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70% of IT managers expect to increase their data center space requirements over the next five years, survey finds

Cloud computing provides companies with a viable alternative to reduce real estate demand pressures


SINGAPORE, 28 September 2010 – Soaring costs, obsolescent buildings and supply constraints will pose serious challenges for companies that rely on data centers to support business-critical functions in Asia Pacific, says Jones Lang LaSalle.

According to a poll of attendees at the recent MIS Asia 2010 conference in Singapore, 70% of IT managers expect to increase their data center space requirements over the next five years.

Mr. Rajiv Nagrath, Regional Director of Strategic Consulting at Jones Lang LaSalle said, “Businesses are increasing their reliance on technology for business delivery with a net million new servers added to the industry every year. Greater volumes of web-based critical business processes and transactions are creating the need for new-generation facilities.”

The capacity and dependability of existing data center facilities in Asia Pacific is coming under pressure. Aging facilities, technological obsolescence and limited capacity of existing data centers represent high risk for companies who depend on technology for mission-critical services.

Companies are faced with the twin challenge of balancing the need to accommodate increasing demand with the need to manage soaring data center costs. “Facilities operating costs have gone up from 1% to 8% of a company’s IT budget and are now increasing by an average of 20% each year,” noted Mr Nagrath. “And that is while overall IT budgets are growing 6% annually.”

“City densities and real estate premiums pose barriers to building new data centers in most Asia Pacific cities. The required upfront capital investment and lengthy delivery timeframes further constrain the future supply of data center facilities.”

“Ultimately, when it comes to data centers, it is all about power. Lack of required infrastructure, such as access to power and fibre, is the biggest challenge when it comes to finding suitable sites for establishing new data center facilities in Asia Pacific,” said Mr Nagrath.

Key findings of the Jones Lang LaSalle survey:

  • 70% expect their data center space requirements to increase over the next five years
  • 43% would meet future space needs by expanding existing facilities; 34% would turn to managed hosting services; 22% would co-locate and only 9% would build a new facility
  • The most important business issues impacting data center decisions in Asia Pacific are the cost of doing business, need to improve IT flexibility and response times and capacity to accommodate growing business needs
  • 66% are actively using less than 80% of their existing data center space; 21% are using less than 60%
  • While only 20% of respondents are dissatisfied with the current energy efficiency of their data centers, only 36% said that they were satisfied

Cloud computing

According to Mr. Jordi Martin, Managing Director of Integrated Facilities Management for Jones Lang LaSalle in Asia Pacific, one alternative that may reduce the need for data center space is cloud computing.

“Cloud computing works by tapping information and processing resources stored somewhere else - the “cloud” - using the Internet. Well known examples include “public” forums such as Google and Amazon,” said Mr Martin.

“While cloud computing doesn’t eliminate the need for data centers overall; it does offer benefits similar to those provided by outsourcing in other arenas such as increased efficiency, scalability and ultimately lower costs. Of the outsourced computing options, public clouds generally provide the greatest economies of scale and the lowest cost.”

With cloud models, data center space and energy requirements for cooling and backup power should shrink dramatically. In addition, the ability to access cloud services from anywhere will support employee mobility and strengthen telecommuting strategies for many organizations, further reducing a company’s footprint and associated occupancy costs.

Cloud computing also offers flexibility. “Most cloud computing services are scalable, enabling a pay-as-you-go system for users. This means that users with a sudden need for greater capacity can simply increase the level of their cloud service instead of investing in more hardware and software and expanding in-house data centers,” said Mr Martin.

Early cloud models sometimes met criticism about data security, reliability and uptime compared to private in-house systems. However, improvements have been made in the performance of public clouds and they are now more secure than ever. Private clouds, which operate like an in-house platform except the computing is done off-site, generally offer security that is equal to or even better than in-house IT systems.

Contacts:

Foo Chek Yee
+65 6494 3647
chekyee.foo@ap.jll.com
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