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Data Center Trends: Increasing Capacity Demands with Managed Services

By James O'Neil, vice president and chief technology officer, FNTS

Corporations face mounting pressure from stakeholders to reduce expenses and increase efficiencies in their information technology (IT) environments, all while maintaining 100 percent data availability. In addition, many organizations have substantial IT initiatives to tackle this year, leaving them with few resources to devote to routine facility maintenance. As a result, facilities are increasingly turning to outsourcing opportunities, such as data center services and cloud hosting, to store and manage their data. By doing so, many organizations have successfully eliminated the capital required to purchase and maintain expensive hardware and accommodate the capacity needed to store data on premise. By outsourcing managed services, facility managers can free up critical square footage and IT staff can hand off general maintenance activities and prioritize overall business strategy.

Confirming this trend, Gartner recently published a report forecasting a 0.5 percent decline this year in worldwide IT spending from 2015. However, spending in the IT services market is expected to reach $929 billion, a 2.1 percent increase from 2015. In other words, as budgets tighten and technology advances, senior IT leaders recognize the value in managed services and will, in turn, spend less on implementing their own hardware and software, entrusting their data to expert providers.

As part of this IT spending shift toward outsourced services, organizations are also considering virtualization in their critical systems and IT environments. As the amount of capacity required to store data on premise proliferates, organizations are turning to virtual technology instead of increasing the square footage in their facilities. According to a recent survey published by Nomura Holdings, CIOs expect cloud consumption to rise from 31 percent in 2014 to 58 percent in 2018. In addition, public cloud adoption is predicted to grow the fastest – from 8 percent in 2014 to 19 percent in 2018.

The transition in IT focus is a positive one, as organizations are using technology as a way to use their space and resources smarter and more efficiently. A retail enterprise that utilizes managed services and cloud hosting, for example, has the flexibility to scale back capacity during slow months – and easily scale up during the holidays. If this same company hosted its critical systems on premise, its IT team would waste a lot of valuable time, resources and energy maintaining unnecessary equipment in the off-season. Therefore, because of its flexibility, reliability and efficiency, the managed services market will certainly continue to grow across all industries.

However, one often overlooked factor as businesses consider managed services is the location of an IT services provider, as the reliability and cost to maintain the power grid can vary tremendously. As such, data centers are flocking to the Midwest to best accommodate their growing need for capacity. The moderate climate allows them to leverage free outdoor air for temperature management, while the lower-than-average utility rates help control the high costs associated with constructing and maintaining a data center.

In today’s data center facility, the ultimate goals are to improve resource utilization, maintain high availability and embrace technology in order to keep up with ever-increasing demand of computing power. In order to focus their internal IT resources on new initiatives and corporate revenue strategy, businesses are moving their data off-site and engaging service providers to manage and maintain their critical systems with higher reliability and availability. Though managed services is not a new concept, infinite advances in technology matched with pressure to cut costs while meeting customer demand certainly make it the most viable option for businesses today.

James O’Neil is the vice president and chief technology officer at First National Technology Solutions (FNTS). Recognized as a thought leader in the industry, James is responsible for FNTS’ long-term technology strategy and oversees the company’s architecture, engineering and network divisions. With over 10 years of information technology (IT) experience and extensive knowledge of the financial, gaming and managed services industries, James has a strong background in information systems planning, development, support and systems integration.  Also a member of the Community Advisory Board at the University of Nebraska–Omaha (UNO), James has a vested interest in the development of IT talent and working with UNO to continually evolve the curriculum offered by the college of Information of Science and Technology.