Innovation Key to Keep Outsourced Data Center Bills Down

By CIOReview | Tuesday, August 9, 2016

In today’s connected global marketplace, data centers have become more important than ever. Customers expect to purchase products and access services round the clock and any downtime—planned or unexpected—can disrupt critical business processes. New rules and regulations mean that organizations have to store huge quantities of data for longer periods of time. Today, data centers are under increasing pressure to reduce their carbon footprint and get rid of old equipment in a safe and eco-friendly manner. To cater to these ever evolving demands, data centers must achieve near continuous availability and increased capacity and efficiency.

Initially considered to be a standard practice for organizations to own and operate their own data centers, today, a number of factors compel businesses to think twice over the need to own their own facilities. A greater impact is created by virtualization, various forms of cloud computing and a paradigm shift in the ways organizations run IT projects. The three critical business metrics that define data centers include reducing costs, managing risks, and accelerating business growth. These metrics are a true reflection of a long term trend, a shift from “information technology”—which implies IT is separated from the business—to a model where technology powers the business.

What Keeps Data Center Managers up at Night?

Outsourced data center costs have been steadily declining during the past year. According to a survey by Gartner, in the $70 million data center infrastructure utilities space in the U.S. and Canada, prices on renegotiated contracts have eroded by about 10.5 percent in the past 18 months. This is one among the myriad  data center outsourcing trends identified by the analyst firm. “What we are seeing is continuous improvement and automation efforts,” said David Ackerman, a Research Director at Gartner.

A large chunk of outsourced data center pricing is variable, with unit based pricing being the most common practice. According to Gartner, the top outsourced data center vendors are IBM, HP, Dell, HCL, Computer Sciences Corp., Atos, Unisys and Accenture. The price drop is result of growing demand, with a 24 percent growth in server capacity and a 38 percent increase in storage demand annually. It’s left for the companies to decide whether they want to outsource their data center operations or not. One of the shortcomings for data center outsourcing vendors is that they don't promote cloud computing well.

It comes as no surprise that companies have found the quality of service from low-cost geographies to be poor, and some providers may not be using data center tools effectively, such as a data center infrastructure management system (DCIM).

The sole aim of a DCIM initiative is to provide administrators with a comprehensive view of a data center’s performance so that energy, equipment and floor space are used in an efficient manner to yield optimum results. Since DCIM is a generic term which covers a wide range of data center management values, each deployment will include only a part of the full DCIM value needed and expected over time.

Companies should be well aware of their business and IT requirements and select a vendor accordingly. Most users are focused on service providers who can support a specific workload, and not necessarily the biggest vendor or the market leader. Strengths of data center outsourcing vendors lie in standardizing processes, consolidating data centers and the service management that is provided.

One of the most critical challenges for customers is dealing with mainframe workloads. The number of clients looking for help with mainframe workloads has escalated astronomically during the past year. IBM is not the only choice for mainframe work—half of the top data centers outsourcing vendors also do mainframe work. Some enterprises leverage data center outsourcing for hosting virtual desktops, with 18 percent of the users surveyed by Gartner doing it with Vmware, Citrix, and Microsoft making up most of the work. In the near future, buyers will continue to see vendors make use of economies of scale, and capitalize on expanding server and storage demands.

Compliance or governance, outsourcing data storage shifts important business activity outside personal networks and security systems. One must be comfortable sharing this responsibility with vendors to choose the right partner wisely.