According to Gartner, the data center co-location and hosting market in India is estimated at Rs2925 crore ($609.1 million) in 2012. The market is expected to experience consistent growth for the next few years, and is forecast to total Rs6240 crore ($1.3 billion) in 2016. By that time, the Indian data center capacity is poised to touch 6.6 million square feet, with service providers driving majority of the growth.
Though there are no definitive numbers available for segmentation within the data center market, experts are of the view that both captives and Independent Data Centers (IDCs) will witness a robust growth that will continue for a couple of years.
For new players wanting to set up data centers in India, the country offers the advantages of cost benefits and sustainability of operations. The growth could accelerate further when coupled with a rising domestic demand for IT services.
However, there are a slew of challenges that come hand in hand with the growth of data centers. Even as we are struggling with infrastructural gaps such as those in terms of energy, bandwidth and data protection laws, questions about environmentally responsible data centers are already beginning to be asked.
It is with this robust backdrop that we try to evaluate the data center market and the trends that dominated it in the year gone by.
Consolidation wave
If there is one common thread that ran across data centers in the past year, it is consolidation. Captives and IDCs alike went on to consolidate their data center infrastructure in a bid to extract higher efficiencies. At the core of this consolidation drive was virtualization.
Although server virtualization is a well embedded trend in the Indian data centers, it was storage and desktop virtualization that ruled the pilot charts in 2012.
On the flip side is the reality that a virtualization led consolidation drive may not be a good decision if an organization lacks a virtualization road-map. “Because virtualization introduces complexity into the IT infrastructure, organizations looking to fully realize the benefits of this technology while driving down capital costs are advised to also implement a management framework that provides architectural flexibility and supports multiple virtualization platforms as well as physical environments,” confirms Luthra.
However, despite virtualization complexities, consolidation remained a clear theme for data centers in 2012. Enterprises and data center service providers woke up to the fact that fragmented facilities in a data center can lead to a higher OPEX. While the existing data centers went full steam on consolidation, the Greenfield projects were attempting to go lean and efficient from ground up.
In addition to driving up efficiencies through virtualization, data centers also went about implementing a variety of technology approaches like storage management and high availability tools in order to maximize existing hardware resources.
The OPEX focus
The other clear theme of the year for data centers was the scramble for technologies that reduce operational costs. With rising real estate and power costs, the IT heads went scouting for options that would sit pretty on their technology budgets and still give them a highly available data center.
Sridhar Reddy, CMD, CtrlS Data Centers, gives an example. “One of our innovations include minimizing the equipment within the server; for example, OEMs usually bundle their equipment with tons of features which are usually under-utilized or never utilized during the life of the equipment. We try to remove all the unwanted equipment from the base server unless required for a reason, thus saving approximately 5% on the power utilized by a server in its standard operations.”
Even enterprises with large captive data centers are not behind, and a growing number of creative data center managers are using a variety of cost-containment strategies that capitalize on heterogeneity to increase IT efficiency and maximize existing resources. At the foundation of these solutions is a single layer of infrastructure software that supports all major applications, databases, processors, and storage and server hardware platforms.
This trend of saving on OPEX has given way to another big trend in the data center market. Data centers are finally being measured in terms of business value. And that is why the debate between captive vs outsourced has gained so much momentum in the past year.
Which model to adopt?
One way to gauge the health of the data center market is by assessing how well the IDCs are doing. Going by those standards, the Indian market looks quite healthy. Says Nareshchandra Singh, Principal Research Analyst, Gartner India, “The data center market is quite healthy, with some mega projects being undertaken by IDCs despite the slowdown turbulence.”
Last year saw a significant business expansion by customers who are outsourcing their data centers to third parties. One of the key trends in the data center market was that the impetus to outsource grew significantly in the last year. This is primarily because organizations are looking to get out of non-strategic functions. Also, the data center ecosystem in India is maturing and prominent players are offering competitive services, making third party data centers an attractive proposition.
Luthra affirms, “Mid-market and government-owned enterprises are increasingly investing in hosting or managed services, primarily to ensure that they can focus on their core business and get a highly skilled data center partner fulfilling their infrastructure growth plans.”
Indian CIOs too are also becoming increasingly concerned about the kind of facilities that they want incorporated in their data center infrastructure. As a result, factors such as power, cooling and space are driving data center decisions. In fact, power efficiency or Power Usage Effectiveness (PUE) has become a common reference point for CIOs looking to host their IT infrastructure with IDCs.
According to Sanjay Bhutani, CEO, Tulip Datacenter Services, “Customers prefer to partner with a data center which is adept in all forms of backbone infrastructure and is future-ready in all aspects.” Though he believes that PUE is beginning to play an important role in data center decisions, it is still largely about costs. If a slightly lower PUE pinches the customer’s pocket in a significant way, then it is unlikely to be a deal clincher.
Another reason why IT heads are opting for professionally managed data centers is disaster recovery (DR). More often that not, having an agile DR is a challenge with mid sized enterprises. That is why hosting with an IDC that can ensure a robust DR is becoming a popular choice.
Although IDCs certainly have an edge when it comes to data center services, it is not to say that captive data centers are legacy burdened, inefficient structures. As Reddy observes, “Yes, there is a move toward third-party data centers. However, it does not necessarily signify that in-house data centers are inefficient. When it comes to outsourcing decisions, cost is a factor but it is the efficiency and utilization that are the deal clinchers.”
Evani is of the opinion that although attractive, IDC models might not fit every business. “Ours is an in-house data center. The major reason behind that is most of the work we do is on a remote basis. For us, access and agility were key to our data center decision.”
However, when it comes to data center management, Nadkarni is looking to take the middle path. “A data center decision depends largely on your business needs. For us, having a data center on LAN works because 2500 of my employees work in the factory and thus we decided to have an in-house data center at the same location. That said, data center management is a big task and no matter how many resources we deploy, we will not reach the level of management of a professionally managed facility. That is one of the key reasons why will are looking to outsource the management of our data center in the near future.”
The impact of cloud
Even though virtualization is a given for both captive and hosted data centers, we are not quite there with respect to cloud, despite the ripples that cloud computing has created in the last couple of years.
Another reason for the relative inactivity of data centers on the cloud front is that public cloud is yet to become a mass phenomenon in India. Opines Singh of Gartner, “As of now, it is still early days for cloud to impact data centers in a significant way because most of the work is happening on the private cloud front. Things are moving quite slowly for public cloud.”
That said, it is interesting to point out that enterprises are indeed moving toward a cloud model in their captive data centers. Elaborates Evani of DST Global, “We’ve already initiated a private cloud model for our internal business. Once we achieve that we want to enable public cloud for our customers.”
Thanks to the scalability promises of cloud, new age businesses are going the hybrid way. Take the example of Myntra.com, a prominent online fashion portal.
This data center model actually came about as a result of an evolution of Myntra. Being in the online business , they could hardly afford any latency. “We started off in U.S, then reached Singapore and have finally settled with a balance between Singapore and India.” The biggest advantage with cloud model, feels Sharma, is that scalability can be achieved in a few clicks. “Achieving scalability at AWS is very easy, whereas with Netmagic, though scaling up is more cost-effective, it can take up to a month’s time.”
Amitabh Misra, VP – Engineering, Snapdeal.com, airs similar views about cloud. “Our IT infrastructure has grown exponentially from 5-10 servers when we began to more than 100 servers today, and cloud can manage that kind of growth,” he says.
Sharma, however, is also of the view that, in India, managing data center costs is more challenging as there is a lack of expertise for cloud-based server management.
Another challenge that IT heads face is that, generally, a cloud offering consists of a standard stack of products. If you want to plug and play with best of breed technologies, you can’t do that. “If I want to use everything from Amazon except for the load balancer, I can’t do that. At some level, the cloud can put limitations on you,” points out Misra. He feels, however, that the advantages of the cloud far outweigh its limitations.
Eyes inside the data center
Thanks to the management complexities of data centers, monitoring tools that give visibility into the crucial aspects of a data center are expected to be the next big thing in the industry.
The expectation is in sync with the market sentiment, as intelligent software is seeping into every industry. Data center analytical tools, feel experts, could gain traction in the next few years. Says Reddy of IDC, “Technologies that are gaining prominence are the ones that are giving more visibility into a data center and are pointing out areas of improvement.”
According to Luthra, intelligent infrastructure management helps companies to shift their IT focus from maintaining disparate devices in data centers to directing a single landscape of servers (both physical and virtual) and storage. This also ensures better maintenance at lesser cost and with fewer complexities.
Data Center Infrastructure Management (DCIM) solutions are emerging as fertile ground, with many data center players already coming into the field with their solutions. Forrester sees three distinct clusters of vendors in the DCIM space: data center facility and infrastructure vendors; IT management vendors; and systems hardware vendors. Their report on DCIM also states that owing to its healthy growth, DCIM is likely to see an influx of some more market offerings.
One of the key functions of DCIM software is a unified dashboard display or report that shows a single-source view of power, physical, and thermal information. Explains Ankesh Kumar, Director – Channel Products & Marketing, Emerson Network Power India, “In some data centers, as much as 60% of resources are sitting idle at certain times. It is in situations like these that a comprehensive DCIM solution with a single interface across functions can help in managing and monitoring data center resources.”
Kumar also echoes the industry sentiment that the focus of the data center industry is increasingly shifting to technologies that can help save OPEX and derive more out of CAPEX assets. In this context, intelligent DCIM solutions may soon become the next data center trend to watch out for.