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By Scott Fogle,
Co-President & Co-Founder,
Advocate Networks, LLC
While attending the Hosting Transformation Summit in Las Vegas last month, I had the opportunity to listen to a wide range of industry participants (data center operators, vendors, consultants, industry analysts, bankers and venture capitalists) and compare their experiences with my own in the data center industry.
• Clearly, the recession of 2008-2009 dramatically slowed or completely stopped many enterprises' plans to expand data center infrastructure. Conversely, data center operators experienced strong growth in collocation services sales - a 5-percent increase in the second quarter of 2009. Most attendees agreed: as data center infrastructure needs grow, enterprises are turning to collocation providers instead of building or expanding their own data center space.
• According to Dan Golding, Director of Research at Tier 1 Research, "the recession has started a sea change - enterprises are realizing they should not build data centers, but should look to data center operators to provide the robust platform for new computing platforms." Golding attributed this to several factors, chiefly the continued constraints in the credit markets that are limiting enterprises' abilities to fund data center builds.
• Several sides took their positions on cloud computing. Vendors, including Microsoft, touted the advantages and benefits of this new architecture, while Golding pronounced it to be pure hype, explaining that no providers are making money in this today. I believe advances in hosting services will continue to evolve, and cloud computing is just the latest label.
• Utilization levels in most collocation provider data centers are high, and most data center operators are seeking funds to continue to build out. Atlanta has seen the opening of at least two new, large collocation facilities in 2009 by Verizon Business and Quality Technology Services. Golding commented that data center operators should pursue the "field of dreams" strategy - he said, "Build it and they will come." While I do not agree with this approach, I believe these data center operators will do well as more enterprises seek to rent data center space and avoid the capital costs and time associated with building or expanding internal data center operations.
• There was also significant debate on the proposed "Cap and Trade" legislation going through the U.S. Congress during this session. The overwhelming view by most I spoke with at the summit was that owners and operators of data centers will be a huge carbon tax target. In fact, several people commented that Cap and Trade would spawn a new industry with services and tools for tracking and reporting on carbon output and carbon offsets at data centers across the country.
We continue to recommend that enterprises carefully evaluate data center options, create a roadmap based on business and technical requirements, build a business case to consider the financial impact of "build vs. buy," and be sure to look at all the data center options available in the market.
For more information about data centers, please contact Scott Fogle at (678) 987-5990 or scott.fogle@advocatenetworks.com.