Managing Growth, Risk and the Cloud Executive Summary of Independent Market Research Commissioned by Zenium Data Centers Spring 2015
Foreword Rising data volumes combined with the always on approach to business and service delivery has resulted in more pressure on IT decision-makers to reliably protect, manage and provide access to business-critical data than ever before. Managing Growth, Risk and the Cloud is undoubtedly top of the agenda for IT professionals across the globe; so we decided to commission independent research in order to find out exactly what the IT community considers to be the key issues. The survey was conducted with senior IT decision-makers in the UK, Germany and Turkey and highlights the trends across the three territories that are at the heart of our business. It was reassuring to learn that 86% of IT professionals consider that outsourcing data center space enables them to demonstrate value and deliver innovation to the business, which of course ultimately leads to a competitive edge. 87% of respondents suggested that it s the most effective way to demonstrate accountability and compliance to the Board which is essential in a targetdriven world. This is particularly important as businesses strive to maximise service availability and seek to reduce the risk and cost of disruption to normal service. Although businesses increasingly operate on a global stage, the research also found that the desire to comply with increasingly stringent data legislation means that 83% of those interviewed will seek to lease more data center space from a local (domestic) provider. As regulations extend beyond European borders, accompanied by hefty fines, we should expect the preference of 82% of IT professionals to physically host their data within national borders to impact current outsourcing arrangements in the near future. It s also interesting to note that whilst 71% of IT professionals plan to use cloud services to manage growing data volumes, they have yet to recognise the importance of evaluating the data center infrastructure supporting the cloud. When selecting a Cloud Services Provider, only 33% ask if the data center behind those services is managed by a third party. At a time when the pressure is on to maximise service reliability and continuity, and so much is being done to manage growth and counter risk, we hope to see greater value placed on the due diligence checks that should be undertaken when considering the infrastructure behind the Cloud. Hopefully 2016 will see this business critical issue feature higher on the corporate agenda. Franek Sodzawiczny Franek Sodzawiczny CEO & Founder 02 Executive Summary Managing Growth, Risk and the Cloud Spring 2015
The Value of Outsourcing Increasingly recognised as a valuable business practice, a staggering 74% of large companies in the UK, Germany and Turkey currently outsource all or part of their data center space requirements. But perhaps this is not actually as surprising as it first seems when you consider that 86% of the IT professionals questioned regard data center outsourcing as the most effective way to manage their core IT infrastructure; ultimately enabling them to focus on demonstrating value and innovation to the business. But it s not just the IT team seeing advantages here. 87% of respondents cited outsourcing as being the most effective way to demonstrate accountability and compliance to the Board, in relation to energy efficiency, carbon footprint, security and resilience. Despite all the argued benefits in favour of data center outsourcing it has been interesting to note that the top three business drivers for doing so are still reducing costs, improving resilience / uptime (49%) and freeing up IT staff(46%), For those that have already invested in outsourcing data center space, 73% reported an increase in the time they now have available to spend enhancing other areas of IT in the business. Clearly this proves that outsourcing is a true business benefit and not simply a perceived one. In addition, these IT professionals also believe that companies that outsource their data center space requirements benefit further from having access to an IT infrastructure that is more sophisticated and advanced than their IT budgets could otherwise facilitate. Q: Which of the following are or would be key motivations for your company to outsource its data center space requirements? Key motivations for outsourcing data center space requirements 100 80 60 Scalability Cost reduction To free up IT staff To support DR plans Resilience / uptime Connectivity Lowering carbon footprint 20 Other None 0 03 Executive Summary Managing Growth, Risk and the Cloud Spring 2015
The Value of Outsourcing At a country level, 71% of German companies are more motivated to outsource in order to achieve cost reductions compared with 53% in the UK and 59% in Turkey. Freeing up IT staff is the second key factor for German and UK businesses, but for Turkish enterprises it s all about resilience. Q: Which 3 of the following criteria would be most important to you if your company were evaluating a long-term, outsourced data center partner? Top 3 requirements for a long-term data center partnership Interestingly, the third top reason to outsource was different in each of the three territories: for UK companies it was the desire to support disaster recovery; for Germany increasing resilience and in Turkey it was connectivity. Q: Which of the following are or would be key motivations for your company to outsource its data centre space requirements? UK 0 50 100 150 200 250 300 42 53 55 49 47 31 6 1 100 80 60 20 0 Trust and confidence in their knowledge and experience Resilience of the facilities Available space to expand into Costs Green credentials Geographical location of the facilities Physical security Tiering levels Other None Germany Turkey 33 71 59 30 58 31 37 59 22 21 48 44 17 932 Scalability To free up IT staff Resilience/uptime Lowering carbon footprint None Cost reduction To support DR plans Connectivity Other 27 2 3 When it comes to selecting a data center partner, unsurprisingly cost emerged as the top criteria stated by 62% of respondents, followed by physical security (50%) and trust in the operator s knowledge and experience (49%). Interestingly, space for expansion, facility resilience, green credentials and geographic location were also widely acknowledged as key considerations by a third of respondents. 04 Executive Summary Managing Growth, Risk and the Cloud Spring 2015
Mitigating Natural Disasters The research also looked into the impact of natural disasters and the role outsourcing plays in helping companies to mitigate the associated risks. Despite the fact 60% of respondents said that their data centers are located in low risk areas, without any physical or environmental hazards; one in two companies has experienced disruption to its data center operations in the last decade due to natural disasters such as seismic activity or flooding. On average, these companies have experienced five such incidents over the 10 year period, but some have reported as many as 100 instances. Unsurprisingly, 91% of those who have experienced disruption to their data center operations due to natural disasters incurred costs as a result of such incidents. The average cost of each incident was c. 25,000 but the maximum was quoted as 500,000 per incident. When extrapolated, this means businesses in these three countries alone lost 156 million per year, over the 10 year period. Looking at the facilities that have been designed to provide protection against the cost and disruption of natural disasters, it should come as no surprise that of the three countries surveyed earthquake-resistant data centers are the most prevalent in Turkey. Given Turkey s topography, a reassuring 60% of Turkish companies claim their facility includes this design feature, however, somewhat worryingly, this means that % of businesses in the region do not. Protection against floods is a key issue in all the three territories, with % of facilities in the UK considered to be flood resistant, rising to 50% in Turkey. Q: Are you currently considering outsourcing your data centre requirements to a third-party facility in order to reduce your exposure to natural disasters, such as earthquakes or floods? UK Germany 0 20 60 80 100 50 55 34 6 6 43 6 2 Turkey 64 15 10 11 1 in 2 companies has experienced disruption caused by natural disasters 91 % 57 % are considering help mitigate risk of those affected incurred costs as a result outsourcing to Yes considering outsourcing to reduce risk No not considering outsourcing to reduce risk No, because there are no such operators So what impact does this have on outsourcing? 57% of IT professionals across the three regions are currently considering outsourcing their data center requirements to a third party operator in order to reduce their exposure to natural disasters. Interestingly 64% of those that already outsource some data center operations are considering outsourcing more to further reduce exposure to natural disasters and 36% of those that do not outsource are also considering taking this same route. 05 Executive Summary Managing Growth, Risk and the Cloud Spring 2015
The Importance of National Borders In the face of growing data legislation, the research also questioned whether the proposed EU Data Protection directive will mean companies seek to lease more data center space within their national borders. In January 2012 the European Commission proposed a comprehensive reform of the EU s 1995 data protection rules in order to strengthen privacy rights and boost Europe s digital economy. The reform consisted of a draft Regulation setting out a general EU framework for data protection and a draft Directive on the processing of personal data. In March 2014 the European Parliament voted to back the European Commission s proposed reforms. The Commission is now working to finalise the details by the end of 2015. For further details refer to:http:// http://ec.europa.eu/justice/newsroom/data-protection/index_en.htm Encouragingly, 97% of the IT professionals interviewed are aware of the EU Data Protection Directive and 92% had already given the impact of this Directive some consideration. Indeed, 83% agreed that the EU Data Protection Directive changes will probably mean their company will need to lease more data center space from a local (domestic) provider. Breaking those figures down further, 29% were definite about this requirement, and 54% thought it would probably the case. That said, 93% of companies with data centers already located outside of their national borders think the Directive will mean their company needs to lease more data center space from a local (domestic) provider, compared to those who only have data centers located nationally (79%). In an ideal world, 82% of IT professionals would prefer to physically host their data within their national borders. However with regulations now extending beyond European borders, and accompanied by hefty fines, this may well further impact the current outsourcing arrangements that companies have in place today. Q: In an ideal world, would you prefer to physically host your data within your national borders? Preference for data centers to be located within national borders 5% 13% 82% Interestingly, a greater number of IT professionals in the UK (86%) and Turkey (87%) think the EU Directive will mean their company needs to lease more data center space from a local (domestic) provider, compared to Germany (75%). Yes would prefer to host data within national borders No would NOT prefer to host data within national borders 06 Executive Summary Managing Growth, Risk and the Cloud Spring 2015
Private, Public or Hybrid? As well as globalisation and advancements in technology, another driver for the EU Directive is the advancement of cloud computing. Data can now be hosted anywhere in the world, irrespective of where the client or the cloud services provider is actually located. Growing data volumes are fuelling the migration of corporate data to the cloud, with 71% of IT professionals saying they are planning to use cloud services to manage the huge increase they are experiencing. The good news is that 91% of respondents currently use the cloud, with equal proportions of companies in each country utilising at least one type of cloud solution. In the UK and Germany, companies use a wider variety than those in Turkey, with both private and hybrid solutions proving to be more commonplace in these territories. Q: Does your organisation currently use any of the following cloud solutions? 1 120 100 80 60 20 2 5 39 36 63 1 6 42 33 63 6 7 24 43 Private cloud Public cloud Hybrid cloud None of these 89% of companies are planning to use a new cloud solution of some sort in the next 12 months, with private solutions being the most popular choice (49%), followed by hybrid (38%) and public (35%). Q: [Just to those who use cloud services] Have any functional heads in other departments taken on cloud services without involving IT in the selection process? 6 % 41 % 53 % No, not without IT Yes, takes on cloud services without IT Unfortunately, the research also highlighted a worrying trend for the CIO. Such is the interest in the cloud that 53% of respondents said that functional heads have taken on cloud services without involving IT in the selection process. This is something that IT will need to address if the move to the cloud is to be a long term success. 0 UK Germany Turkey 07 Executive Summary Managing Growth, Risk and the Cloud Spring 2015
What s behind your cloud? Despite the rapid adoption of cloud computing, it is still a relatively new concept so one might rightly expect users to be particularly careful when outsourcing to Cloud Service Providers (CSP).However, this does not seem to be the case. The research indicated a woeful lack of evaluation of the data center infrastructure supporting the cloud, despite the fact that 71% of the IT professionals questioned said they are planning to use cloud services to manage the levels of data growth. In fact, 98% of respondents claimed to only consider a single criterion when evaluating a new CSP. The most common due diligence checks companies carry out are meeting the team who will manage the data (46%), meeting the management team (45%), examining the CSP s background / history (44%) and obtaining the specification of the physical (bricks & mortar) data center infrastructure (43%). Just 38% visit the data center facility itself whilst only 33% ask if the data center is managed by a third party. A further 14% do not conduct any data center-related checks. Q: [Just to those who use cloud services] When evaluating a cloud services provider, which of the following does your company do? Evaluation criteria for cloud computing service providers 100 80 60 20 0 Check the vendor s credit history Examine their background / history Speak to their customers *bricks and mortar Meet the management team Ask if the data center is managed by a third party Obtain the specification of the physical data center infrastructure* In general, the way in which cloud users across the different countries evaluate CSPs is very similar. However the most notable difference is the variation in respondents who obtain the specification of the data center - 53% of those in Turkey do this compared with only 35% in the UK and 41% in Germany. Visit the data center facility Meet the team who will manage the data None 08 Executive Summary Managing Growth, Risk and the Cloud Spring 2015
Methodology This report was commissioned by Zenium and details quantitative research conducted by Dynamic Markets, using an online global research panel in Q1 2015. Before and during the interviews, respondents were not aware that the research was being undertaken on behalf of Zenium. A total of 301 interviews were collected in the UK, Germany and Turkey with senior IT professionals across a wide variety of industry sectors and in large organisations with 250 or more employees. All respondents confirmed prior to interview that they were an IT professional with responsibility for the company s data centers from an operational and / or strategic perspective. Zenium Technology Partners Limited 6th Floor, 65 Grosvenor Street London W1K 3JH United Kingdom T: +44 (0)20 3667 84 E: info@zeniumtechnology.com www.zeniumdatacenters.com Zenium Technology Partners Limited