A survey conducted by Gartner Inc. in the beginning of 2014 indicated that CIOs have the ‘Infrastructure and Data Center’ category ranked as number two on their list of technology priorities for the year. This category came second only to ‘Business Intelligence and Analytics,’ which is gaining exceptional momentum this year. Both the categories are related as BI has its dependencies on efficient and innovative ways of data storage and access. There is, however, a forceful shift happening in the data center environment as applications are being divided in the use of cloud-based systems and server as a service options, as compared to traditional on-premise options.
The total IT budget spend this year is in the range of $3.75 trillion globally. If data centers are the number two priority on the list, it leaves CIOs with a huge budget at their disposal. Data center budgets in the range of billions of dollars were unheard of a few years ago. Today, however, companies like Google, Microsoft and Amazon are increasing capital expenses by as much as 60 to 85% on an average every year. For these big players, almost all of the capital expense is going in the area of infrastructure acquisitions or upgrades, either through buying land for constructing new data centers or through aggressively increasing network bandwidths and digital horsepower.
Gartner revised its numbers recently and indicated a slowdown in the data center investments as compared to what it had predicted earlier in the year. The numbers for the big giants still seem strong as Google’s financial results show that it spent $2.6 billion on data centers alone in Q2 of 2014. Amazon and Microsoft were also high in their spending with numbers close to the $1.2 billion range for Q1 2014. With such high infrastructure spending in 2014, the data center industry can expect a consolidation between 2015-2018 in terms of stabilization and moving towards using the new infrastructure.
In the current landscape, most vendors are looking for product differentiators. Without taking that into account, the only competitive factor to use is price. The risk of investing in products, services and software by vendors that may not make it through huge market consolidation waves in the future is very real.
Lifeline Data Centers has a stable, expanding business in the Midwest. We are continually looking for new ways to be more efficient, innovative and compliant. Schedule a tour with us today to learn more.