Virtualisation increases in 2016, yet data centres should not be underestimated

As cloud services continue to evolve and form a large part of UK IT spending, it comes as no surprise that virtualisation is set to enjoy a successful 2016.

A recent study by the Cloud Industry Forum (CIF) found that four in five UK organisations formally adopted at least one cloud service in 2015, whilst seeing a year-on-year rise in the uptake in cloud services from 48 per cent in 2010 to 84 per cent in 2015. These figures show the ability for virtual servers to address two key factors in IT strategy: reducing carbon footprint and providing high power solutions. Both these factors are fuelling the migration towards virtual services for organisations. In light of these moves there have been concerns that this could lead to data centres becoming redundant. This is simply not the case.

Essentially, data centres address a simple factor that virtualising servers cannot – providing a physical location for data storage. Many organisations still prefer knowing where their data is located and have instant access to their data should they need to. With 2015 being plagued by a plethora of distributed denial-of-service (DDoS) attacks, organisations will continue to see the benefit in splitting their resources between both cloud applications and data centre solutions, to avoid the risk of having all their assets stored in one place.

A combined approach between both cloud-based platforms and data centres will continue to gain momentum as industries including managed services, gaming, and tier-2 financial services drive adoption.

Both cloud and data centre providers are beginning to tap into the potential of a combined approach for its end-users, acknowledging that data centres located closer to the virtual server can experience enhanced connectivity, boosting speed of operations and reliability. Location of colocated data centres thus provides a key consideration point in 2016.

A good sign for colocated data centres is its continued growth particularly in tier-2 cities. With the “dog fight” of property rent in London, many data centre providers alongside its end-users are adjusting to the idea of having their data centres located on the outskirts of major cites, capitalising on cheaper rent. In a growing market and with fierce competition from cloud-based providers, data centres are in the unique position of being far more aggressive on pricing. Rent was between 30-40 per cent cheaper in 2015, and with prices set to stay at this low rate, it provides a more cost-effective model, particularly beneficial for SME’s and start-ups.

Aside from the financial benefits of lower rent, the debate between capital expenditure (CAPEX) and operational expenditure (OPEX) also comes into contention. The rise in colocation data centres has seen a shift in traditional IT infrastructure management with organisations quickly realising the benefit of an OPEX model, and its flexible and refreshing approach to existing legacy IT systems.

Figures by 451 Research revealed that data centre space occupied by colocation providers is up 11 per cent on 2014, and forecast to maintain this level of growth through to 2018, as organisations look to outsource more of their IT. CAPEX expenditure has become increasingly difficult to gain approval from the boardroom whilst the OPEX model provides a viable solution to prevent the additional costs incurred from overheads and staff. The more flexible contracts offered by data centres as well as having dedicated management of an organisation’s data will allow them to invest their time and money into other business matters.

Perhaps the largest obstacle for data centres is the growing insurgence of the Internet of Things (IoT), which will prove to be a huge market for online activity. Gartner predicted that there would be close to 21 billion connected devices by 2020, creating an even larger demand on power consumption.

2015 saw longer durations in online gaming sessions, significant e-commerce activity fuelled by events such as Black Friday, and the growing user base of streaming media such as Netflix and Amazon Prime. The boost in these activities will result in more devices being connected on a daily basis and thus the requirement for more data centres to meet the demands of increased power consumption.

Ultimately, the rise of the virtual servers will continue to thrive in the year ahead, yet the importance of data centres should not be underestimated. It’s not simply a question of which service to choose, but an understanding and appreciation of both. The combined approach of virtual servers and colocated data centres rewards its end-users with increased efficiency of operations whilst keeping costs to a minimum. The beauty of this relationship is that both can effectively co-exist and should be seen as a collaborative project rather than separate IT entities.

Greg McCulloch, CEO, Aegis Data

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