Data Center Spend Keeps On Climbing

A growing pile of money

Posted on Friday, October 13, 2017

According to Gartner’s latest Worldwide IT Spending Forecast, the market will grow by a further 4.3 percent in 2018, reaching $3.7 trillion. Some of the sub-markets are set to grow faster than others, but they all show continued growth.

As may be expected in the age of cloud, data center systems are set for the lowest growth (1.8 percent) and the lowest total spend ($176 billion). Notably, data center spend is increasing, and there will be year-on-year growth (albeit very small).

The data center is still king

The report makes for interesting reading, not least because it shows that “cloud first” strategies are not having the desired effect on IT budgets. The IT services market is increasing almost five times faster (5.3 percent) than data center spend, but business are still having to pay out for local resources. And the overall cost is going up, not down.

If anything, this trend simply serves to prove that local data centers remain essential to enterprise operations. Speed of data access is increasingly important - a factor the cloud cannot address. Indeed, moving data off-site actually makes performance worse, due to the latency of the internet connection.

IoT and AI may further increase data center spend

As businesses build autonomous systems the issue of latency becomes even more pressing. AI needs to be able to act on the data gathered from IoT sensors in real time – virtually impossible if the data is not immediately available.

Faced with this reality, it is likely that businesses will need to spend even more on local data centers to give them the performance they need in the age of AI.

Cutting costs elsewhere

The Gartner report is sobering reading for CTOs who are under pressure to cut costs – or to free up budget for other strategic projects. Spend is accelerating – and not necessarily towards corporate goals.

In the case of data center spend, it is possible to reduce costs on two fronts using third party maintenance services. First, choosing non-OEM support allows you to leave post-warranty hardware in place for longer, delaying new purchases. Second, non-OEM support reduces service costs by up to 50 percent, helping to bring spend under control in a second market.

At the moment, Gartner’s forecasts are simply educated guesses – increases in IT spending are not unavoidable. To learn more about bringing data center and IT services spend back under control, please get in touch.