Mar/Apr 19 - ChannelVision Magazine

Colocation Market to See Double-Digit Growth The global managed hosting ser- vices market is projected to grow at a CAGR of 14 percent and reach $81 billion by 2020. The North American market for colocation services, meanwhile, was forecasted to reach $25.5 billion by the end of 2018, according to Liz Cruz, associate director, data centers, cloud and IT Infrastructure at IHS Markit. Cruz cites a growing need for data center IT capacity for medium and large enterprises, with an increasing share going to colocation data centers IT decision makers surveyed by IHS expect an average of 33 percent growth in total data center capacity (as measured in IT racks), from 2018 to 2019. More than half (58 percent) of IT racks are expected to be placed in co- location data centers in 2019, up from 49 percent in 2018. More than one-third (37 percent) of IT budgets in North American will be spent on colocation services in 2019, up from 31 percent in 2018, show the research firm’s figures. Colocation ser- vices are defined by IHS as the leasing of data center space, power, connectiv- ity, security and environmental controls. The survey revealed that enterprises are driven to adopt colocation services to increase their application perfor- mance, improve speed of deployment into new data center space, and de- crease operational costs. Respondents expect to grow their overall data center capacity and to increase adoption of colocation services in 2019. A key consideration for all data center planning and deployment is how to address edge computing require- ments, said Cruz. In general, a variety of methods are being assessed to en- sure low latency connections to users across the globe, but colocation servic- es ranked highest among respondents as a key means to address this issue. “These findings suggest a new surge of growth coming from this use case,” said Cruz. In addition to coloca- tion, micro data centers (a previously niche offering) was highly ranked to support processing and storage needs across dispersed geographies. Barriers to colocation adoption do exist, Cruz continued, with outage con- cerns, compliance and regulatory is- sues, and concerns around changes to internal procedures topping the list. “However, many of these are sur- mountable for providers with a bit of education and proof points provided, especially for outage concerns, given that most colocation data centers have better uptime metrics than enterprise data centers,” she said. In evaluating colocation service providers, security was clearly the most important criterion for selection. “Because colocation data centers are inherently more trafficked than enterprises’ on-premises data centers, assurance of security is important,” added Cruz, with on-site guards, video surveillance, multi-point access control including physical and biometric barri- ers, and cabinet/cage level locks typi- cal of the features offered. Colocation will continue to play an important role in the increasingly hybrid approach enterprises take toward de- ploying data center capacity, said IHS. At present, medium and large en- terprises still lean toward operating on-premises data centers. “But over the next year, we expect these same enter- prises to move more to cloud and colo- cation services, causing an increased use of off-premises versus on-premises data centers,” Cruz concluded. Beroe, for its part, said innovations such as green data centers and modu- lar data centers have strengthened the data center industry. o P ushed by the increasing importance for a reduction in IT infrastructure expenses, physical security and high power requirements, the global market for data center colocation services is expected to grow at a compound annual rate of 13.7 percent until 2020, according to Beroe Inc., a procurement intelligence firm. virtual reality Colocation Service Drivers (Percent rating 6 or 7) Improved application performance 75% Speed of deployment of new data center space 68% Decreased operation costs 67% Ability to directly connect with cloud service providers 66% Reduction of capital investment 61% Ability to direct connect with partners or customers 59% Geographic proximity to end users or devices 57% Reduction of data center staff workload 53% Tax incentives 49% Access to renewable energy choices 47% Source: IHS Markit 60 Channel Vision | March - April, 2019