In September 2014, 451 Research published the results of a study it conducted in July of over 6,000 IT decision-makers in North America and Western Europe. The purpose of the study is to identify trends involving data center implementation and facilities spending in the multi-tenant data center market.
Businesses have several options in how they leverage IT resources within their organizations. They can build their own data center facilities, install prefabricated designs, migrate to cloud services or deploy a colocation model. Understanding current investment dynamics in the enterprise market is important for businesses and data center service providers alike. For example, are businesses using in more opex-based services or investing capital expenditures to build their own in-house data centers?
Facility Spending in Q4 2014
According to the survey, more businesses will increase data center facility spending in the final quarter of this year. A total of 22% of respondents expected more investment versus 10% anticipating a decreased investment. Larger businesses were more likely to increase their spending compared to small and mid-sized businesses.
Specifically, the participants were asked to compare their spending plans for the next 90 days to the previous 90-day period. Their responses were to include spending amounts on components such as the actual data center building, power and cooling. However, they were to exclude any associated costs for colocation services.
Other interesting findings from the report include the following:
- Of the total number of respondents participating in the survey, 53% said their business owns or operates at least one enterprise data center. These company-owned facilities could be centralized, regional or local. Businesses with in-house facilities rely primarily on their internal resources rather than on a third-party’s facilities and services.
- Among this percentage, 38% also lease colocation space and 34% use software-as-a-service. A surprising 47% reported they don’t use colocation or SaaS.
New Build and Retrofit Projects in 2014
The study confirms over one-fifth of businesses that operate in-house data centers are planning new projects. For example, 23% said they either have a retrofit or new construction project in progress or have just completed one this year.
In addition, 54% of these projects were retrofits compared to 46% new construction. When asked about future projects, respondents indicated they expected to undertake more retrofitting projects. By almost a 2-to-1 margin, retrofitting an existing facility is a bigger priority for businesses than building a new data center.
Here are some additional findings from the report:
- When it comes to the type of company-owned data centers being constructed or retrofitted, 62% are premium centralized facilities, 26% are regional data centers and 12% are local data centers. These findings indicate a trend toward data center consolidation.
- In terms of facility age, 59% said their primary data center is less than 10 years old, 27% indicated their facility is 11 to 20 years old and 14% said their facility is more than 20 years old.
451 Research expects businesses to migrate to third-party providers as their in-house data centers age. Significant capital investments in older facilities will become increasingly uncommon. However, businesses will also focus on realizing the required return before they divest a company-owned facility. With an average life expectancy of 20 years, many existing data centers will continue to operate for some time.
Top Priorities Going Forward
The 451 Research study asked participants about their data center priorities in the near future. According to the results, 47% of respondents ranked efficient utilization of existing assets, such as servers and storage, as a high priority. Other important issues involve alignment and consolidation. For example, 35% indicated aligning data center and IT processes across facilities and IT teams is critical, and 28% said consolidating data centers is a major initiative.
In the past, facilities and IT teams were separate functions whose processes rarely overlapped. However, the trend toward commoditized IT infrastructure requires better alignment between these two groups in the future.
By analyzing the type of data included in the 451 Research reports, both businesses and service providers will be able to follow important market trends. Paying attention to these trends will help decision-makers capitalize on current and future opportunities that will more competitively position their businesses.
CyrusOne has been providing innovative enterprise data center solutions since 2001. With more than 30 data centers across the globe, CyrusOne helps many of the world’s largest global businesses – including nine of the global Fortune 20 companies and over 135 of the Fortune 1000 – and companies of all sizes take advantage of the latest data center technology. For more information about what to look for in a data center services provider, visit https://cyrusone.com/.
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