Scramble for data centers indicates shift to cloud technology

Sep 22, 2016

Recently, Internet services major Amazon launched its first set of data centers in India, saying that it is spending ‘tens of millions of dollars’ to set up data centers in the country. “The data center will help accelerate growth,” said Shane Owenby, managing director-APAC, AWS in an interview. In India, Microsoft by now has three data centers, IBM has two, whereas many others such as Japan’s NTT also have big data center operations in the country. Chinese e-commerce giant Alibaba Group too is reportedly planning to announce its India entry with a data center.

India is not unique to this as these days the Asia-pacific region has become a favourite destination for setting up of data centers. According to APAC Reach, a marketing and research company focused on assisting expansion throughout the Asia Pacific region, has reported a marked increase in European clients interested in data center investments in the area following the UK Brexit referendum. Chunghwa Telecom, Taiwan’s largest telecom company, has opened the doors to its approximately £309 million data center facility, just outside of the capital Taipei. Similarly, Deskera, a leading Cloud software provider in South-East Asia, has announced spending USD 50 million over the next three years to build a wholly owned Cloud data center in Singapore. The company plans to convert the data center into one of the biggest software as a service (SaaS) centers in South-East Asia.

“We are investing in this Cloud data center to basically offer our customers fast and reliable services. It will strengthen our ecosystem and consequently our ability to support business expansion across multiple industries.” said Shashank Dixit, CEO, Deskera.

Why the sudden rush for setting up data centers?

The mad rush is due to software companies moving from premise-based technology to Cloud-based technology. IT companies are leaving behind traditional resources, such as direct server and software license purchases, and moving into Cloud computing. Consequently, they increasingly need to set up fast-paced and reliable infrastructure; establishing state-of-the-art data centers will be one step to achieve that objective and support a company’s expansion plans.

“Cloud adoption is growing at an unparalleled speed and therefore it is mission critical that there is a scalable and robust infrastructure in place,” added Shashank.

According to a report released by IT research company Gartner, IT will spend more than USD 1 trillion directly or indirectly due to the shift to Cloud over the next five years, making Cloud computing one of the most disruptive forces of IT spending since the early days of the digital age.

“Cloud-first strategies are the foundation for staying relevant in a fast-paced world,” said Ed Anderson, research vice president at Gartner. “The market for Cloud services has grown to such an extent that it is now a notable percentage of total IT spending, helping to create a new generation of start-ups and ‘born in the Cloud’ providers.”

Apart from Cloud services replacing or complementing existing IT systems, new applications and services are being created to run exclusively in the Cloud.

According to the report, IT will spend USD 111 billion on Cloud services this year, which will grow to USD 216 billion by the year 2020. The shift translates to a total of USD 1 trillion over the next five years. The shift is greatest in the business process as a service (BPaaS) segment, with the shift amounting to USD 42 billion at the rate of 43 per cent through 2020. The software as a service (SaaS) segment follows closely, registering total Shift of USD 36 billion in 2016 at the rate of 37 per cent through 2020. Consequently, the race for setting up data centers is going to get hotter.

What is a data center?

A data center is basically a facility used to house servers, storage devices, cables, and Internet connection. Besides, the center also has equipment for supplying power and cooling. It generally includes backup power supplies, data communications connections, environmental controls (e.g., air conditioning, fire suppression) and various security devices. Large data centers are industrial-scale facilities that use electricity equivalent to a small town.

In the beginning, computers used to be so big that special rooms had to be set aside to house them. Later, despite the miniaturization in computer sizes, the increase in functional scope was so much that they still needed to be housed in individual rooms. The need for specialized data centers arose during the dot-com bubble of the early twenty-first century. Companies required fast Internet connectivity and uninterrupted operations to deploy systems. Many started building very large facilities, called Internet data centers (IDCs), which provided clients with an array of solutions for systems deployment and operations.

Coming of the Age of Data Centers

Practices have finally migrated towards private data centers, which are primarily being adopted due to their practical benefits. They are now being progressively used to deliver fast-growing Cloud solution services for private and business applications. With exponential upsurge in the spread of Cloud computing, data centers are being increasingly scrutinized for security, availability, environmental impact and adherence to standards. Accredited professional groups, such as the Telecommunications Industry Association, have laid down the requirements for a data center design. Apart from other benefits, data centers would also aid in the employment of trained personnel from data analytics, software, network design and telecommunications, and business development.

Today, every company’s success inevitably depends on smooth software operations and data centers are a significant building block in the architecture. They provide protection from external influences and reduce chances of internal manipulation. After all, there is a whole lot of hi-tech hardware sitting at one place.

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