Data Center Design & Consolidation

In the CloudTweaks article “5 Ways the Cloud is Redefining Modern-Day Data Centers”, I discussed how cloud computing is driving a major shift in IT business operations and provisioning, as well as within the data center – where it lives. This piece will focus on how the cloud is driving further consolidation in the data center industry, in addition to giving rise to “specialty” facilities, which offer a viable alternative to the traditional cloud model and give providers exactly what they need, where they need it.

Data Center Consolidation Trends

Historically, the number of data centers owned by both business as well as government entities has fluctuated to accommodate the respective ebb and flow of internal demands. In recent years, the rising cost of hardware, maintenance, cooling and energy have pushed already strained IT budgets to the edge, compelling IT management to seek out alternative methods for supporting both existing systems and new development. For many, this includes reducing the number of data centers in the organization. In 2010, for instance, the Government created the Federal Data Center Consolidation Initiative (FDCCI) to consolidate the number of Federal data centers. Agencies participating in the initiative today are on track to close nearly 3,800 data centers by the end of this year, saving approximately $3.3 billion. In addition to cost-savings, rampant merger and acquisition amongst today’s enterprises has caused massive inefficiencies in companies’ IT departments due to lack of systems integration, spurring an even greater need for alternate computing models.

While organizations continue to consolidate facilities to save money, their need for effective data management and storage have increased exponentially. The volume of digital data is growing at an unprecedented rate, doubling every two years. Today’s IT execs are under phenomenal pressure to deliver value, while maintaining cost and efficiency. This is where the cloud can be most effective. Through economies of scale, cloud vendors are able to deliver the same, if not better, performance than in-house data centers at a lower cost. Furthermore, the cloud provides a centralized computing system that enables data and applications to be accessible from anywhere, anytime, yielding operational efficiencies.

The Rise of “Specialty” Data Centers

The cloud’s proliferation, driven by an increasingly data-driven world and smarter consumers’ zero tolerance policy for latency, performance and quality, are causing today’s providers to have very specific infrastructure requirements in order to effectively serve their customers’ needs. Because of this, the data center has become a key component in the delivery of the user experience, and an increased focus has been placed on building “specialty” data centers that can give network, service, content, and other providers exactly what they need to meet specific customer requirements. For example, data center infrastructure is evolving to meet the increasing power needs of enterprise hardware, or the micro-colocation requirements of companies just getting their feet wet in the world of colocation and cloud, like MOD Mission Critical’s Colo by the ‘U’ offering.

The growth of bandwidth-intensive content consumption and its effects on backbone transport costs are other key challenges that one specialty data center provider named EdgeConneX® is helping to overcome. With the proliferation of the Internet of Things (IoT), High-Definition (HD) video and 4K TV, traffic growth is projected to increase at a 30 to 50 percent Compound Annual Growth Rate (CAGR) over the next five years. The company’s model focuses on replacing massive facilities in major NFL cities with vast populations yet no direct access to cloud data centers, with strategically-located data centers positioned at the edge of the Internet in underserved Tier 2 markets. By creating a new “edge” of the Internet, these specialty facilities move content closer to the end-user, thereby ensuring the lowest latency data delivery, with an improved quality of service while lowering the transport costs for content providers.

Managed Services

Another cloud-driven requirement propagating the growth of specialty data centers is the need for full stack management and managed services such as security, backups, email, monitoring, storage, Content Delivery Network (CDN), Disaster Recovery and Database-as-a-Service (DRaaS), and more. A key benefit of the cloud and hosting in third-party facilities is the ability to free up internal staff and IT resources from the hassles of daily infrastructure management, enabling them to focus on revenue-generating initiatives and the core business – a model that New York-based company Webair has honed through its international network of data centers.

For other data centers, the business model is focused on interconnection. Gone are the days of a single telco providing one way in and one way out; of simply buying property and setting up shop. Realizing end-user demands to access data and applications anytime, from anywhere, providers like Equinix have established global multi-tenant, distributed ecosystems of buyers and sellers that support customers’ basic access and service delivery needs – a digital supply chain, so to speak. It’s a model that has served them well, and is relatively trend and customer-agnostic.

Cutting down the distance to partners and customers is key for tenants, as well as attractive in terms of cost, performance and faster time to market. And today, it is a need that must be met for anyone – from cloud provider, to CDN, to subsea cable. Equinix has taken 6,000 of the most important customers in the IT space across cloud, content, network and financial sectors to create a thriving interconnection ecosystem; and now, the company is setting its sights on its next ecosystem participant: large enterprise.

There’s no question that cloud computing has played an important role in driving the evolution of data center design, while also having a massive impact on the industry’s consolidation. With the majority of these advances occurring in the last 10-15 years, the future of the cloud and its impact on the data center sector are both remarkable and seemingly limitless. As the cloud comes of age, what will it disrupt next?

By Michael Hollander