Are in-house data centres in a state of permanent decline?

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The in-house data centre will be a very different place in a few years' time as workloads move to cloud and colo, a Computing survey finds

Once the beating heart of every organisation's technological ambitions, the company data centre has been facing some stiff competition of late.

In spite of Moore's Law, in spite of new technologies coming down the track, in spite of mobility and big data, when we talk about the future of the company data centre, is it really a conversation about managed decline?

The answer to this question will be of vital importance to anyone who earns his or her living in a data centre. It will also be crucial to those formulating company strategy. Will the data centre still have a central place in these plans over the next two, three or five years, or will it have gone the way of the fax, the PBX and the mainframe?

This was the subject of a major research programme undertaken by Computing this summer, during which we interviewed a dozen IT heads about their data centres and fielded the views of about 300 IT staff by means of a quantitative survey.

In themselves, of course, data centres are going from strength to strength. The vast majority of the world's seven zetabytes of data is held in a data centre, and as that figure climbs towards a predicted figure of 45 zetabytes in five years' time demand for somewhere to store it is certainly not going to go away. The question is not one of data centre or no data centre. Rather it is one of whose data centre. Will it be yours, that of a colocation provider or MSP, or one belonging to the likes of Amazon, Microsoft or Rackspace?

At first glance it must be said that the future looks pretty bleak for the company-run data centre.

The majority of respondents said their own data centres and server rooms are central to their activities, but over the next two years this is expected to change, with hosted services and cloud the main beneficiaries (figure 1).

Cloud reaches a tipping point
Cloud services have moved inexorably into the mainstream over the last couple of years. This is the third time we have asked respondents whether they have experience with outsourcing to cloud services and this year, for the first time, a majority of respondents - 60 per cent - replied "yes", up from 48 per cent last year (figure 2).

"Cloud has become more established and more understood. We started with SaaS then looked at developing platforms which we would have done internally before..." said a head of technical architecture in the health sector.

Supporting this finding, 73 per cent of respondents said their use of cloud services will increase over the next 12 months, with only two per cent predicting a decrease (figure 3). Clearly, cloud has reached some sort of tipping point. The reason may be falling prices or it could be increased trust in the security credentials of the providers - always something of a sticking point with cloud.

"Cloud will really take off as there are more players, it's becoming more economically viable and more secure. The user will become less sceptical and less risk averse," said the head of IT in the finance sector.

And here comes the crunch: out of the three-quarters of respondents who said their use of cloud services will increase, almost half predicted that this will mean a consolidation or a reduction of their internal data centre services. Grim reading for anyone who happens to make their living in one.

However, that's not the whole picture. The reality is more nuanced. It's certainly not all doom and gloom for the internal data centre.

Among those who said their use of cloud would increase, 27 per cent said they expanding their internal data centre capacity at the same time, 35 per cent said they will continue to modernise existing facilities, with another 12 per cent saying they will still be maintaining their data centre, but with fewer upgrades than would have happened had cloud not been a reality. Only eight per cent said they would be closing facilities out-right.

In terms of expenditure on data centre-type services, the biggest growth is seen in cloud (figure 4). However, before data centre operatives become too depressed, it should be noted that this growth, while impressive, comes from a pretty low base. Cloud may be growing fast, but the internal data centre is still the largest recipient of funds in 32 per cent of cases, versus 22 per cent for cloud.

Moreover, in a separate question 40 per cent of respondents said they expected spending on data centre technology and equipment to increase this year, with only 18 per cent predicting a decrease. This new spending will be concentrated in a few key areas: new technologies such as software-defined solutions, converged infrastructure and specialised appliances (cited by 30 per cent), storage (18 per cent) and virtualisation (14 per cent) are the top three areas.

Some of this spending will certainly be going to support new activities in the cloud.

"People are spending massive amounts on data infrastructure to support cloud. They are not buying traditional data centre infrastructure," said a strategy consultant in finance.

The 18 per cent of respondents who anticipatied cuts in their data centre spending expected the axe to fall on servers (27 per cent), equipment such as racks and cabling (18 per cent), and power and cooling equipment (16 per cent).

Towards a hybrid future
The findings above fit neatly with another trend revealed by the survey. Asked about the type of cloud they are investing in, the largest response was "hybrid cloud" (figure 5).

Whether this means a tightly integrated system comprising private and public services, or simply a mixture of deployments, some sort of hybrid approach will be the best for most organisations.

Public cloud tends to be appropriate for hosting predictable, commodity services, systems that need to be spun up and run down rapidly, as well as for coping with peaks in demand.

Private clouds are used for workloads that can run on virtualised infrastructure but where regulations, latency and security demand that they be kept on-site.

So, while commodity services are moving to the public cloud, other more specialised services must be supported on site, hence the expected increases in both cloud and cutting-edge equipment and software.

It also explains the rise in popularity of colocation services seen in figure 1.

Some medium-sized organisations such as insurance brokers cannot put data into the public cloud because much of it is sensitive. What's more, regulations may require that the data is replicated to another data centre so that it is always available. Added to this is data protection legislation that is becoming increasingly stringent, and regulators that are becoming increasingly willing to punish companies for lax security practices that result in data breaches.

Given this squeeze from all directions, coupled with the rise in volumes and perhaps in view of the up-coming EU General Data Protection Regulation (GDPR), some organisations may feel their own data centre facilities lack the necessary armour-plating and that they would be better to employ a local third-party provider with the right credentials to do the job, which is one reason for the rising appeal of "colo".

Another reason is connectivity. Hybrid cloud requires connectivity between public and private cloud infrastructures and also the applications on the company's own servers. With a colo provider, private cloud and internal servers may be housed within the same building with high bandwidth low latency connectivity to public cloud services too.

The pattern of keeping important mission-critical applications and data close to home also explains the rise of flash storage. Once an expensive luxury deployed for applications that demand the lowest of latency and the highest of IOPs, the price of flash has plummeted over the past 18 months and vendors are offering guarantees of reliability and uptime. As commodity workloads move to the cloud, it is likely that those that remain in the in-house data centre will be the sort of applications that will benefit most from high-speed storage.

However, things do not change overnight in the data centre and other technologies that are predicted to revolutionise the data centre, such as software-defined and converged infrastructure, are still very much filed under "futures". While awareness of these solutions has risen, deployment has barely shifted since this time last year, with software-defined storage, the most deployed of the solutions we asked about, finding a place in a mere six per cent of data centres. Figure 1 may predict a big rise in spending on such solutions in the coming two years, but it seems likely that it will take longer than this for them to become mainstream.

The verdict
To sum up, then, companies are making more and more use of cloud and co-location and other third-party hosting providers. As a direct result many data centres will be consolidated or downsized, and a few will close. For those making cuts, the axe will fall on servers and data centre equipment.

At the same time, though, the vast majority said data centre budgets are stable or rising, with many expecting to invest in new cutting-edge technologies. But - there's not much sign of this happening yet.

So is the in-house data centre in decline? The answer is broadly no. It may not be at the heart of things any more but it is still a vital element in the hybrid set-up. However, for a minority of firms, those with commodity, standard workloads, the answer is yes. There is nothing that they do in their data centre today that they won't be able to do more efficiently and perhaps cheaply in cloud or via an outsourcing deal.

@_JohnLeonard