Cloud users consolidate their operations

March 16, 2015

Data center colocation has become an increasingly appealing option for businesses that want to expand their cloud storage capacity. The technology is streamlining a variety of different tasks, so chief executives naturally want to optimize its use in their daily operations. However, the process of building out an internal data center can be quite expensive, especially for a business with budgetary constraints. A number of startups and smaller scale cloud users find themselves in this scenario quite often. This explains much of the emergence of colocation solutions.

As IT managers further develop their data center infrastructure, whether it’s through in-house investments or colocation expenditures, consolidation is on the rise. However, fewer data centers doesn’t mean that the market is diminishing. Recent data indicates that the opposite is taking place.

The collective rise of the cloud and colocation
Synergy Research Group recently noted that global colocation revenues are increasing at approximately 10 percent per year, Data Center Knowledge reported. The colocation markets in the United Kingdom, Germany and the Netherlands are expanding at rates above the average, while China is at about double the average growth trajectory.

In the U.S., there seems to be two major contributors to the investment in data center colocation. Many different types of service providers – cloud, content, IT, telecommunications, account for about 60 percent of cloud spending. The other 40 percent comes from enterprise operations.

“The relative spend on [and prospects for] colocation, enterprise data centers and cloud are all intertwined,” John Dinsdale, the chief analyst for Synergy Group, told the news outlet. “Clearly enterprises are pushing more and more IT workloads onto the cloud, which diminishes their potential spend on their own data centers. Colocation is in an interesting middle ground. The growth of cloud is a big driver for colocation growth while trends in the enterprise are inhibiting growth in enterprise spend on colocation.”

Data center consolidation in Ohio
According to State Tech Magazine, a variety of state and local governments in Ohio are reducing the size of their data centers and consolidating their assets, sometimes through colocation with other governments.

Ohio’s central data center has three levels, but most of the space is regularly untouched, the news outlet noted. As a result, the state’s IT leaders are working on making the system more efficient through consolidation.

“We’ve been on this journey for about two years,” Spencer Wood, Ohio’s deputy CIO and chief operations officer, told the publication. “We are already seeing about $50 million in cost savings.”