Data Centers in the downturn by carol wilson

Views and Opinions on Green IT (Aug 17 2009)

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   While everyone expects data center traffic to continue to grow exponentially for the foreseeable future, the reality of the current economy is that some companies are cutting back on their IT and telecom spends, to match the decline in their own revenues. How will that affect hosted data center services?

   Two new studies from Forrester Research, released this week, show interesting trends in how businesses are cutting back. The two reports, “The State Of Enterprise Networks And Telecommunications: 2009” and “The State Of SMB Networks And Telecommunications: 2009” were based on interviews with enterprise and SMB IT executives in North America and Europe.

   What they show is that enterprises are cutting back much more than SMBs. Fifty-two percent of enterprises – defined as companies with more than 1000 employees – said they expected their revenues to be down over the next 12 months, and 58% said they would but cutting telecom and IT spending as a result. By contrast, 57% of SMBs interviewed in the study said they expect revenue to go up and 51% said they would spend the same amount or more on telecom and IT.

   Where enterprises are cutting back, the cuts tend to come in staffing. Seventy percent had IT staff hiring freezes, 66% were using fewer contractors and 60% were spending less capital. Almost three-fourths said cutting costs was the top item on the agenda for the IT department.  Against that backdrop, the same companies expressed greater interest in buying managed services and data center services were high on their list. Nineteen percent said they were already buying data center services for collocation/hosting and 43% of the rest were either very or somewhat interested in those services.

   SMBs represent an even opportunity – they listed data center consolidation as their second top priority for IT spending, trailing only reduction in costs.

   Clearly providers of hosted data centers still have a major opportunity at hand, despite the economic downturn, especially if they can do a good job of explaining the return on investment of a hosted service, to make the business case more clear.

   Interestingly, both the enterprise and SMB groups listed saving electrical power as one of their top 10 priorities for IT and telecom spending. Part of the best business case for hosted data centers clearly includes a green data center solution.

   
   

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