User Survey Analysis: Key Trends Shaping the Future of Data Center Infrastructure Through 2011

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1 User Survey Analysis: Key Trends Shaping the Future of Data Center Infrastructure Through 2011 Gartner Dataquest Research Note G , April Adams, Naveen Mishra, 22 October 2010 Complementing Gartner s recent research on IT spending around the world is a new study of large enterprises that answers the question, What s driving change in the data center? Of course, we asked about their hardware infrastructure challenges, project priorities and planned technology investments. But moving beyond that, we also explored the reasons behind those choices. Specifically, how do they plan to address the specific challenges they are facing? What actions are they taking to drive the strategic changes they view as important to their organization s data centers? Will they be expanding or contracting their overall data center space? And, what is their underlying approach philosophy, if you will to change in the data center? Key Findings Data growth emerged as the biggest data center hardware infrastructure challenge, with 47% of respondents from large enterprises ranking it in their top three challenges, followed by system performance and scalability (37%), and network congestion and connectivity architecture (36%). Sixty-two percent of respondents report that they will be investing in data archiving or retirement by the end of 2011 to address the data growth challenge. Business continuity and availability was the most-oft-mentioned driver of strategic change in the data center through 2011, with half the respondents ranking it in their top three, and 62% of respondents favoring server load balancing as the preferred technology project for enabling the change. The second and third most commonly mentioned drivers were cost containment initiatives (37%) and maintaining or improving user service levels and satisfaction (36%), although some of these drivers could be additive. There is almost an even split at the global level between large enterprises that approach data center change with a definitive strategic plan and integrated project road map versus those working on a project-by-project basis to meet current needs. More than half of the respondents plan to expand capacity at their existing data center site by the end of 2011, and 30% plan to build new data centers, although there is wide variance by country. About 21% expected to make no changes to their data center space in that time frame.

2 2 The top three technologies that respondents plan to invest in through 2011 are server virtualization (67%), application consolidation or rationalization (56%) and blade servers (51%). Recommendations Technology providers product managers and product marketing managers who sell into the data center should focus their product development, product marketing and messaging efforts on the key hardware infrastructure challenges facing large enterprises today: data growth, system performance and scalability, network congestion and connectivity architecture issues, etc. This includes the possibility of solution bundling to tie existing products together in a way that meets predominant needs. Technology providers should study what large enterprises say are the most important drivers of strategic change in their data center (business continuity and availability, cost containment initiatives, and the need to maintain or improve user service levels and satisfaction), as well as consider how their offerings tie into the technology solutions that customers plan to implement to enable those changes. Devise plans to either promote the solutions that customers say they most want or educate them on other ways to cost-effectively produce that change using the vendor s solution. Technology providers should explore each customer s individual strategy for addressing change in the data center and seek to become a trusted advisor as the enterprise moves along the path toward a more-integrated approach. Customers will be more inclined to partner with a provider that can help them to seamlessly migrate from the legacy environment to the nextgeneration infrastructure. Vendors should continue to invest in boosting their virtualization ecosystem for example, by promoting and training Tier 2 system integrators. SURVEY OBJECTIVE In August 2010, Gartner completed an extensive primary research study designed to drive a greater understanding of what s happening in the data centers of large enterprises worldwide today and the trends that will drive change in those data centers going forward. To that end, we explored the infrastructure-related challenges they are experiencing, what is driving strategic change in their data centers, the project and investment plans that large enterprises are putting in place through 2011 to address these challenges, and how their philosophical approach to longer-term change in the data center might have impacted their responses. This extensive survey included more than 1,000 respondents from eight countries. DATA INSIGHTS The Data Center IT Issues and Priorities survey was designed to look beyond technology silos and tell a story the story of what s really going on in data centers today and what large enterprises are planning to do with their data centers in 2011 and then five years down the road. We wanted to know what hardware infrastructure challenges these large enterprises were facing in their data centers and what technology projects they are planning to invest in to address those specific challenges. We explored the factors that are driving strategic change in the data center and followed up with questions about what projects they were implementing to enable the changes they most wanted to make. We delved into the broader demographic changes they were expecting to have in their data centers during the next year, such as capacity expansion, data center closings, or a shift to colocation or outsourcing. And we probed their longer-term philosophy for how they would be approaching change in the data center in general. We inquired about individual technology investments not only what they were planning to buy, but also the reasons behind the investment and, to determine if they were considering the interdependencies, we inquired about how they expected that investment to impact the rest of their data center. And for those technologies that they are not investing in, we inquired as to why not. This overview report briefly recaps the high-level results for each of these topics at a global level and provides technology and service providers that are selling into the data center market with valuable insight into buyer issues, intentions and behaviors. Specifically, the data and conclusions from this study will be of interest to product managers, product marketing managers, strategic marketing managers, marketing communications managers and sales channel management teams. Watch for further in-depth research to be published in these areas, as well as the additional subjects addressed in the survey that include: Top priorities for server projects. Top priorities for storage projects. Top priorities for networking projects. What is driving virtualization efforts? 2011 Gartner, Inc. and/or its affiliates. All rights reserved. Gartner is a registered trademark of Gartner, Inc. or its affiliates. This publication may not be reproduced or distributed in any form without Gartner s prior written permission. The information contained in this publication has been obtained from sources believed to be reliable. Gartner disclaims all warranties as to the accuracy, completeness or adequacy of such information and shall have no liability for errors, omissions or inadequacies in such information. This publication consists of the opinions of Gartner s research organization and should not be construed as statements of fact. The opinions expressed herein are subject to change without notice. Although Gartner research may include a discussion of related legal issues, Gartner does not provide legal advice or services and its research should not be construed or used as such. Gartner is a public company, and its shareholders may include firms and funds that have financial interests in entities covered in Gartner research. Gartner s Board of Directors may include senior managers of these firms or funds. Gartner research is produced independently by its research organization without input or influence from these firms, funds or their managers. For further information on the independence and integrity of Gartner research, see Guiding Principles on Independence and Objectivity on its website,

3 Data Growth Is No. 1 Challenge for Data Center Hardware Infrastructure If our goal was to be able to predict future trends in the data center, it made sense to begin by understanding the underlying challenges facing large enterprises in their data centers today. We asked respondents to identify the three biggest challenges that their organization will face with respect to its data center hardware infrastructure through the end of The No. 1 response was data growth, followed by system performance and scalability, and network congestion and connectivity architecture (see Figure 1). While there were variations in the top three across geographies, data growth came in first in all but two countries (India and the U.S.), where it placed second. Similarly, there were some variations in response by vertical (although data growth was never lower than second among the top three challenges), and it came in first in all four of the organization size categories we studied as well. It is also noteworthy that all the countries we surveyed except Russia and the U.K. rated data growth as their single biggest, or tied for their single biggest, hardware infrastructure challenge. With data growth emerging as the biggest data center infrastructure challenge (47% of our respondents ranked it in the top three challenges, and 20% named it as their biggest challenge), we delved a little deeper into what technology projects large enterprises will be investing in through 2011 to address the issue. Survey findings suggest that data archiving and retirement projects 3 Figure 1. Top Three Data Center Hardware Infrastructure Challenges Through 2011 Data growth 47 System performance and scalability 37 Network congestion and connectivity architecture 36 Cost of power, cooling and space 33 Data center management issues 30 Integrating multiple vendors' technologies 29 Virtual server sprawl 25 Underutilization of hardware and/or effective asset inventory 25 Physical server sprawl 20 Cable management issues Percentage of Respondents Question: Which of the following will be the three biggest challenges for your organization with respect to its data center hardware infrastructure between now and the end of calendar year 2011?

4 4 are the most popular response to this challenge, with 62% of the global respondents reporting that they will begin investing in or continue their current investment in it through year-end 2011 (see Figure 2). Other high-ranking IT projects that large enterprises will be employing to address the issue of data growth are data security from internal, external or hacker risk (54%), storage consolidation (53%), storage management tools (52%), and data reduction techniques (49%), which we defined as data deduplication, singleinstance store and compression. While all of the top data center hardware infrastructure challenges impact cost to some degree or another, data growth is particularly associated with increased costs relative to hardware, software, associated maintenance, administration, services, etc. Given that cost containment remains a key focus for most organizations, positioning technologies to show that they are tightly linked to cost containment in addition to their other benefits, is a promising approach. Consider, for example, archiving, application retirement, storage resource management (SRM) tools and data reduction solutions. With the exception of data deduplication, which is now often part of the combined hardware/software backup solution, most organizations do not have an existing budget category for these technologies. As a result, it was harder to get funding for them, and their purchase was often deferred. Providers most likely to be successful are those that link their message to cost containment and improved service-level agreements (SLAs), show the use case, demonstrate success via case studies, total cost of ownership (TCO) calculators, etc., and pitch to the appropriate buying center. Figure 2. Technology Projects That Large Enterprises Are Investing in to Address the Challenge of Data Growth Data archiving or retirement 62 Data security from internal, external or hacker risk 54 Storage consolidation 53 Storage management tools 52 Data reduction techniques 49 On-premises or off-premises data storage or management 45 Outsourcing 34 Cloud storage 31 Storage tiering 29 Data growth is not an issue for our organization 1 Question: Which of the following technology projects is your organization going to begin investing in or continue its current investment in between now and year-end 2011 to help address the challenge of data growth? Percentage of Respondents

5 Large Enterprises Are Struggling With Performance and Scalability System performance and scalability emerged as the secondbiggest data center infrastructure challenge, with 37% of our global respondents rating it among their top three issues, and 14% ranking it as their biggest challenge. As the global economy begins to revive in 2010 and organizations start to shift focus to a return to growth, IT organizations will be challenged to support the various growth initiatives. Many data center managers were forced to defer infrastructure upgrades and extend technology refresh cycles in 2009 and, as a result, are now dealing with an aging infrastructure or, in some cases, product obsolescence. Vendors wishing to tap into this reopening market should propose infrastructure solutions that are high on efficiency and offer scalability as the demand grows, thus helping the companies to prepare for a return to growth. Many of Gartner s clients have been leveraging server virtualization as one of the ways to address issues surrounding server performance. One of the reasons for the continued uptake of blade server sales is the fact that blade servers address the scalability issue. Virtualization on a blade server has been an ideal solution for certain types of workloads for many enterprises. Network-Related Challenges Rear Their Ugly Head Network congestion and connectivity architecture was the thirdbiggest data center infrastructure challenge, with 36% of global respondents rating it in their top three challenges, and 11.5% rating it as their biggest challenge. While a number of factors could contribute to these responses, Gartner client interactions suggest that increased deployment of server consolidation and virtualization projects is a highly probable one, especially in mature markets. The new generation of servers with multicore processors demand significantly high input/output (I/O), and if these servers are virtualized, this requirement further goes up. The traditional LAN switches are not designed to meet this sudden upsurge in network demand because there are only a few switches with 10 Gigabit Ethernet connectivity. A recent focus group in Australia also suggested that organizations with more than 80% server virtualization deployment frequently struggle with network-related challenges. This result is validated by the survey findings on network congestion. Increased reliance on WAN can be another trigger for networkrelated challenges as users are consolidating their IT systems, especially as individual users are increasingly working remotely or going mobile. Vendors are advised to help customers to be strategic with their network infrastructure rather than continue to take a silo approach. Virtualization-led consolidation projects are only successful if they are governed by a cross-functional IT team including server, network, operations, etc. Business Continuity and Availability Needs Drive Strategic Change in the Data Center Interestingly, while respondents reported that their top challenge with respect to their data center infrastructure was data growth, they did not rank existing data center at or nearing capacity and/or utilization limits as one of their top drivers for strategic change in the data center. Rather, when we asked respondents what the three most important drivers of strategic change in their organization s data center would be through the end of 2011, business continuity and availability came in first at 50% (see Figure 3). This result was fairly consistent across all the segments we evaluated. While the results in Australia spiked higher than the global average at 62% and came in a little lower at 47% among enterprises with 1,000 to 2,499 employees worldwide, business continuity and availability still placed first for all segments except China and Germany and respondents from the healthcare industry (where it was ranked third in each case). Returning to the global numbers, cost containment initiatives was ranked the secondbiggest driver of strategic change in the data center, followed by the need to maintain or improve user service levels and satisfaction. Technology providers that tie their messaging to one of these drivers, or better yet, a combination of these drivers, are likely to see their messages resonating with large-enterprise users. Large Enterprises Define the Technology Projects They Are Implementing to Enable Strategic Change in the Data Center Delving deeper, we explored the kinds of technology projects that large enterprises are running now or plan to implement in the near term to enable these strategic changes. For business continuity and availability, the most common answer at the worldwide level was server load balancing at 62% a logical response, given that server load balancing minimizes server response time, helps to improve SLAs and potentially helps to maintain uptime and avoid a system crash. This was followed by database or file-based replication and rearchitect backup and recovery, two back end technologies that help to provide a safety net should a crash occur. High availability clusters was a close fourth (see Figure 4). Turning to the second-biggest driver of strategic change, the most-popular technology project that large enterprises will be implementing to enable their cost containment initiatives is server virtualization, with 75% of our respondents worldwide indicating their plans to have this running by year-end Data reduction techniques came in second at 53%, followed by data center management tools at 49% and unified communications a close fourth at 47%. These are all logical responses for an enterprise focusing on cost containment, but they do have longer-term implications for enterprises and providers alike. While implementing server virtualization can at least initially reduce capital expenditure for hardware through server consolidation and improved utilization rates, it can also lead to new problems longer term, such as virtual server sprawl or (as noted above) network connectivity 5

6 6 Figure 3. Most Important Drivers of Strategic Change in the Data Center Business continuity and availability 50 Cost containment initiatives 37 Maintain or improve user service levels and satisfaction 36 Infrastructure consolidation 32 Data center modernization 29 Existing data center at or nearing capacity and/or utilization limits 28 Infrastructure management concerns 23 Sustainability or green IT 21 Application consolidation or rationalization 21 The need to support regulation, reporting and/or compliance Percentage of Respondents Question: Which of the following do you expect to be the three most important drivers of strategic change in your organization s data center(s) in your country between now and year-end 2011? issues. And many enterprises neglect to factor in the cost of addressing those issues when they do their server virtualization TCO or ROI calculations. For providers, the increasing popularity of server virtualization automatically translates to a reduced market opportunity for x86 server sales, creating a challenge for them to find new ways to sustain or increase revenue. Similarly, implementing data reduction may require investment in a new storage solution and perhaps even a switch in vendors, as the major storage providers have only recently begun to introduce such solutions for primary storage. Either way, an initial and sometimes an extended outlay of cash is required to implement these solutions that intuitively negates the higher-level cost containment objective. We also note that the majority of respondents do not see cloud computing or cloud services as a cost containment measure at this time, despite significant vendor marketing and the overall promise of the technology perhaps because they haven t yet figured out how organizational structures, roles and responsibilities will change in a cloud environment or are still evaluating how cloud shifts the cost model from capital expenditure (capex) to operating expenditure (opex). Ultimately, cloud could lead to fewer people in the data center, but how that would work and which roles would still be required may be something they re not prepared to deal with yet.

7 Figure 4. Technology Project Implementations to Enable Business Continuity and Availability 7 Server load balancing 62 Database or file-based replication Rearchitect backup and recovery High availability clusters 53 Off-site failover (companyowned) 42 Colocation or outsourcing 36 Host-based replication 35 Array-based replication 30 Appliance-based replication 26 Off-site failover (hosted) Percentage of Respondents Question: Which of the following technology projects does your organization have running now or plan to implement before yearend 2011 to enable business continuity and availability? N = 506 To maintain or improve user service levels and satisfaction, 60% of our respondents reported that they were either running disaster recovery projects now or would implement them in WAN optimization came in second at 51%, followed by traffic flow monitoring tools at 49% and ITIL implementation at 48%. Rounding out the top five was application performance projects, according to 43% of worldwide respondents. Their Philosophical Approach to Change in the Data Center While it s valuable to understand the specific challenges and projects that large enterprises are prioritizing and the technologies that they are choosing to invest in, it is also useful to understand the underlying philosophy they are pursuing relative to change in the data center. We wanted to test the hypothesis that many large enterprises today are looking beyond the pure infrastructure challenges when considering how to improve their data center operations and prepare their organizations for future growth, and that many are in fact taking a longer-range view. We therefore asked respondents about their organization s approach to change in the data center during the next five years.

8 8 Fifty percent of respondents globally said they had a definitive strategic plan for their data center that included an integrated project road map, while 49% said they address each project separately to meet current needs rather than as part of an integrated plan (see Figure 5). The fact that half the respondents especially after coming out of a period of economic decline report that they are strategically approaching change in the data center is a positive sign for technology and service providers that go to market with some form of data center transformation story because it suggests movement toward a more proactive approach to data center infrastructure within large enterprises. While a reactive, or silo-based, approach can certainly lead to solid box-moving in the short term, a more thoughtful, integrated view has the potential to drive larger revenue across a broader product portfolio in the long term. However, the depth of the strategy these large enterprises are following remains unclear. Just because an organization reports that they re taking a strategic approach to IT does not necessarily mean that they fully understand the interdependencies between projects or how to integrate projects so that the results they achieve collectively are greater than the sum of the individual project parts. This is an area in which technology and service providers can add significant value. Providers should explore this area with customers to try to understand exactly what they mean by strategic approach, what their vision for the data center is, and how it aligns with their organization s overall business goals so that they can help to move the customers along the path and potentially become a trusted advisor in the account. Data Center Demographics Large enterprises report being challenged by a number of factors, including the ever-increasing amount of data that has to be stored and managed; system performance and network connectivity issues that they fear will impact business continuity as well as user service levels and satisfaction; power, cooling and space costs; and data center management issues. And they are dealing with all of these under the shadow of an overriding cost consciousness that remains pervasive, despite loosening budgets. Clearly, something has to give. IT organizations cannot continue to do more with less unless they are able to grow or find alternative ways of operating. We asked respondents what changes they expected to see in their data center space by the end of Not surprisingly, more than half of our respondents worldwide (and more than 60% in emerging countries) plan to expand capacity at their existing sites (see Figure 6). One-quarter of respondents plan to add between 26 and 100 racks of equipment to expand capacity by year-end 2011, while almost half (47%) will add between one and 25 racks. But adding more capacity is not always an option, whether because they cannot afford the additional capital expenditure or there physically is not enough room or sufficient infrastructure (power, cooling, space, etc.) in their current data center to support it. Approximately one-third of respondents worldwide plan to use colocation to respond to this challenge, while 30% plan to build one or more new Figure 5. Strategic Approach to Change in the Data Center Through 2015 Don't know 1% We address each project separately to meet current needs, rather than as part of an integrated plan 49% We have a definitive strategic plan that includes an integrated project road map 50% Question: When it comes to changes within your organization s data center(s) over the next five years (i.e., by year-end 2015), which of the following statements most closely matches your organization s approach?

9 data centers more in the emerging markets we studied and less in the mature markets. About 21% of respondents indicated that they don t expect to make any change to their data center space by year-end In all cases, there are still wide variations by country, even within those breakdowns. Technology Investment Plans All of the data presented thus far has strategic importance for technology and service providers looking to optimize their go-tomarket strategies and messaging plans. However, there are more-immediate tactical issues that are critically important as well. Therefore, in a series of questions (to be further detailed in future research), we asked respondents about their near-term investment plans for a wide range of technologies. What are they planning to invest in by the end of 2011? What is driving that investment? How do they think that investment will impact the rest of their data center? And to round out the picture, for those technologies that they aren t going to be investing in by year-end 2011, what are their reasons for not investing? Not surprisingly, server virtualization topped the list of technologies that respondents worldwide planned to invest in, at 67% (see Figure 7). However, significant differences existed by segment, with 81% of respondents in the mature markets (Australia, Germany, the U.K. and the U.S.) indicating plans to invest, compared with only 53% of respondents in emerging countries we surveyed (Brazil, Russia, India and China), and even-greater variance when viewed by country. Looking at the data by organizational size, we saw little 9 Figure Changes to Data Center Demographics We don't expect to have any changes to our data center space in this time frame We expect to close down one or more of our existing data centers We expect to use outsourcing to grow our data center space We expect to build one or more new data centers We expect to use colocation to grow our data center space We expect to expand capacity of our existing data center(s) at our current site(s) Don't know Question: Thinking about your organization s data centers, what changes do you expect to see to your data center space between now and the end of calendar year 2011? (total); N = 505 (emerging); N = 499 (mature) Percentage of Respondents Mature Emerging Total

10 10 variation with one exception from the global norm in terms of server virtualization. Organizations with 5,000 to 9,999 employees reported a greater intention to invest in server virtualization, at 72%. Notably, planned investments also were higher for every one of the technologies we asked about for those respondents who described their organization as having a definitive strategic plan that included an integrated project road map to address change in their data center than for those who addressed each project separately to meet current needs. This finding suggests that persuading users that there is value in approaching data center change from the perspective of an integrated data center transformation journey, while challenging, may well be a worthwhile endeavor for providers in terms of increasing overall sales. Implications for the Cloud Harkening back to the list of top hardware infrastructure challenges and key drivers of strategic change in the data center, we noticed something interesting. The list of top challenges and change drivers bears a distinct resemblance to the lists of features and benefits that cloud providers claim their as a service models will deliver to customers. While certainly not the only answer to these enterprises concerns, it does beg the question: Is cloud computing the cure for what ails today s large enterprises? Figure 7. Technology Investment Plans Through Year-End 2011 Server virtualization 67 Application consolidation or rationalization 56 Blade servers 51 Unified communications 50 Storage tiering (including SSD) Hosted virtual desktop technology Cloud computing or cloud services FCoE or unified fabric 39 Energy management software tools 37 I/O virtualization 37 Fabric-based computing 23 Question: For each of the following technologies, indicate whether your organization plans to begin investing or continue investing before year-end 2011? FCoE = Fibre Channel over Ethernet SSD = solid-state drive Percentage of Respondents

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