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Survey: Enterprises Plan to Spend More on Data Centers

Despite the popular belief that cloud services are well on their way to replacing enterprise data centers, most mid-size and large businesses are planning to increase spending on their mission-critical facilities in the near future.

That’s according to a recent report by 451 Research, which said nearly 90 percent of data center operators surveyed in North America and Europe had plans to increase data center facility spending. About one-quarter of them said they will increase spending over the next 90 days.

Enterprises are consolidating smaller data centers into larger centralized ones. They are generally reluctant to build new data centers, so those larger data centers are older facilities that have to be upgraded to support the consolidated capacity.

Companies generally start looking for options to expand capacity when they reach about 75 percent utilization of their existing data center footprint, according to 451. When they do, they have the choice to consolidate into large existing facilities, buy or build new data centers, use cloud services, or lease colocation space.

Consolidation is the preferred option, the researchers found. Cloud was the second most popular option, and colocation was third. About one-quarter of respondents said they would consider building new data centers, and only 6 percent said they would look into buying one.

Here’s a 451 chart showing colo and cloud providers enterprise users favor most:

451 Top Enterprise Colo Cloud vendors

There is pressure on IT organizations to support growing business demands, Dan Harrington, research director at 451, explained. To address those needs, companies are allocating more budget to modernization of older data center facilities.

Driven primarily by healthcare and finance industries, the bulk of new enterprise data center spending is going to racks, cabling, electric gear, and data center infrastructure management (DCIM) software.

Vendors that stand to benefit the most from this influx of capital are Schneider Electric, Emerson, Trane, Carrier, Caterpillar, and Cummins.

According to 451, most survey respondents said they preferred Schneider’s power distribution units, universal power supplies, DCIM, as well as racks and cabling. Emerson was the top preferred seller of computer room air conditioning and air handling gear, closely following Schneider in the four other categories.

Most data center operators considered Trane and Carrier top chiller vendors, while Caterpillar and Cummins enjoyed widespread popularity as backup-generator suppliers.

One company surveyed said it was planning to increase spending to replace aging equipment, such as aging PDUs and CRAC units. This is a $5-billion-plus IT company with more than 1,000 employees.

Another company with a similar profile is planning to spend on Emerson’s DCIM platform Trellis.

Emerson announced earlier this week a plan to spin off its data center and telco infrastructure business unit called Network Power as a stand-alone entity. The company said it would benefit from more agility in being able to respond to changing market needs as an independent business.

Still, while enterprises are planning to spend more on data center infrastructure, there will be fewer actual data centers.

Companies are actively consolidating smaller data centers and server rooms, replacing them with larger centralized facilities, supplemented by colocation and cloud services. As a result, there will be fewer facilities, but the total overall footprint will remain about the same, the analysts concluded.

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About the Author

San Francisco-based business and technology journalist. Editor in chief at Data Center Knowledge, covering the global data center industry.

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  1. Yevgeniy, Am I missing something? It seems the findings on today's article completely contradict the findings of the Uptime survey you wrote about on 5/29/14. Complete shift in one year? Thanks!

  2. Patrick

    I see this trend everyday; as the industry transition to the cloud; for many of same reasons (op ex vs. cap ex; focus of areas of higher value add, etc) the industry is shifting away from investing their large Cap Ex $ in areas that are not core to their business and in which they can gain no competitive advantage. For them datacenter ownerships represents is just a drag to ROIC.