requirements by 70% or more, while yielding huge application performance advantages and thus reducing the time it takes to complete workloads. IBM sees the conversion to flash storage happening soon, while other vendors see it as three or more years out. In either scenario, major improvements in storage efficiency are coming.

[ For more insight on the evolving data center market, see Why Your Data Center Costs Will Drop. ]

With the combined server and storage efficiency improvements over the next three to five years, all but the fastest-growing companies will see a net reduction in data center requirements. Add in the effects of virtualization, engineered stacks and software-as-a-service, and the enterprise data centers in place today should suffice for most companies.

Despite such efficiency improvements, total data center space will likely grow as cloud and consumer-oriented companies such as Google and Facebookinvest major sums in new data centers. The proportion of data center space will shift to direct consumer compute needs (a la Gmail or Facebook) from enterprise compute needs over the next decade, even for companies that provide consumer services. Such a shift follows the enterprise-to-consumer trends in chips and storage.

It's highly likely there will be a surplus of enterprise-class data centers (50,000 to 200,000 raised floor space) in the next five years. Those centers are too small and inefficient for consumer-class services on a Google or Facebook scale (500,000 to 2 million-plus), and with declining corporate demand and consolidation, plenty of space will be on the market.

As an IT leader, you must ensure that your organization is riding the effects of these compute and storage efficiency trends while leveraging the added benefits of virtualization, engineered stacks and SaaS (where appropriate). Apply the money you would otherwise invest in data centers over the next five to ten years to technology initiatives that drive more direct business value. Or just drop the savings to your company's bottom line.

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If you have excess data center capacity, consolidate quickly and dispose of the extra space as soon as possible. Those assets will be worth far less in the coming years. Consider partnering with a cloud vendor looking for space if your assets are strategic enough for them. Conversely, if you have minimal headroom and see high business growth ahead, look to acquire first-class data center assets at a far lower cost than in the past.

For 40 years, technology has ridden Moore's Law to yield ever-more-powerful processors at lower cost. Its compounding effects have been astounding. We're now seeing nearly 10 years of similar compounding on the power-efficiency side of the equation.

What trends are you seeing in your data center environment? Can you turn the corner on data center demand? Are you able to meet your current and future business needs and growth within your current data center footprint and avoid adding data center capacity? Please drop me a line at the email address below, or weigh in below with a comment.

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