Data Center Makeover

If you had told me 5 years ago, the boring data center would be one of the hottest areas in the technology industry I would have laughed.

But several trends have converged to make it so

• Cloud computing - Microsoft's Mesh offering this morning in response to what amazon, Joyent and others have been pioneering
• Breakthrough designs - Google, Sun and others , in particular, have been rethinking traditional raised floor and other accepted best practices in data center design
• Green Computing - the focus on lower energy consumption and a willingness to consider alternative energy efficient locations like Iceland
• Virtualization - VMware was one of the hottest IPOs last year, but there are several other vendors in the space
• DC Consolidation - Really aggressive consolidations like HP's internal moves from 85 data centers to 3 pairs worldwide with related savings in everything from real estate to network costs.
• Standardization - with ITIL - decades of data center operations and yellow books being formalized and best practices shared
• The move to services  - part of a broader desire for clients to reduce their capex IT spending and buy it more as as an opex service - SaaS, HaaS, PaaS
• Remote monitoring - the ability to monitor key components of network, database etc from cheaper, remote locations
• New tax incentives - seems like every state in the US and every savvy emerging country wants to attract data centers with incentives

But all this excitement is often muted at several of my clients. Why? Because many data centers are outsourced, and few outsourcers are proactively bringing these efficiencies to bear on their contracts. Clients are stuck in multi-year deals and outsourcers want to squeeze every last bit out of older data centers.

While HP can brag about its own DC consolidation, check how many of its DC clients have seen the pass through effects of such efficiencies. While IBM launches its own version of cloud computing check how many of its clients are being offered utility computing economics. While Accenture can talk about "green computing" check how many of its own DCs are green.

So, yes if you had told me 5 years ago data centers would be a hot area , I would have laughed. If you had told me many of the innovations would come from amazon and Google, not folks like EDS and CSC, I would have questioned your sanity. But that's the reality and outsourcers need to catch up and pass along these efficiencies. Fast.

Comments

[Gregory Yankelovich]

It is very amusing to hear financial analysts to discuss Amazon as a retailer and forecast their multiples on that basis. A good example of blind leading the blind.

[Eric Dirst]

Vinny, I agree. We are moving forward aggressively with many of the data center optimizations you mention (vmware, consolidation, advanced replication to replace backup tapes) and we have >10 SaaS applications deployed too date. However, have any of these innovations been spearheaded or even come from our outsourcers? The answer is absolutely NO. Even though the contracts allow for gain sharing, this just doesn't happen. We eventually brought most of our outsourcing back in-house, with the exclusion of mainframe and some applications development. The outsourcers just don't get it ... at least the one's I've dealt with. I'm sure this is just an opportunity waiting for the right outsourcer to capitalize on. Sounds like a new business model for someone.