DATA CENTRE CONSOLIDATION; WHAT CAN ORGANISATIONS ACHIEVE? White Paper

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1 DATA CENTRE CONSOLIDATION; WHAT CAN ORGANISATIONS ACHIEVE? White Paper Publication date: November 2012

2 EXECUTIVE SUMMARY Data centre costs constitute a large part of most organisations IT budget. As they struggle to cope with increasing amounts of computing and data, organisations frequently find themselves with widely distributed data centres that are becoming costlier and more difficult to manage. Data centres work on economies of scale so larger ones are more economic. There is also huge growth in data centres as the need for more computing power and data capacity increases. The statistics contained in this report leaves no doubt to the fact that distributed data centres or data rooms leave organisation exposed to spiralling operating costs. There are also many predictions contained in this report showing that the data universe will increase many times over this decade. That data needs to be stored somewhere and accessed through new computing power. Consequently, there is a trend towards data centre consolidation as organisations seek greater cost-efficiency and business agility. The same drivers are encouraging a move to outsourcing and virtualisation, with the attractions of reduced capital investment and workload, greater flexibility to accommodate growth, and more business value. Many companies have found that outsourcing provides the level of flexibility and cost efficiency not obtainable by building their own facilities. In addition, outsourcers can take advantage of economies of scale. Lastly, it appears that communication service providers are the favoured choice for outsourcing data centres 1. Interestingly, specialists were the least favoured choice. This paper considers the value of data centre outsourcing, and the approaches to take to rapidly generate value for your organisation. 2

3 THE DRIVE TOWARDS CENTRALISATION AND CONSOLIDATION Even as recently as 30 years ago, many organisations had only a few departments using IT and electronic data. As that reliance on IT grew, networks were established to disseminate the data from servers. Data centres evolved to house the servers, along with the rest of the organisation s IT and telecoms systems. With increasingly sophisticated applications and expanding connectivity requiring more and larger servers, plus the need to ensure business continuity by building in redundancy (fail-safe backup), data centres as well as their power and cooling requirements have grown considerably. In fact, the cost of power, as we have all observed, has gone up dramatically. So has the need to build in tighter security measures to safeguard these business critical assets and their highly sensitive data. Today s data centres are not only bigger and more complex than ever, and even more critical to an organisation s success but are also extremely expensive to build and operate. Fig 1: Typical buy vs build comparison 500 sq ft Cumulative Costs Initial Investment Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Facility Build 573, , , , ,037, ,162, ,272, ,397, ,508, Facility Buy (Co-location) 52, , , , , , , , ,041, ,600,000 1,400,000 1,200,000 1,000, , , , ,000 0 Facility Build Facility Buy (Co-location) Initial Investment Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Source: Glasshouse CE10702 Version 1 November

4 Power consumption typically accounts for 70% 2 of a data centre s operating costs, and will continue to increase in line with data centre growth. The age and relative inefficiency of many data centres compounds the problem. A recent International Data Corporation survey reports that the average data centre is nine years old 3 and IT equipment has become significantly more power-efficient in the last nine years. According to US figures, the average data centre has a PUE (power usage effectiveness) figure of 1.4 4, while the energy efficiency for the latest data centres is rated at 1.2 PUE 5. The concern of not being able to adequately meet their IT demands has resulted in many organisations commissioning new data centres. Built to accommodate future requirements, they are often initially under-utilised, and this over-capacity is wasteful and costly. With continually changing IT demands, under-utilised and potentially obsolete data centre resources, increasing costs and the pressure to support business growth, CIOs are now looking at data centre centralisation and consolidation to resolve these problems. Centralisation reduces the management workload associated with widely distributed data centres, allows for economies of scale, and means new, more efficient equipment need only be introduced at one site, rather than several. Going one step further, more and more organisations are choosing to ease their capex burden by outsourcing some or all of their data centre requirements, and market intelligence suggests this trend will continue. 4

5 THE MAIN DRIVERS FOR CONSOLIDATION. Data centre consolidation has become a top priority for many organisations. Two of the most critical drivers for this are having to deal with more data, and paying more for the infrastructure required. Yet there are several additional factors encouraging IT decision makers to consolidate their data centres. Fig. 2 The pressure to find a more effective data centre solution. Consolidate IT infrastructure via server consolidation, data centre consolidation, or server virtualisation High Priority Critical Priority Low Priority Not on our agenda Don t know / does not apply 1% 5% 15% 29% 51% Source: Forrester Research Change and growth in organisations is usually mirrored by demand for growth in IT capacity. This is prompted by factors such as employees using more devices and inputting more data, mergers and acquisitions, changes in location, and regulatory pressure to retain more data for longer periods. This is fuelling the need for larger data centres; according to the Uptime Institute, 36% of companies surveyed expected run out of capacity in at least one of their data centres in the next 18 months. 6 These increasing data volumes are considerable; the digital universe (the amount of data stored and in use worldwide) is predicted to grow by a factor of 44 from 0.8 Zettabytes in 2009 to 35 Zettabytes in Over 50% of business professionals surveyed said they expected their overall data storage to grow between 10 24% a year 8. To provide sufficient capacity for this extra data, organisations are installing more physical servers, with corresponding increases in power, cooling and space requirements and costs. Organisations are therefore seeking to cut their data centre costs through greater efficiency and simplification, via centralisation and consolidation. Consolidation has the additional benefit of reducing the management workload. It can also improve security: having to maintain firewalls and anti-virus programs on multiple machines, plus physical security across several sites, creates more potential weak spots that are vulnerable to attack. In contrast, providing effective security at fewer, consolidated sites is less costly and risk-prone. Disaster recovery can also be simpler and quicker if they are fewer sites to deal with. CE10702 Version 1 November

6 HOW WILL DATA CENTRES EVOLVE? Fig 3. Data centre infrastructure as part of the global outsourcing trend Market size. Global Infrastructure Utility Services IUS Forcast, Worldwide, (Millions of Dollars) CAGR (%) IUS Data Centre Outsourcing Component 5,640 7,613 10,430 13,872 17, IUS Network Outsourcing Component ,268 1, IUS Hosting Component 871 1,282 2,000 2,991 4, Total IUS 7,101 9,634 13,383 18,131 23, Source: Gartner February 2010 The data centres being built now and in the future will make increasing use of high efficiency, low power consumption equipment. The emphasis is on standardisation and modularity to enable scalability, to cope with continuing computing and data growth. The cost and risk of change, and factors such as data compression and de-duplication may help to reduce the pace of data centre growth. However it is server virtualisation and outsourcing that are most likely to transform the traditional data centre model. Virtualisation helps to reduce energy and space costs, and enhances business agility by allowing more efficient use of the available computing power. Most organisations now have some form of virtualisation, but this is not without its problems. The ease with which virtual servers can be set up allows individual departments to create their own computing, data storage and handling policies. Although this reduces the number of physical servers, it leads to a proliferation of operating instances. The result is virtual machine sprawl, with IT managers possibly unaware how many virtual machines they have in their organisation. This is clearly not ideal, and is another point of favour of consolidation. 6

7 DATA CENTRE OUTSOURCING Outsourcing offers an array of possibilities to suit each organisation s specific circumstances, from co-location to cloud-based data centres. Each has its merits, but they all offer the same overall benefits for the organisation: on-demand growth and flexibility increased organisational agility reduced need for expertise, and freedom to focus on core business reduced capital investment predictable costs lower total cost of ownership. Moving from a capex to an opex model via outsourcing eases the burden on organisations. It reduces the organisation s own power and cooling requirements, helps improve their Corporate Social Responsibility profile and frees up costly floor space. With less time spent on running their own data centre operations, they can focus on more profitable areas of their business. Fig. 4: Transition map for data centre services, from co-location to cloud computing. Outsourcing / Hosting Infrastructure Utility Cloud Computing Data Centre Outsourcing Specialised Platforms IU4SAP, Exchange, Dynamics, etc. Data Centre Outsourcing Application Hosting Utility Servers, Storage, etc. Virtual Data Centre Longtitudinal Axis Managed Dedicated Hosting Co-Location Latitudinal Axis Shared Hosting VPS Hosting Utility Hosting Network Outsourcing Infrastructure as a Service The vertical axis indicates the complexity in the service content of individual offeringd, the level increasing from bottom to top. The horizontal axis indicates the stage of evolution from the traditional delievry models and offerings (to the west) to new cloud-oriented data centre offerings (to the east). CE10702 Version 1 November

8 While there are compelling arguments in favour of data centre consolidation via outsourcing, other factors must be considered to ensure the service provides all the desired benefits. For example, the organisation should make sure the network accessing their data centre has sufficient bandwidth to maintain application performance at peak demand periods. Is there provision for geographic resilience for backup and restore purposes? Are the data centres physically located in the UK to meet data residency rules, and is shared space acceptable for the type of data stored? Organisations also need to determine how their data will be handled and stored. A data lifecycle management policy will minimise costs, for example by using primary storage for the most frequently accessed business critical applications, near-line cloud for backup, disaster recovery and data recovery, and deep archived storage for compliance. These aspects all demonstrate that data centre transformation needs to be carefully planned and managed to minimise disruption and ensure continuity of service. To gain the full benefits of outsourcing, IT managers and the CIO should look to the new service provider to share the task and help develop policies and an implementation programme, so the organisation does not devote yet more time and resources to a service which is supposed to be saving them time and resources. A recent study by the Customer Experience Forum and Cable&Wireless Worldwide showed that there is a preference for outsourcing to communication service providers 1. This is because there is a high level of trust in companies running mission critical services. Interestingly, data centre outsourcing specialists were rated lowest. 8

9 HOW CABLE&WIRELESS WORLDWIDE CAN HELP Based on our extensive experience helping organisations realise their hosting and Cloud strategies, we have developed a formal approach, the Cloud Adoption Methodology, which will aid consolidation. This approach takes you from Inform to Transform, ensuring you quickly understand the business benefits to your organisation and are assisted through each step to achieving those benefits in an accelerated timeframe, whilst mitigating your risk. We also understand that organisations will be at different points within the adoption process and as a result we have designed the journey to enable you to engage at any given point, eliminating repetitive analysis. BUSINESS CONSULTING SERVICES TRANSFORMATION METHODOLOGY INFORM TRANSFORM C&W WORLDWIDE DATA CENTRE SNAPSHOT IMPACT ANALYSIS DISCOVERY DESIGN MIGRATION IN-LIFE SERVICE LINE OF READINESS SERVICE MIX HOSTING SERVICES HOSTING PRIVATE CLOUD PUBLIC CLOUD STORAGE INFORM PHASE Inform is comprised of two parts: a Snapshot and an Impact Analysis. The Snapshot provides a light touch assessment of where you are. The Impact Analysis makes use of discovery tools and capacity management applications to investigate current infrastructure utilisation, in addition to structured workshops and data analysis. While the Snapshot provides a quick view of where you are, the Impact Analysis helps you build a detailed business case. TRANSFORM PHASE Once a business case is delivered in the Inform stage and a service has been purchased, the organisation is then ready to proceed into Transform, which guides you through the process of service migration. Transform consists of four key stages: Discovery, Design, Migration and In-Life. The work performed during these four phases is complex and supported by a unique framework, called Reflector. Reflector includes a proprietary portal designed to provide a central repository for data and to reduce the complexity associated with managing multiple interdependent work streams, while continuing to support business processes with minimal interruption. Cable&Wireless Worldwide has evolved the process of data centre and application migration from an ad hoc project plan to a streamlined assembly line, reducing the time required to start the migration and minimise the associated business risk. CE10702 Version 1 November

10 CONCLUSION As costs, particularly those for power and space, inevitably increase, the trend towards data centre consolidation will continue to grow. Up-to-date facilities using the latest, highly efficient technology reduce expense and simplify control over centralised data. However the organisation will have to decide if it is in their best interests to invest in this equipment themselves, and face the prospect of continually maintaining and expanding their data centre to match their needs, or to eliminate the problem by outsourcing, either entirely or as a solution integrated with their existing facilities. Outsourcing will become more widespread as organisations recognise its ability to cut capex and opex, and to liberate valuable IT staff who would be better deployed on business building projects. An outsourced solution incorporating virtualisation, though requiring a cultural and strategic commitment from the organisation s management, promises the greatest efficiencies and cost savings. The following should be considered:- The organisation should make sure the network accessing their data centre has sufficient bandwidth to maintain application performance at peak demand periods. Is there provision for geographic resilience for backup and restore purposes? Are the data centres physically located in the UK to meet data residency rules? Is shared space acceptable for the type of data stored? The data centre consolidation route ultimately chosen needs to be built around the organisation s specific aims, such as reducing cost, increasing business agility and enhancing the user experience. By carefully defining requirements from the outset through comprehensive consulting, and applying a planned and managed migration process, organisations can be confident of ensuring their computing and data accessibility and security, and realising its full potential, at optimum cost. 10

11 NEXT STEPS For more information about cloud, managed hosting, storage and co-location services from Cable&Wireless Worldwide, please contact: T: E: Sources: 1 Data Centre Power Efficiency Study, Customer Experience Foundation and Cable&Wireless Worldwide 2 Gartner 3 HP Updates Data Center Transformation Solutions, Nicholas Mukhar, August Report to Congress on Server and Data Center Energy Efficiency, US Environmental Protection Agency, August Data Center Energy Forecast, Silicon Valley Leadership Group 6 Data Centres Turn to Outsourcing To Meet Capacity Needs, CIO.com, May The Digital Universe Decade, Gantz & Reinsel, May State of Storage survey of business professionals, Information Week, January 2012 CE10702 Version 1 November

12 CE10702 Copyright All Rights Reserved Cable&Wireless Worldwide pursues a policy of continuous development of its products and services. This document is for guidance only and doesn t form part of any contract. It is subject to change without notice.

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