Pupul Dutta
More and more organizations are looking at hosting their applications at independent data centers for higher efficiencies and better management
Data centers have been evolving to meet the growing demands and complexities imposed by enterprises in their quest to stay competitive and agile.
The amount of data that is generated by enterprises today is enormous. As a result, businesses are realizing that their operational efficiency is dependent on the effectiveness of their data center.
Currently, there is an increased demand in the market with more and more companies looking at improving their IT adoption and this is directly influencing the speed at which data centers are coming up.
We are at a point where a large number of innovations and technologies that have been in development over the past decade are now ready for deployment. Abstracted computing models, software defined networks and increasing adoption of thin clients as well as mobile devices means businesses will find moving to the cloud more compelling than before.
Also, it is expected that more enterprises will migrate to independent data centers (IDCs) given the operational efficiency they provide. Usually, data centers consume up to 60% of the total power usage of a company. However, now with shortage of power and increasing electricity cost, there is a need to manage and curb energy consumption in the data center. This need to save energy is resulting in a more scientific approach to designing and building efficient data centers. At the same time, with data centers growing in space, IT teams are also turning to Data Center Infrastructure Management (DCIM) software tools to monitor, optimize and intelligently plan power and cooling capacity in the data center. DCIM tools have become essential as the availability and operating costs of the data center have become increasingly intertwined with the facility.
Data center market
The data center market can be divided into data center infrastructure management market (DCIM) and IDC (independent data center) market. According to a report by Nasscom, India is emerging as the fastest growing data center services market in the Asia Pacific region. The Indian IT infrastructure market (comprising servers, storage, and network equipment) reached $2.2 billion in 2012, and is expected to grow at a CAGR of 8.5% over four years. “Growth is being driven by ongoing data center consolidation and modernization. Indian organizations are shifting from a distributed IT setup to a more manageable and efficient centralized model,” says Santhosh D’Souza, Director – Systems Engineering, NetApp.
DCIM market on the other hand, grew from about $245 million in 2010 to around $307 million in 2011. Market figures about the current fiscal year are not available. “Some estimates predict that the DCIM will be worth $3.14 billion in 2017, with an annual growth rate of over 47%,” notes Sridhar Pinnapureddy, Founder & CEO, CtrlS.
Pinnapureddy adds that though North America, currently is the biggest market for DCIM software and services, the APAC region is well on its way to becoming the biggest DCIM market.
According to research firm IDC, the demand for DCIM is expected to pick up this year. “The growth rate of DCIM far outstrips that for the data center equipment industries and for the enterprise IT segment as a whole. DCIM sales are set to grow at 44% CAGR to reach $1.8 billion in aggregate revenue by 2015, according to a study conducted by ‘451 Research’. However, the actual numbers are still small compared with other categories of enterprise software market (such as IT service management, ERP, databases or security),” asserts Neeraj Matiyani, Director, Storage Solutions, Dell India.
In any case, the industry is placing its bets on the DCIM market given the steep business it is expected to bring. Going by the current trends, Business Process Outsourcing (BPOs), trading and financial services, IT and ITeS, digital commerce and manufacturing companies are expected to drive growth in this market exponentially.
Current trends
Indian data centers, lately, have witnessed the introduction of virtualization, orchestration and workflow automation across their infrastructure and operations and now cloud computing architectures and utility models promise to transform them further. The notion of a software defined data center is beginning to take hold, with command and control abstractions being overlaid on top of pools of hardware resources.
However, for a CIO, zero downtime and lights on (power) 24×7 is what he/she would call the ideal data center as of now. Basically, 100% efficiency is what each IT head aims for. Says Ashwin Khorana, CTO, ING Vysya Bank, “The current trends are around zero downtime, reference tools and services being offered and 100% efficiency in running the data center.”
Other market trends which are currently very popular are business intelligence and big data. Big data is no longer just the next big thing, but it is a reality and a necessity in the current scenario. “Companies have realized the incredible value locked in their data sets and the sheer amount of actionable business intelligence that can be extracted from big data. The year 2014 will see many big data pilot projects being moved into the full production phase,” explains Pinnapureddy.
Software defined networking (SDN) is another trend that is expected to see an enormous rate of adoption this year. In a software-defined data center, all elements of the infrastructure – networking, storage, CPU and security – are virtualized and delivered as a service. Though SDN currently has a few issues such as fragmentation and questionable interoperability, the huge benefits that SDN offers will make the industry adopt it rapidly.
Moving on, when it comes to IT spending, a trend that is fast catching up is the adoption of Enterprise Asset Management System by companies. With efficient life cycle management of assets, companies can now focus on the total cost of ownership of their IT assets. With the move to Asset Life Cycle Management, the physical devices are managed as business assets, with standard accounting processes and TCO being addressed. This has led to the realization that servers or switches that exceed their depreciation and warranty schedules, can easily be replaced to reduce operating costs. This trend though is in its nascent stage, it is fast catching up as CIOs attempt to reduce their TCOs.
Some other trends that are being witnessed, but are yet to pick up in the data center market are modular and scalable infrastructure, pre-fabricated data center modules, all-in-one solutions and remote management and analytics.
Run up to IDCs
Migration of a data center is never an easy task as it involves several stakeholders, and significant investment and risk. However, in the recent past, the market has seen a rise in migration to independent data centers (IDCs) owing to cost efficiency, regulatory pressures etc. Though data center migrations have become much simpler than they were, they are not without significant complexities.
“IDCs provide an attractive option for organizations that are starting out, or those that have limited in-house resources for infrastructure design/operation. Most IDCs are designed to higher tiers, thus assuring uptime, many also provide redundancies in power, cooling, connectivity and services,” notes Amod Ranade, General Manager – Data Center Business Development, Schneider Electric IT Business India.
Another reason why IDCs are gaining popularity is because of the high cost of real estate as well as commercial power. Says Ankesh Kumar, Director, Channel Products and Marketing, Emerson Network Power, “Resource constraint is one of the biggest reasons for companies to migrate to IDCs. CIOs are entrusted with the burden of providing maximum efficiency even when there is scarcity of resources. Given the high cost of real estate and power, IDCs turn out to be more cost effective than a captive data center.”
Since IDCs follow all the best practices, one just has to go and rent these places. Moreover, as enterprises continue to rapidly embrace cloud computing to meet their business needs, the increasing volume and complexity of data traffic place severe strains on networks that are based on traditional hierarchical architectures. More than often, the need for data center migration emerges from enhanced cost efficiency, business demand and technology drivers associated with an IDC. Data protection and regulation is another area that data center operators have to consider when expanding their footprint.
IDCs vs captives
So, while we discuss the reasons behind the migration to IDCs, lets ponder over the facts as to why independent data centers score over captives.
According to a research by Forrester and TPI, cost savings generated from moving to independent data centers average around 12% for firms on the high and low end of deal sizes, while midsize deals deliver average cost savings of as much as 17%.
One of the most important factors in favor of IDCs definitely is economies of scale in terms of capital expenditure. Secondly, there is better component efficiency due to larger capacities deployed at the same time reducing overhead costs.
Moreover, an in-house data center requires a large team of experienced data center experts to manage, operate and upgrade the system. By outsourcing the data center, a company can rely on the data center operators and the service level agreements offered, thus reducing human resource costs.
But migrating to IDCs does not always mean saving cost and improving efficiency. Many large organizations have capacity to build assets, and are able to still gain cost advantages in terms of Capex. Also, the infrastructure is designed to accommodate maximum IT profiles in the market. “There is always a possibility for a more efficient design which can be looked at if the company is deploying a captive infrastructure,” notes Ranade of Schneider Electric.
Khorana of ING Vysya too believes in setting up a company’s own data center. “Its better to run your own data center than migrating to an IDC. Basically, the maturity required to work in IDC is very high and with this, the cost spirals up. I personally look for the cost of running the whole gamut of services. Also, getting tied down by SLAs is not a very appealing idea,” he asserts.
Many organizations set up offshore or near offshore captive centers, which help them overcome regulatory pressure and fears about IP security. “Multinational businesses often use captive centers in low-cost regions of the world to take advantage of cheap labor. Sometimes, the workforce in such places is not only cheap, but also skilled and hence, through these centers, businesses supply services to a company’s global operations including IT, HR and finance functions,” explains Matiyani of Dell.
To sum up, no one size fits all. So, while migrating to IDCs would be a great idea for some companies, for others being loyal to captives is a more cost efficient approach. Hence, before making the decision to move, one should take into account things like reliability, scalability and cost advantages over the other options available.
The cloud impact
Cloud computing is leading the transition for evolution of data centers and has been key in rapidly changing IT architectures around the world. Enterprises nowadays need more flexible and easily scalable data center environment to handle the dynamic demand, and they are looking for an on-demand, pay-as-you-use service model. “With the exponential growth of IP traffic and data driven by the trends of cloud computing, mobility, video, social media and big data, businesses across industries are increasingly outsourcing their data centers,” notes Sunanda Das, Managing Director for Pacnet India.
Though the adoption is still in its nascent stages, it is getting picked up by SMEs, nevertheless. Given the space and cost constraint, SMEs don’t need to be worried about either but just need to buy space in cloud.
Another reason why businesses are increasingly looking to adopt cloud is due to its sheer capability to scale up with demand. “Businesses need to roll out new products and services quickly to gain first mover advantage. They need to scale seamlessly as their services succeed and attract large numbers of new consumers. Simultaneously, they have to keep costs of operation down. Scheduled maintenance windows are a thing of the past, as businesses cater to global audiences. Cloud computing introduces fundamental changes — in technology, architecture, people and processes that if properly implemented, can address all of these requirements,” explains Abhilash Purushothaman, Head of Service Assurance Business, India & SAARC, CA Technologies.
With cloud, data center operations can be streamlined, automated and driven by Quality of Service (QoS) policies. Cloud computing architectures have also enabled new business models wherein businesses or individuals starting a speculative venture do not have to invest in data centers, infrastructure and IT staff to support their product or service. They can simply obtain it all from an appropriate public service provider.
However, despite so many advantages, CIOs are still wary of cloud-based services. As it is true in all other technologies based on cloud, security remains a prime concern for CIOs. Khorana explains that the laws of the land too are not very favorable in terms of hosting your data center on the cloud. “According to RBI regulations, banks are required to have their data stored in the country. This is the precise reason why cloud has failed to pick up in India,” quips Khorana.
Turning points and caution lines
While a number of IT trends are resulting in the transformation of today’s data centers, the use of flash storage has begun to play an important role in the enterprise market in India. New flash technologies have developed in many forms and have achieved high reliability and extreme performance at impressively low latency.
Besides, software defined data center architectures are increasingly prominent in redefining IT frameworks as they redefine the manner in which such infrastructures computes, stores, secures and networks.
Every fundamental infrastructure component in a data center can be provisioned, operated, and managed through an API. “Clustered storage is driving increased adoption as it helps to scale the data infrastructures out (horizontally) as opposed to exclusively scaling them up (vertically), while delivering enterprise class performance, reliability and serviceability,” explains D’Souza of NetApp.
In the coming years, it is expected that mobility, social media, and cloud computing adoption will significantly influence the demand for data centers and transform the way they will be designed, operated, and managed.
Some other trends expected to evolve are data centers architectures that will incorporate increasing adoption of 10 Gigabit Ethernet, new technologies such as Fiber Channel over Ethernet (FCoE), and increased interaction among virtualized environments.
Lastly, as Khorana says, “You never really finish your decision-making cycle regarding data centers.” Organizations have to be quick to catch the next wave of change in data center technology in order to stay ahead in the market.
