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The global data center outsourcing market is expected to grow at a moderate pace and reach $320.65 billion by 2028, mainly driven by growth in priority towards shared infrastructural services across enterprises. Data center colocation remains the top adopted segment in market. The growing demand toward infrastructure as a service (IaaS) in enterprises will reduce cost and improve productivity, acting as the primary factor for market growth. The market growth is also driven by a rapid increase in virtualized infrastructure and cloud computing. Changing business needs, increasing complexities of network architectures and fluctuating bandwidth are the potential challenges faced by end-users.
- The growing focus for reducing IT operational and infrastructural expenses embolden enterprises to move toward cloud computing that is expected to predominantly to drive the data center colocation market.
- When a customer leases a part of the data center, it is called retail colocation. It is generally preferred when organizations have limited IT budgets, limited space and time, low future scalability, low data volume to be stored, no capabilities to afford a data center and limited IT expertise to maintain them. The segment’s development may be attributable to the multiple advantages, such as managed services, which results in cheaper data center maintenance costs and high data security, among others.
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When a buyer leases out a fully-built data center with the necessary hardware, it is called wholesale colocation. Generally preferred when organizations have limited IT budgets, but need more space, require at least one megawatt of power capacity, need to meet stringent regulatory standards, high future scalability and enhanced customization. Wholesale colocation is predicted to increase significant in the future, as it enables enterprises to install hundreds of servers at one location.
Data Center Hosting Services Best Practices
- Fortune 500 organizations practice an optimum ratio of in-house vs. outsourcing while managing their data center. With co-located hosting prices falling gradually, organizations have started to outsource data center services more when compared to managing them in-house.
- Cost reduction: Due to high economies of scale, vendors provide infrastructure services at a highly competitive rate, thereby reducing expenditure by 30–40 percent.
- Moving from capital to operational expenditure: Through pricing models like pay as you go, organizations could group these expenses as operational.
- Reduced refresh cycle complexities: Outsourcing helps organizations to get rid of evaluation planning, implementation and disposal of legacy equipment.
- Dual vendor engagement is usually preferred by companies in order to reduce dependency on a single vendor. Ideally, companies engage with one vendor for their core data center operations and engage with another vendor for disaster recovery operations. Dual-vendor strategy helps to maintain a competitive environment, promotes innovation, ensures better negotiation power and avoids being locked in with one vendor in terms of high mark up and slow innovation.
- Organizations prefer to engage with global vendors for data center services due to their brand value and wide geographic reach. Enterprises can also engage with local vendors, when in close proximity to the target client base or global vendors do not have capabilities to comply with local regulations, lack regional support, etc. In some scenarios, global vendors also set up onshore delivery centers or establish a local presence by partnering with local suppliers.
- The space cost components will include space occupied by customer, security, building operations, fire protection equipment, cooling infrastructure, UPS and 24/7 access. Power usage charges are based on a meter and calculated based on per KW consumed. Apart from this, the pricing model will also be dependent on type of technology services used, internet connectivity, the type of co-location connect fiber required, per head charges for on-site and in-house employees working on outsourcing services, etc.
Data Center Hosting Services SLA
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Server Management (Operating system patching, server firmware patching, anti-virus management, security management): The supplier should provide operational support, patch updates and system administration tasks and duties for the server environment to maintain server service availability on a 24/7/365 basis.
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Infrastructure Monitoring (Proactive and reactive monitoring of server infrastructure): The supplier should provide monitoring services on a 24/7/365 basis and respond to alerts on a customer service level basis (i.e., defer response until 8 am, if the customer only has a 10/5/52 agreed service level).
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Reporting (Storage availability and performance report, network device availability report): The supplier should be able to provide reports on a monthly basis in a presentable format (forecasted for minimum of 3–4 months).
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The supplier intelligence provides insights on key global and regional players such as Equinix, Digital Realty Trust, Lumen Technologies, Rackspace, Verizon, IBM, FIS Global, NTT Communications.
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Vendors are differentiating themselves in the market by providing add-on services, such as simplified integration and also offering a broad portfolio of integrated data center solution for buyers, for example, service providers offering tenants with a range of insight, reporting, and local management capabilities through services, such as data center infrastructure management.
