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The Uptime Institute says cloud services is cannibalising enterprise datacentre growth

The Uptime Institute says cloud services is cannibalising enterprise datacentre growth

While global adoption of public cloud computing seems to be picking up pace in 2013, investment in enterprise datacentre growth has largely remained flat, according to a report published Thursday by international datacentre authority Uptime Institute.

The report features the results of an international survey that included responses from over 1,000 datacentre facilities operators, IT managers and senior executives globally.

Nearly one third of datacentre operations in North America and Europe are receiving budget increases of 10 per cent or more each year, with developing economies in Asia and Latin America seeing twice as much expansion, and while datacentre budgets seem to be expanding worldwide the growth is overwhelmingly weighted towards third party providers.

63 per cent of third party providers have reported budget increases, up from 48 per cent in 2011, while only 5 per cent noted budget decreases. Meanwhile, of 25 per cent of enterprise datacentres have reported budget increase and 21 per cent have reported budget decreases, with 57 per cent reporting no budget growth.

“This data suggests third-party datacentre service providers are growing at the expense of in-house IT operations. This isn’t the death knell for the enterprise-owned datacentre, but it is reflective of a growing shift we’ve noted in these surveys and anecdotally for the last few years,” the report reads.

The Institute says that global adoption of public cloud computing is up to 17 per cent this year from 10 per cent in 2012 – but interestingly, it notes that large enterprises are almost twice as likely to deploy public clouds than smaller enterprises, whereas conventional wisdom generally dictates that public IaaS services like AWS and Windows Azure are more attractive to companies that are not already managing tons of servers.

“Today, the onus is on the enterprise operator to demonstrate that a new in-house datacentre build is the best choice for the company. The burden of articulating value has shifted from the third-party provider to the internal enterprise staff,” the report said, adding that making a decision between a new in-house datacentre build and outsourcing computational infrastructure is wrought with “complexity and emotional influences due to potential staffing impacts.”

The Uptime Institute says that this trends can be explained in part by the fact that many enterprise datacentre operators don’t effectively collect and present cost and performance data to their executives, whereas third party datacentres make their bread and butter on efficiency, cost and performance metric.

It will be interesting to check in with next year’s Uptime Institute datacentre industry survey to see whether ITIF’s prophecy about PRISM and US-based cloud service providers losing billions in the fallout comes true. Nevertheless, in the short term the increased adoption of public cloud means the industry will likely see a surge in demand for services like TwinStrata or Nasuni that help enterprises transfer data from on premise kit to public clouds, with some cloud providers looking to offer optimised cloud migration services themselves.

@BizCloud
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