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Data centers turn to outsourcing to meet capacity needs

By James Niccolai
May 10, 2011 11:37 AM ET

IDG News Service - More large companies are turning to collocation providers to relieve capacity constraints in their data centers, as a way to avoid the high cost of building their own new brick-and-mortar facilities, two studies suggest.

The Uptime Institute, in its first annual data center survey, reported Tuesday that more than a third of the large companies it surveyed -- 36 percent -- expect to run out of capacity in at least one of their data centers over the next 18 months.

Server consolidation and upgrading of power and cooling equipment are the primary ways the companies said they would boost their capacity, the survey showed. But a significant portion -- 29 percent -- said they plan to lease collocation space, while 20 percent will move workloads to the cloud.

That's notable because large companies traditionally have kept their IT operations in-house, said Matt Stansberry, a research analyst with the Uptime Institute. "This is a trend we've been seeing," toward more companies managing IT operations that are outside their own data centers, he said.

A separate study commissioned by Digital Realty Trust, which builds and operates data centers for third parties, showed a similar trend. Sixty percent of the respondents who planned to expand their data center capacity in 2011 said they would lease space from a third party rather than build their own data center. That was an increase of 7 percent over last year, which follows an upward trend over the past few years.

"Increasingly, enterprises appear to be favoring the lease model, as fewer companies are choosing to go it alone on these capital-intensive projects," Michael Foust, Digital Realty's CEO, said in a statement.

The Uptime survey quizzed 525 large data-center operators, mostly in North America, in March and April. They included banks, insurance companies, collocation providers and government agencies -- what the Uptime Institute called "typically conservative organizations."

Digital Realty's study involved 300 IT executives directly involved in data center decision-making at large corporations in North America.

The fact that so many data centers are running out of power, cooling or floor space isn't a surprise. Many companies put data center projects on hold during the recession and are just now starting to ramp up spending.

"Companies stretched server life cycles an extra 12-24 months, sat on their wallets and rode out the crisis. Now, a lot of shops need to do major infrastructure upgrades," Stansberry said.

A new data center can cost hundreds of millions of dollars and take a year-and-a-half to build. They are also expensive to operate, mostly because of the power needed to run the IT gear and cooling equipment. That may explain why even large, conservative companies are willing to move IT workloads outside their own data centers.

Reprinted with permission from IDG.net. Story copyright 2014 International Data Group. All rights reserved.
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