Issue link: https://cp.revolio.com/i/394834
6 | THE DATA CENTER JOURNAL www.datacenterjournal.com www.datacenterjournal.com tolerate a data center almost anywhere, enabling management to pick the location with the lowest costs in real estate, utili- ties, labor and so on. For other industries, such as finance, however, location is more critical. Expenses tend to rise dramatically in urban areas, particularly for real estate. Frazer summarizes the problem as follows: "One major challenge that changes the entire value proposition is where physically to locate a data center, owing to power- consumption needs and cost of real estate, but also how close to the business demand and indeed the business application the data center will support." He expects that "for mid-market, high-end and global enterprises, we're more likely to see 'micro' data centers that are soware-defined in terms of management, provisioning, rais- ing/moving apps, performance optimiza- tion and so on from a central location." Movers anD shakers Given that in-house data centers require a fair amount of capital to build, small companies will likely be attracted mostly to the cloud and other outsourc- ing methods, like colocation. Moving up the business scale, however, the matter becomes less clear. Regardless of company size, colocation is always an option—par- ticularly for industries that are far removed from IT as a core aspect of the business. Referencing CoreSite's experience with co- location, Warren sees "a variety of business sizes and industry types in our customer base. Because we can offer solutions rang- ing from a single cabinet to a build-to-suit deployment, our MTDC model supports all type of companies." Making a tentative prediction, Frazer expects that "companies with fewer than 1,000 employees or users will gradually consume every IT resource in a virtualized format or from the cloud"; that is, they "increasingly will not touch any kind of IT hardware on premise or in data centers." is prediction is largely in line with the typical lack of extensive capital resources on the part of small businesses. Of course, even very small companies can run "server closets" and other small in-house deploy- ments, but such facilities may be a bit too much of a stretch to fit the definition of a data center. Again, however, the more dynamic situation is for larger businesses. "Midsize, mainstream and mid-mar- ket to large enterprises will increasingly run hybrid data centers both on-premises as well as external/cloud based on ap- plication scalability needs and demand, economics of consumption, and SLAs for performance and uptime," said Frazer. Unsurprisingly, companies will, in a mar- ket of choices, seek to combine different possibilities to provide the best return on their capital and operating investments. A hybrid approach, for instance, allows a company to keep mission-critical resources close while avoiding capital expenses and other hassles (updating/upgrading equip- ment, maintenance and so on) for less critical applications. is approach also enables greater scalability on demand with- out the need to plan an expansion (even a modular one) or secure capital funding. a glIMPse of the future e outsourcing picture is thus likely to be a mix. "Data center resources to support ERP, SCM, high-performance computing in terms of scientific or medical discovery, and big data proprietary data- bases that contain IP or confidential data more typically will not be outsourced," said Frazer. But on the other hand, a good potential outsourcing scenario is "high- frequency trading apps that get their own dedicated data centers in colocation facili- ties closest to the point of egress to reduce further latency." So how can this mix be quantified? One approach is to consider IT budgets. According to IDC's September 2013 CloudTrack survey of over 750 companies in the U.S., respondents on average expected to dedicate 36.7% of their budgets to "traditional IT." Traditional IT outsourcing consumed 15.8%, and in- house private cloud consumed 14.3%. e public cloud stood at just shy of 11%, with virtual private cloud (10.1%) and hosted private cloud (12.1%) comprising the remainder. e survey also asked respon- dents to predict their budgets in 24 months and in the year 2020. e most dramatic shi occurred in traditional IT, which can expect a falloff to 30.6% in 2015 and to 26.4% in 2020. e results show traditional IT outsourcing losing 1.2% to 14.6%. e other options look to add 2% to 5% each— not stunning growth individually, but consistent across the cloud spectrum. e various cloud deployment models together will increase from 47.4% of IT budgets in 2013 to 58.9% in 2020, if the expectations of the survey results prove to be accurate. Essentially, the IDC survey results paint a picture of the different IT models balancing out toward a roughly even distri- bution of company IT budgets on average. Obviously, different company sizes and industries will likely see some variations from this general trend, depending on a number of factors. Some will focus mostly on one model, whereas others will use a hybrid approach that involves two or more alternatives. Overall, however, the numbers show the cloud continuing to increase at the expense of traditional IT approaches— particularly in-house data centers. Given the indispensable roles these in-house facilities still play in some instances, how- ever, they will remain a part of the mix. ConClusIons e enterprise data center in its purest form—a facility that houses all of a company's IT resources—may be dying, but on-premises deployments will remain; they will simply be increasingly comple- mented by outsourcing options such as colocation and, particularly, the cloud. e question is simply at what level the market will find a balance. Presently, it seems to be tilting toward more outsourcing to avoid the various hassles of running in-house equipment and to garner the benefits that dedicated IT-services providers can deliver. ere will clearly be some variation in the level of outsourcing with industry and company size: compared with larger com- panies, smaller companies tend to have less access to capital in order to fund data cen- ter construction, and some industries will see a greater reluctance than others to part with local control of some IT resources. Nevertheless, although the enterprise data center may be specializing, it is presently in no danger of going extinct. n