Modern Infrastructure

The data center and the cloud: Changing the game


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Deliberating data center development, evolution and investments

Pondering the next stage in data center development? CIOs are taking a hard look at capacity and disaster recovery in molding these future assets.

When will the data center you have today look like a relic? This is not a trivial question. The velocity of change the Corporate Executive Board sees in corporate IT demands that CIOs start data center planning with this question in mind—otherwise, they risk misallocating capital in a climate where the average return on invested capital frankly isn’t what it used to be. Before investing in your next data center upgrade, consider the following questions:

How much data center capacity will we really need over the long term?

Near-certain increases in IT demand will not necessarily translate into demand for more corporate data center capacity. A quick snapshot of 49 infrastructure organizations from CEB’s “Vision for Infrastructure” survey found nearly 60% had no plans to build a new data center over the next five years, preferring for the most part to leverage colocation facilities or upgrade existing facilities instead.

Why? The first and most apparent reason is the rapid growth in the maturity of public cloud services. Survey data indicates that, by 2015, the average infrastructure organization will have 13% of its application and Web hosting capacity with public cloud providers. Should public cloud providers resolve key security and performance concerns even faster than anticipated, this share of capacity will likely grow, especially if pricing for many public cloud services continues its downward trend. The ability of Software as a Service (SaaS) providers to encompass more end-to-end capabilities, particularly for commoditized back-office functions, will only accelerate this trend.

The second and less obvious reason is the continued trend line of improvements in internal efficiencies. A private cloud strategy in use at a majority of large enterprises should improve utilization of internal capacity beyond that already achieved through virtualization and the increasing number of cores available per physical server. Hosting and storage in 2015 are simply unlikely to require the same data center capabilities that most large enterprises support today.

Will the corporate data center be an asset or a liability in the future?

Several sectors, from financial services and logistics to high-tech manufacturing, have invested heavily in data centers to promote and preserve their competitive advantage. The highly advanced, highly resilient data center is a prized asset for many companies today, but companies should still question whether a tipping point lies ahead in which the data center as asset becomes the data center as liability.

Recent events point to two potential scenarios that could bring this tipping point sooner rather than later. First, the recent effects of Hurricane Sandy on the northeastern U.S. have put disaster recovery and business continuity planning back on the agenda. But even prior to Sandy, 53% of infrastructure leaders had indicated that improvements to resiliency and continuity were on their agendas for 2013.

Why? Early CEB data suggests that the technical and operational complexity associated with more dynamic architectures, as in most private cloud implementations, is both increasing the number of single points of potential failure in IT service delivery and obscuring corporate IT departments’ visibility into these points of potential failure.

Absent significant, rapid improvements in automation and management tools, companies will want to undertake resiliency investments to handle this growing complexity, or shift more of this liability to external providers with the requisite capabilities, scale and expertise. Part of this will require a hard look at exactly what companies are investing to protect, from the standpoint of business impact analysis. Are redundancy and continuity measures taking a one-size-fits-all approach when they could be better targeted at truly critical, truly core assets?

Second, the connection between data centers’ energy consumption and climate change is highly likely to resurface as a reputational issue for corporations, especially if the economic climate continues to recover. The prospect of regulation related to energy consumption and carbon dioxin emissions, while not immediately evident, remains a possibility, and a recent article in The New York Times suggests that data center energy use could come back as a focal point of interest for companies’ environmental track records.

Most have not yet made “next-generation” investments to reduce their power consumption footprint, and the return of interest in green data centers should raise questions around whether the data center will remain an asset worthy enough to warrant these investments over the next decade.

Different CIOs will have different answers to these questions, but common to all of them is the idea that the “data center of the future” isn’t necessarily a matter of new investments and technologies. It really begins with the question of whether the data center should continue to exist in its present form and consume capital that might, over the long term, see more return elsewhere.

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