Spending on data centres declines in Australia in 2020, set to rise in 2021

Even though companies are spending less on data centre infrastructure, COVID-19 has accelerated the transition to the hybrid cloud and has not slowed colocation providers’ investments.

Data center corridor of servers with abstract overlay of digital connections.
Sdecoret / Getty Images

Australia could see a 6.5% increase in investment in data centre infrastructure in 2021, reaching a total spend of $3 billion, according to the latest forecast of research firm Gartner.

The analyst firm also projects a a 10.4% drop in investment in data centre infrastructure in 2020. This year’s decline, as well as next year’s projected increase, are in line with the global forecast: a 2020 decline of 10.3% and an expected increase for 2021 of 6%.

As-a-service investments take priority due to COVID-19

Due to ongoing cost containment, many Australian enterprises have delayed their capex-intensive infrastructure refresh and upgrades. Gartner senior research director Naveen Mishra said these enterprises are increasingly evaluating as-a-service infrastructure consumption models.

“Automation and remote monitoring, coupled with infrastructure optimisation, including networks, is part of the new normal for IT infrastructure leaders. COVID-19 has accelerated the transition towards the hybrid cloud as more IT departments have already experienced the benefit of public cloud during this pandemic. CIOs and CXOs will be focused on overall IT optimisation and digitalisation strategies,” Mishra told Computerworld Australia.

One of the main reasons for the decline from a global perspective were lockdowns resulting from the coronavirus pandemic, which, according to Gartner, will prevent more than 60% of planned news facilities construction in 2020. The analyst firm expects the reduced demand will pick up in 2021.

In 2020, investment has gone towards remote monitoring, automation and software-enabled data centre technologies such as software-defined storage (SDS), SD-WAN, and hyperconverged infrastructure (HCI) supported by consumption-based pricing, as well as any technologies that support the hybrid workforce by combining on site and home based work for organisations.

“Gartner expects larger enterprise data centres sites to hit pause temporarily and then resume expansion plans later this year or early next. However, hyperscalers will continue with their global expansion plans due to continued investments in public cloud,” Mishra said.

Colocation sites in Australia not affected

Colocation providers in Australia don’t seem affected by COVID-19 as construction plans and sales of existing infrastructure has continued to grow.

The hosting business of Macquarie Telecom registered growth with revenue up by 17.9% for the year ended 30 June 2020. The expansion of its Intellicentre 3 (IC3) will continue as planned, and the company’s annual report to shareholders said that demand for the segment’s products has increased since March.

"We have continued construction on our IC3 Sydney and IC5 Canberra data centres this year, with both near completion. We have also increased the initial capacity of IC3 in line with market demand, particularly among hyperscalers, SaaS providers and global enterprises," Macquarie Data Centres CEO David Hirst told Computerworld Australia.

NextDC has told Computerworld Australia it has experienced strong growth due to the need for more compute power and storage requirements but also connectivity services to interconnect customers’ hybrid IT environments.

“Organisations have moved quickly to support more permanent remote and distributed environments; and there has been extraordinary growth in cloud services and the introduction of new cloud availability zones during this time, and organisations have started to rethink their operating models,” a spokesperson told Computerworld Australia.

To meet customer demand, the organisation expanded one of its Melbourne data centres, it delivered its second Perth data centre, and it finished construction of its second Sydney data centre. Works on its third Melbourne and Sydney data centres are continuing in compliance with COVID-19 parametres.

In late September, Fujitsu Australia announced the expansion of its Western Sydney data centre, with the first phase of the project involving the addition of 4,500 square metres of technical area with 20 megawatts of available power capacity.

Copyright © 2020 IDG Communications, Inc.

7 inconvenient truths about the hybrid work trend
Shop Tech Products at Amazon