Despite a 10.3% spending decline in 2020 due to restricted cash flow during the pandemic, the global data center market will rebound over the next 4 years. End-user spending on global data center infrastructure is projected to reach $200 billion in 2021, according to the latest forecast from Gartner, an increase of 6% from 2020.
Lockdowns from COVID-19 will prevent more than 60% of planned new facilities construction in 2020, which is why data center infrastructure revenue will decline 10.3% in 2020. End-user spending is expected to grow in the single digits starting in 2021, while the worldwide data center market is expected to grow year-over-year through 2024.
“The priority for most companies in 2020 is keeping the lights on, so data center growth is generally being pushed back until the market enters the recovery period,” said Naveen Mishra, senior research director at Gartner. “Gartner expects larger enterprise data centers sites to hit pause temporarily and then resume expansion plans later this year or early next. However, hyperscalers will continue with their global expansion plans due to continued investments in public cloud.”
“Much of the reduced demand in 2020 is expected to return in 2021 when staff can physically be onsite,” added Mr. Mishra. “For now, all data center infrastructure segments will be subject to cost containment measures and enterprise buyers are expected to extend life cycles of installed equipment.”
Advise for Data Center General Managers
With slow improvement in economic growth, data center infrastructure general managers should seek to prioritize a select set of existing and new customers. Specifically, Gartner recommends:
- Training the organization’s sales force to engage with the chief financial officer (CFO) and chief procurement officer on a set of cost optimization initiatives such as renegotiating IT contracts, optimizing cloud costs, and consolidating IT.
- Crafting an industry playbook that helps technology providers understand COVID-19’s impact on a range of different industries to then recommend short- to midterm action items for the given providers by each industry.
- Investing in a new go-to-market model for digital natives to drive innovation. Build momentum around hybrid IT and consumption-based pricing to improve mind share with digital natives.
Gartner customers can read more in the report ‘General Manager Insight: Data Center Infrastructure Spending Downturn and 3 Actions for Recovery.’
Gartner analysts will provide additional analysis on cloud strategies and infrastructure and operations trends at the Gartner IT Infrastructure, Operations & Cloud Strategies Conference taking place virtually December 7-10 in the Americas and EMEA.