7 Key Factors Driving Data Center Outsourcing

The global market for colocation data center services is expected to grow from $30.9 billion in 2016 to $54.8 billion by 2020, according to a ResearchAndMarkets.com study released last month. But what are the factors driving organizations to outsource their data centers to professional colocation partners?

 

Data center outsourcing has gained traction worldwide as a viable alternative to building and managing an in-house data center facility. This is confirmed by recent research results. The global market for colocation data center services is expected to grow from $30.9 billion in 2016 to $54.8 billion by 2020, according to a ResearchAndMarkets.com study released last month. But what are the factors driving organizations to outsource their data centers to professional colocation partners?

Jochem Steman CEO Datacenter.comAuthor: Jochem Steman, CEO of Datacenter.com

The Americas as a segment is expected to grow from nearly $16.8 billion in 2016 to $26.4 billion by 2020, at a CAGR of 12.0% for the period of 2016-2020, according to this ResearchAndMarkets.com report. Asia-Pacific is expected to grow from $5.4 billion in 2016 to $13.2 billion by 2020, at a CAGR of 25.0% for the period of 2016-2020.

In Europe, Internet hubs like Amsterdam, London, and Frankfurt are attracting an ever-increasing amount of multi-tenant data center customers too, something I saw confirmed last month at the Kickstart Europe 2018 event in Amsterdam, a new annual data center event, when listening to the keynote of Mitul Patel, Head of EMEA Data Centre Research at CBRE Data Centre Solutions. The data center markets in Amsterdam, London and Frankfurt are poised to continue surging for the foreseeable future.

Historically, cost has always been a big factor behind data center outsourcing. Cost will remain a key element driving the outsourcing of data centers to colocation providers, but I also see customers concentrating more and more on the value of the colocation services being provided as well as reducing their risks. Here are the five top reasons why customers are outsourcing their data center operations today.

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  1. Cost

Since a couple of years, CIOs are under constant pressure to reduce all costs associated with IT operations. Running an in-house data center will add huge expenses. The level of investment required to deploy and maintain modern, energy-efficient data center infrastructure is substantial – which makes colocation of IT infrastructure in professionally managed data center facilities a good alternative.

  1. Cloud Connectivity

In the past few years, we’ve seen the growing popularity of various cloud services. Public cloud providers like Amazon AWS, Google Cloud Platform, Microsoft Azure, IBM Cloud and Alibaba Cloud are growing rapidly. Public cloud offers ultimate flexibility and is a fantastic resource for enterprises and others with dynamic IT operations.

The truth is that the majority of users will need a combination of in-house IT and (public) cloud providers. Connectivity towards those cloud providers is key for enterprise-grade business operations. The benefit of outsourcing in-house data center infrastructure to the right colocation data center also means access to high speed and high available connectivity. The cloud-enabled connectivity providers located in colocation data centers tend to offer high levels of performance, reliability and scalability at a more attractive price point compared to in-house data center operations.

  1. Compliance

CIOs today need to comply with a variety of government and market regulations, including PCI-DSS, ISAE, et cetera. Without dedicated and well-educated staff with the right skills and compliance expertise, maintaining compliance requirements can be difficult, time consuming and expensive. Many colocation data center providers on a worldwide level have been 3rd party audited and hold certifications confirming their ability to comply.

  1. Reducing Risks

How difficult is it to access your in-house data center? Colocation data center providers are usually able to offer advanced security layers meeting the latest security and compliance requirements. With security measures including biometric scanning, video surveillance, alarm systems, mantraps, and personnel onsite 24/7, organizations are better equipped to secure their most valuable asset: the company data (infrastructure).

  1. Capacity/Flexibility

With an in-house data center, companies run the risk of not being able to respond to changing capacity requirements, which might restrict and even hurt the business goals being set. Outsourcing data center operations to a colocation provider with ample floor space to grow and flexibility in their contracts allows you to manage your data center operations dynamically and to easily scale your operations up and down.

  1. Expertise Shortage

The level of expertise required when running a modern, energy-efficient data center with low Power Usage Effectiveness (PUE) figures is growing day by day. About twelve years ago, operating a data center was not a big deal. It required a hall, some racks, power and compressor cooling. Nowadays, data center operators are all pioneering to get the lowest and most energy-efficient PUE-levels, as the cost of current has become a substantial part of data center operations. They’re also focused on modular deployments to keep things flexible and cloud-enabled.

From an ROI perspective, companies outsourcing their data center services may benefit from having access to more sophisticated data center infrastructure than their budgets would otherwise allow. This is a significant point, which not should be overlooked, particularly when you consider the life span of a data center.

Even if you have the expertise to setup and maintain modern data center infrastructure, think twice, as various studies conclude that CIOs like to free up IT staff and lower their in-house data center costs by outsourcing core data center operations to external data centers as well cloud providers.

  1. Uptime Guarantee

A data center outage comes with a significant price tag. Professional data center providers are capable of operating state-of-the-art facilities and offering sophisticated backup systems to keep things running even in the event of an outage. Most data center providers are also able to offer Service Level Agreements (SLAs) guaranteeing high levels of availability.

If CIOs don’t have to worry about the technical aspects of data center and IT infrastructure uptime as well as the risks of any downtime and the redundancy measures being taken, they will be able to focus on accomplishing corporate goals, on applications and supporting the business.

Conclusion

As said, a standard motivation for outsourcing in-house data centers is cost reduction, but there’s much more to it – including compliance, improved resilience/uptime, cloud connectivity, scalabilty and flexibility, expertise shortage, and reducing risks. According to various market reports, data center outsourcing is the most effective way to manage core IT infrastructure, enabling organizations to focus on innovating their business. When above is taken into account, it’s actually hard to find a reason to keep all data center operations in-house.

About Jochem Steman and Datacenter.com

The author of this article, Jochem Steman, is a data center executive with a long and successful track-record as a manager and entrepreneur within the global hosting, storage and data centers services business.

Datacenter.com’s investors have committed themselves to invest heavily in state-of-the-art data center infrastructure – to meet the market’s growing need for energy efficient, highly interconnected and modular colocation facilities, in which organizations can flexibly and securely host their critical IT infrastructure while cloud computing needs are addressed. Datacenter.com’s customized, reliable and innovative data center solutions are accompanied with the company’s best-in-class customer support.

To learn more about Datacenter.com, visit https://datacenter.com or follow Twitter @datacenter_com.

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