New research has found that companies are expecting their in-house data centre capacity to decrease going forward, despite most organisations moving their client server-based applications into the cloud.
The survey was conducted by IDC on behalf of co-location and managed service provider Interxion, and it polled 401 enterprises across the four largest European countries (Germany, UK, France and the Netherlands)
IDC estimated that the combined carrier-neutral colocation market in those countries was worth 725 million euros (£632 million) in 2008, and but in 2013 it will reach 2.01 billion euros (£1.75bn), which equates to a 23 percent CAGR (compound annual growth rate).
Despite this, companies expect their total data centre capacity (by number of racks) to shrink 1.1 percent in the year to March 2010.
The survey found that nearly all 95 percent of companies operated their own data centre. Around 20 percent of the companies surveyed used an IT outsourcer's data centre, and 11 percent used a colocation service.
IDC thinks that the main reasons for expecting capacity to shrink are IT consolidation and the combined response of utility/cloud computing or server virtualisation (with the need for less servers). This is attractive in the current climate, thanks to the need to cut costs and reduce duplication and overlap.
But despite the decline, IDC feels that capacity placed with colocation providers will increase as a proportion of the whole, equivalent to a net increase of 5.2 percent for all colocation (carrier-based and carrier-neutral). This reflects the trend IDC sees in network and data centre operations overall, with the increased willingness to outsource or use managed services, including among companies that are traditionally heavily in-house
"Overall, the market place has stayed same, espcially as some thought there would be a decrease because of the credit crunch," said Anthony Foy, group MD at Interxion. "We see continuing demand and growth for data centres, but it varies from company to company, depending on what network and infrastructure they need, in line with what we saw two years ago (when IDC and Interxion conducted a similar survey).
"The survey points to an expected decrease in total in-house data centre capacity," he added. "However if you look at underlying requirements for data centres and data centre services, the decrease can be explained by the type of application and equipment being deployed."
"Large companies are consolidating their data centre capacity, some of which is coming to the end of its operational life, and equipment has a higher power and cooling overhead because of density, as well as the migration from client-server environments to web based environments, so it more sensible to centralise their resources."
We continue to see a broad IT refresh since late 2007," Foy told Techworld. "The IT refresh will continue to take hold as companies need to update their applications and deploy them onto the web."
"One of the things that came out of survey, is that while capacity has been shrinking, the use of colocation and services is increasing dramatically," he said. "10 percent of companies currently use outsourced data centres. It was less than 1 percent couple of year ago."
"Ourselves and our competitors must be doing a good job of building confidence, that is the one message we take from this," Foy said. "The second message is that the addressable market is huge, and we are only scrapping the surface of demand, especially when you consider that in the United States, 35 percent of organisations use outsourced data centres, compared to only 10 percent in Europe."
Foy pointed out that in the past for example, companies always had their own logistics departments, but nowadays most have outsourced their logistics to specialist companies. "Companies are increasingly accepting they no longer need to own their own data centre, because the challenges of operating their own in-house data centres is so difficult," he said.