Data center services is outpacing its supply, explaining the high growth rate which this highly fragmented industry is poised to witness. With exponential growth and a dynamic and innovative supply chain backed with multiple delivery channels, enterprises are looking for agile and responsive business solutions, especially for their IT requirements. Due to these trends, Technavio analysts expect the global data center services market to register a CAGR of around 11% by the year 2020.
Data center services and the cloud arms race
Some of the major reasons for the high demand for cloud-based data center service providers:
Lack of in-house capabilities
This is one major impediment which many enterprises face – regardless of their size or area of business. Especially in the case of small organizations, maintaining in-house data centers and monitoring day-to-day operations is a costly affair. Instead, they prefer outsourcing data center services to third parties, as it helps them bring down infrastructural costs and management complexities, increasing focus on their core activities.
Demand for better network management and storage capacity
As businesses witness growth, so too does the demand for enhanced storage capacities. Data center service providers and their virtualization process help enterprises save on power consumption and also rids the need for dedicated physical infrastructure. These are two driving forces explaining why data center budgets will increase by more than 10% by 2017, according to Technavio. Several organizations are now looking for better network connectivity options that include carrier availability and density. This demand for network connectivity is driving the data center market, as they are able to provide large network bandwidth which enables faster transmission of data in a cost-effective manner.
Classification of Data Center Services
Source: Technavio
Higher focus on sustainability
The focus on sustainability and an eco-friendly image has prompted businesses to outsource their data center requirements to energy-efficient data centers. Thus these businesses not only comply with the regulatory requirements but are able to save on their R&D (research and development) costs as well. This has further boosted the demand for data center services and the growth of the green data centers market.
These key factors have a significant impact on why major data center service providers are rigorously competing against each other to widen their customer base and thereby acquire a larger share of the market. Recently Microsoft announced its own cloud data center expansion, by opening two previously announced German data center facilities in Magdeburg and Frankfurt. This was followed by Google and Amazon Web Services who have come up with their own plans of increasing the number of data services centers in India, Singapore, Australia and France.
What has turned the whole process of providing data center services in to a cloud arms race, are major service providers coming up with their infrastructure closer to the actual customers. As long distances between service providers and buyers leads to delay in operations, placing data centers closer to the buyers is sure to speed up the performance of their operations. Also, as countries come up with data sovereignty laws, it becomes increasingly important for service providers to have their infrastructure within the borders of these countries.
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