The pendulum swings back


14 March 2017
Mark Bidinger of Schneider Electric

The data centre industry is undergoing a profound transformation to support the enormous data volumes and processing demands that are being generated by the Internet of Things (IoT).

Speaking at the recent Datacloud Asia event in Singapore, Mark Bidinger (Photo: Datacloud Asia 2017), President, Cloud & Service Provider Segment, Schneider Electric, said 2016 saw the pendulum shifting back from centralised facilities towards the creation of a decentralised hybrid computing ecosystem.

He cited examples such as Microsoft’s use of cloudlets or small-scale cloud data centres located at the edge of the Internet, Dropbox building its own private cloud and Netflix creating an Open Connect appliance architecture to utilise the resources of Internet service providers, colocation providers and telcos to cache and push content to the end user.

“By 2018, 40 per cent of IoT-created data will be stored, processed, analysed and acted upon close to, or at the edge of the network,” he said. “There will be more cloud providers in regional data centres, housed in colocation facilities.”

Steve Wallage, managing director of BroadGroup Consulting, said many of these developments are being driven by practical considerations. “Very large data centres are being built where it is cheap to do so, and where there are local incentives,” he said.

For example, companies like Microsoft and Google build big data centres in states like Washington and North Carolina in the United States where they get tax breaks. They would still want to have a presence in cities like Los Angeles and New York, but do not want to build their own data centres there. Instead, they will enter into colocation arrangements with smaller facilities in those locations.

The rise in edge computing is also being driven by data sovereignty and privacy issues which require cloud service providers to have a local presence. For example, data protection laws in countries like Indonesia require government e-services and data on their citizens to be hosted within the country.

Besides regulatory considerations, the hub-and-spoke arrangement also addresses issues such as performance and latency and may also make sense from a cost perspective. For example, financial services institutions are working out their latency, regulatory and security requirements and moving some applications away from large data centres to be nearer to, say, stock exchanges, and others to public clouds or private clouds in cheaper locations.

These factors have helped propel the global colocation market to a strong growth of 14 per cent in 2016, with some Asian markets growing by over 20 per cent. And the signs for 2017 continue to be positive, with new technologies and models continuing to drive demand, said Wallace.