Rapidly changing market dynamics and increased GRC (governance, regulatory and compliance) requirements are pressuring more IT departments to evolve toward a hybrid data center strategy. A hybrid data center approach lets organizations retain and fully amortize legacy infrastructure, while curbing capital expenditures on new data centers. It also provides the opportunity to reduce application purchase and maintenance costs, speed the adoption of DevOps practices and facilitate data movement between private and public clouds.

In an uncertain and less predictable environment, companies are reassessing their underlying computing assumptions and are looking to reduce their cost structures. Last decade’s technology spending boom has ended, as the economics of building and operating data centers is undergoing a secular change. Many industries are rife with excess computing capacity, driving down utilization rates in facilities with high operating costs and depreciation schedules.

The need for real-time information, collaborative applications and big data analytics require a fundamental shift in the way enterprises plan and execute their data center strategies. We are seeing a trend toward a more consolidated approach to data center strategy, with converged software-defined architectures to enable faster, more agile service provisioning and capacity elasticity.

In turn, those companies that implement better data management practices will gain sustained competitive advantage by extracting more value from their data assets. To realize this, they need to shift their focus from building the fastest infrastructure to assuring end-user productivity. Specifically, enterprises must increasingly view rapid delivery of applications and services as the new competitive front. As users access data from a variety of devices and locations, assuring user experience has become paramount to achieving the return on investment (ROI) objectives of cost reduction, enhanced productivity and incremental revenue generation.

Priorities Shift From Speed and Capacity to Efficiency…

Data center performance is a function of speed, capacity and cost. While speed and capacity remain critical for latency-sensitive businesses, cost and efficiency are becoming the key competitive differentiators among companies. With better data management practices, the keys to market leadership are assuring user experience and data quality. That is how IT aligns with corporate strategy to drive growth and value.

In the current environment, massive scale becomes a disadvantage to firms that are unable to extract deeper insights from their data through efficient data management. Underutilized data centers keep capital tied up in facilities with high operating costs. As a result, capacity becomes a drag on financial statements and competitiveness as firms saddled with excess floor space lose flexibility.

Today, energy efficiency is a primary data center concern. As technology costs have declined with hardware and storage commoditization and increased automation realized through virtualization, the cost of energy has continued to rise to become the single largest component of data center operating expenses.

As a result, cloud data centers operators have had to become much more efficient in reducing the power consumed per unit of computing executed, or power usage efficiency (PUE). While a PUE of 1.0 is utopia, and the world’s most efficient data centers have achieved a PUE in the 1.06-1.08 range, most enterprise data centers operate at nearly twice that rate.

Technologies such as data center infrastructure management (DCIM) software, pre-fabricated data centers, converged infrastructure and software-defined networking help data center and facilities management teams mitigate the cyclical nature of data center construction and management. Data centers are evolving from monolithic, one-size-fits-all repositories into highly optimized and transparent data lakes within smart buildings.

Firms that operate more efficient data centers can shift more resources from maintenance to product and systems innovation. This new strategic focus extends to outsourced infrastructure and services, which continue to become more economically viable amid a cloud price war, as well as more secure and compliant, particularly for secondary and tertiary data.

…And From Managing Infrastructure to Managing Data

Tech-Tonics believes this trend in data center investment represents a secular shift across industries, as companies leverage newer data center architectures and technologies to enable reduced costs, improved efficiency, greater security and lower risks. We expect consolidation to gradually extinct the monstrous enterprise data centers that ruled the past, with the new competitive paradigm evolving from infrastructure to agility as firms seek to improve ROI by reducing TCO.

These trends underscore the need for IT teams to evolve from managing infrastructure to managing data and computing resources. A hybrid data center approach provides the best economics while allowing companies to migrate at their own pace in a more secure fashion. It represents the fastest path to operational efficiency and enabling companies to extract more value from their data assets.

The key to achieving this objective will be to leverage all resources – both internal and external – to assure faster, more reliable and scalable service delivery and user experience. With hybrid data center strategy more closely entwined with data management, those firms that can free up capital investment and redirect operating expenses will be better positioned to sustain competitive advantage in the digital economy.

Gabriel LowyGabriel Lowy is founder of Tech-Tonics Advisors, a leading consultancy providing strategic messaging and market research services to technology companies of all sizes. He has received multiple awards as a technology analyst over the past 16 years, while published over 1,000 articles, market studies, forecasts, and competitor analyses on different sectors of the industry. His views can be found here.

(Image credit: Sarath Kuchi)

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