Build Or Buy: You Always Have Other (Data Center) Options

About the only item not experiencing massive growth in the IT world is budgets. While data, devices and demands are seeing explosive growth, IT budgets are not just limping along in single digits, they’re actually contracting, according to a new report from IDC, which cut its 2014 forecast from 4.6% growth to 4.1%. Of particular interest to changes impacting the , i.e. doing more for less, , , and software defined data center (SDDC), IDC said approximately 10% of software spending will have moved to the by the end of 2014, while Infrastructure as a Service will represent 15% of all spending on servers and storage.

Data center operations teams need to adapt much more quickly to changing requirements, according to a Cisco-sponsored IDC study. Big Data, analytics, cloud, mobility, virtualization, Internet of Things and social media are placing growing demands on infrastructure and organizations have to choose how best to address these demands, build, buy or some combination.

Like IDC, Gartner’s 2014 spending forecast is grim, and data center budget growth was reduced from 2.9% to 2.6%. “We are seeing CIOs increasingly reconsidering data center build-out and instead planning faster-than-expected moves to cloud computing. Despite these small reductions, we continue to anticipate consistent four to five percent annual growth through 2017,” said Richard Gordon, managing VP at Gartner. The largest contributor to this revision comes from reductions in IT outsourcing — specifically, in colocation, hosting and data center outsourcing growth rates.

Over the short term, build versus buy is not a question of either/or, said Ryan Mallory, Senior Director of Global Solutions Architecture, Equinix. We’re seeing some of the smaller companies jumping in more quickly to outsourcing, and “even larger brick and mortar companies have cloud strategies but it’s not something you can implement overnight.”

On Wednesday announced that cloud and Open Data Services provider GoGrid was joining the Equinix Cloud Exchange, its interconnection solution for on-demand and direct access to multiple clouds and multiple networks. GoGrid said it was expanding its relationship with Equinix because the exchange simplifies the process of establishing hybrid cloud deployments by connecting enterprises and services providers, and enables its customers to use its cloud and Big Data solutions in a more secure, predictable, and high-performance manner via the combination of its Cloud Bridge option.

Equinix has over 4,500 customers globally, including 450 cloud service providers and 975 networks, that are deployed within its 100-plus global data centers. The Equinix Cloud Exchange is currently available in 13 markets – Silicon Valley, Washington D.C., New York, Toronto, Seattle, Los Angeles, Atlanta, Dallas, Chicago, London, Amsterdam, Frankfurt and Paris – with plans to expand to 19 markets by the end of 2014.

Launched in April, the exchange has two other public clouds, Amazon Web Services and Microsoft Azure. GoGrid’s expertise in delivering advanced infrastructure and database platforms architected for handling large analytic workloads is “what we saw in them as a core partner,” said Chris Sharp, vice president of cloud innovation at Equinix.

“We have customers internal to Equinix looking for ways to do big data analytics. Now they can port data to GoGrid through a 1- or 10-Gigabit port,” he said.

The company launched its Performance Hub in March, a solution that combines elements of data centers, networking infrastructure and connectivity, and cloud computing access to improve application performance and deliver a globally consistent quality of experience to end users. As part of the better experience, the hub offers: 50% improvement in http-load tests for web-based applications; greater than 40% improvement on file transfers for Microsoft Sharepoint; 40% improvement on Virtual Desktop Infrastructure (VDI) launch times; and reduced jitter and latency for video streaming applications. For applications hosted on public cloud infrastructure, benchmarking showed: 30% improvement in page-load tests for web-based applications; and 100x improvement in data transfers for data-replication applications such as Oracle Data Guard.

In early May announced Facility-as-a-Service (FaaS), it’s money-saving alternative to building an owner-operated data center or colocation. Using Forrester data, it said the cost of building and managing a traditional data center is just over $59 million, and then you can throw in the ongoing operational costs of power, staffing and maintenance.

This offering is not a new type of data center, it’s a sourcing strategy for customers to obtain a data center without the capital costs, said Rick Einhorn, VP, Technology Services Data Center Consulting, HP in an interview with IT Trends & Analysis. “We think this is a game-changing capability. It avoids the huge Day-one costs.”

According to a new report, while the Software Defined Data Center (SDDC) market was estimated at $396.1 million last year, it is expected to see compound annual growth of 68.7% between 2013-2018, and reach $5.41 billion. Telecommunication service providers continue to be the largest user for SDDC solutions followed by cloud service providers, with North America expected to be the biggest market, while Asia-Pacific (APAC) is expected to grow at a significantly faster pace in the coming years.

At the end of April Equinix CEO Steve Smith said the company was off to a “strong start” in 2014, with Q1 revenues of $580.1 million, up 3% QoQ, and 12% YoY. However, cloud adoptions continues to ramp creating “massive disruptions in how businesses consume IT services” and creating significant opportunity for Equinix.

“We’re experiencing a dramatic increase in traffic within the data center as enterprises leverage virtualized infrastructures and move data and applications into hybrid cloud architectures… [and] projects that cloud traffic within data centers will triple over the next four years.” Cloud and IT services is the company’s fastest growing vertical, delivering 15% year-over-year revenue growth. For the year, the company is predicting greater than 11% YoY growth to revenue greater than $2.395 billion.

The bottom line is that changes in the data center are coming. A recent study from Network Power found that IT experts believe modern data centers will undergo significant, even massive changes over the next decade. While cautious about some of the results, analyst Charles King, Pund-IT, said the study offers “much food for thought” as data centers and their employees stand in the midst of an ongoing revolution in consumer and business behavior.


Author: Steve Wexler

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