Data centre investments shift to outsourcing as industry matures


13 October 2014
Dedric Lam of DCD

Enterprises may still be putting money into facility equipment and solutions, and into IT upgrades and systems, but colocation and outsourcing is where data centre investments are really taking off.

“People looking for solutions where they don’t have to lock up money in capital investments,” said Dedric Lam, chief executive officer, Asia Pacific, DatacenterDynamics (DCD).

Presenting the latest Data Centre Asia Pacific Census Findings by DCD Intelligence, Lam noted that the weight of investments has shifted towards outsourcing as the data centre industry matures.

Between 2010 and 2014, investments in new build declined from 37 per cent to about 30 per cent, while the money spent on outsourcing increased from 16 per cent to 24 per cent. Existing facilities continued to take up the lion’s share of data centre investments but the figure has remained constant at 42 per cent.

“Companies are increasingly using colocation or outsourcing because they want to focus on their core business (which may not be IT),” said Lam. “As IT becomes a more important part of their commercial future, the risks associated with getting it wrong become greater and many recognise that they will be better off leaving data centre management to the experts.”

Another strong theme that emerged from the Data Centre Asia Pacific Census 2014 was the ascent of the cloud. The study found that between 2012/2013 and 2013/1014, the proportion of respondents investing in private clouds grew from 20 per cent to 24 per cent, while those investing in the public cloud grew from 10 per cent to 14 per cent. There was also an increase in the number of respondents investing in applications and Software-as-a-Service (from 15 per cent to 18 per cent), and in Platform-as-a-Service (from 13 per cent to 16 per cent.)

Zeroing in on Singapore, Lam noted that the country has been moving further into the cloud space, compared with the global average. According to the DCD Intelligence study, one in five physical racks in Singapore data centres are virtualised or in private clouds on-premise, compared to 16 per cent in the Asia Pacific and 15 per cent worldwide. Another 12 per cent of Singapore-based racks are virtualised or in the cloud in external locations, slightly higher than 11 per cent in the region and 10 per cent globally.  When both public and private cloud rack installations are combined, one third (34 per cent) of physical racks in Singapore are either virtualised or dedicated to cloud applications, whereas the regional figure is 27 per cent, and the global figure is 25 per cent.

In contrast, Singapore had a significantly lower percentage of physical racks stored in-house (48 per cent), compared with the Asia Pacific or global figures (57 per cent and 60 per cent respectively).

The expanding role of the cloud is also reflected in the technologies and solutions which Singapore respondents identified as being important in the coming year (2014/2015). About 39 per cent of census respondents cited the hybrid cloud as a key technology/solution for them, compared with 22 per cent in 2013/2014. There was also a significant increase in the number of respondents citing private cloud (from 21 per cent in 2013/2014 to 37 per cent in 2014/2015), and cloud infrastructure architecture (from 17 per cent to 28 per cent).

“With the cloud, it is possible just to access and pay for what you use on a flexible and scalable basis and to limit your consumption of finite resources by doing that,” said Lam. “The cloud is interesting not because of the buzz surrounding it but because it makes economic sense.”

Related story: Data centre buildup in Southeast Asia continues