Mid-Market Data Center Purchasing Drivers, Priorities and Barriers Featuring Sophia Vargas, Forrester Research Inc. 30 May 2014
Introducing today s presenters: Matt Miszewski Senior Vice President of Sales & Marketing, Digital Realty Guest Speaker - Sophia Vargas Researcher for Infrastructure & Operations, Forrester Research, Inc 2
2014 Data Center Trends And Priorities Forrester Consulting Sophia Vargas Researcher May 30, 2014 3
Welcome to the connected world Source: See the October 2013 Mapping The Connected World Forrester report 4
The public cloud market is in hypergrowth Source: April 2014 The Public Cloud Market Is Now In Hypergrowth Forrester report 5
2014 infrastructure priorities focus on reducing complexity and increasing efficiency Which of the following initiatives are likely to be your firm s/organization s top hardware/it infrastructure priorities over the next 12 months? Virtualization Consolidation Higher densities Cloud New, expanded sites Higher, uniform densities Disaster recovery/business continuity Multiple sites Source: May 2014 Strategic Benchmarks 2014: Infrastructure Budgets And Priorities Forrester report 6
2014 business priorities show a strategic focus on the customer Source: February 2014 Predictions For 2014: Technology Monitoring Forrester report 7
Online retail market is large, global and growing By 2017, Forrester expects that the Web will influence half of all retail purchases in some way, via features like store locators, price checks, and ratings and reviews. Source: March 2014 The Global ecommerce Opportunity Forrester report 8
Customers increasingly interact with your brand via digital channels Software enriches the brand Source: January 2014 Software Must Enrich Your Brand Forrester report 9
2014 data center trends Data center demand continue to increase Businesses depend on computing resources for both internal and external operations and services Data center performance will increasingly impact topline revenue and customer experience Data center buyer preferences are shifting to accommodate new business priorities Emerging technologies and form factors disrupt traditional solutions 10
Data center sourcing trends While the majority of infrastructure remains in company owned facilities Most firms rely on multiple types of environments Own and operate data center Colocate data center IaaS/Cloud or strategic right-sourcing Less managed Own data center, outsource operations Infrastructure outsourcing/ managed services/ hosting More managed 11
Thank you Sophia Vargas svargas@forrester.com 12
Analysis of 2014 Digital Realty Data Center Demand Survey 30 May 2014
Key questions explored How are customers sourcing their data center facilities? How do customers plan to source future capacity expansions? What are the key factors and motivations that influence this decision? 14
Survey methodology In this Digital Realty-commissioned study, Forrester conducted an online survey of 517 organizations in the US, UK, Singapore, Japan, Germany, Hong Kong, France, Canada, Australia, the Netherlands, and Ireland to evaluate their data center investment plans and drivers. Survey participants included senior-level decision makers in IT, Finance, and line of business roles with responsibility for data centers at midmarket firms with up to $500 million in revenue. Respondents were offered a small incentive as a thank you for time spent on the survey. The study began in January, 2014 and was completed in February, 2014. 15
Respondent demographics Where are your company's primary business operations located?" Australia 4% Hong Kong 5% Which of the following best describes the industry to which your company belongs?" High tech 15% US 39% North America 45% Canada 6% Germany 8% Asia- Pacific Europe 28% 27% UK 8% France 7% Singapore 7% Japan 11% Ireland 2% Netherlands 3% Manufacturing and materials Retail Financial services and insurance Business services, consulting Government, public sector Energy, utilities, and waste Education and nonprofits Healthcare, Pharmaceuticals, Biotech Telecommunications services Consumer product manufacturing Media, entertainment and leisure Electronics Online gaming/shopping/group-buying 7% 6% 6% 5% 4% 3% 2% 2% 1% 14% 12% 11% 10% Base: 517 Senior level decision makers with responsibility for data centers at mid-market firms A commissioned study conducted by Forrester Consulting on behalf of Digital Realty, February, 2014 16
Most mid-market firms have multiple data center sites How many data centers currently support your company s global operations? (This includes both internally owned data centers/server rooms and outsourced, hosted, and colocated data centers. This does not include any public cloud services.) 50+ 5% 41% have at least 4 data centers 21-49 3% 11-20 5% 7-10 7% 4-6 21% 2-3 38% 1 21% Base: 385 Senior level decision makers with responsibility for data centers at mid-market firms. Don t know, None, we only use cloud services and None, but we have plans to implement one responses omitted. A commissioned study conducted by Forrester Consulting on behalf of Digital Realty, February, 2014
Majority of mid-market firms require more than 2,000 sf of data center space What is the approximate footprint of data centers that support your company s operations? 3,000+ 41% 2,000-2,999 12% 1,000-1,999 15% 500-999 7% 100-499 17% <100 7% Base: 251 Senior level decision makers with responsibility for data centers at mid-market firms. Not applicable, everything is in the cloud and Don t know responses omitted. A commissioned study conducted by Forrester Consulting on behalf of Digital Realty, February, 2014
Majority of mid-market firms plan to increase spend on data center facilities "How do you expect your firm's spending on data center facilities to change over the next 12 months? " Increase more than 10% 9% Increase 5%-10% 40% Stay about the same 40% Decrease 5%-10% 9% Decrease more than 10% 2% Base: 517 Senior level decision makers with responsibility for data centers at mid-market firms. A commissioned study conducted by Forrester Consulting on behalf of Digital Realty, February, 2014
Expansion plans remain aggressive Are you in the market for a new data center facility within the next 4 years? 88% Yes, will be provisioning a new site or expanding a current one No Base: 233 senior level decision makers with responsibility for data centers at North American midmarket firms (<$500M revenue) A commissioned study conducted by Forrester Consulting on behalf of Digital Realty, February, 2014
IT sprawl and business growth encourage companies to consider new facility investments "Why are you looking for/anticipate looking for a new data center facility, colocation, or additional IT capacity?" Consolidating IT infrastructure 46% Current data center facilities are aging Running out of capacity 38% 41% Expanding global/regional footprint Need a site for disaster recovery 29% 31% Want a more energy efficient data center 25% Want to move to a new sourcing model Want to move to a different geography for lower risk Want to move data center closer to corporate HQ Access to green and sustainable energy sources Want to move to a different utility company territory for lower power costs Other 1% 21% 19% 18% 16% 16% Base: 517 Senior level decision makers with responsibility for data centers at mid-market firms. A commissioned study conducted by Forrester Consulting on behalf of Digital Realty, February, 2014
Poll question 1 What do you believe is the greatest driver for your business data center capacity growth today? Business growth Big data Application proliferation Regulatory or compliance requirements Mergers and acquisitions Other:
Business growth is number one driver behind new facility investments "What do you believe are the greatest drivers for data center capacity growth today? Business growth 51% Storage growth 45% Big data Virtualization 39% 38% Business continuity 32% Redundancy / resiliency Application proliferation Consolidation Regulatory or compliance requirements 23% 21% 20% 17% Mergers and acquisitions 13% Other 2% Base: 517 Senior level decision makers with responsibility for data centers at mid-market firms. Graph displays combination of top three rankings. A commissioned study conducted by Forrester Consulting on behalf of Digital Realty, February, 2014
Majority of mid-market firms still own and operate their primary data centers "How do you currently source your primary data center facilities? (Select all that apply). Own them ourselves 54% Fully outsourced 32% Colocation or other data center lease 26% Managed services or hosting 22% Infrastructure-as-a-service or cloud computing platforms 21% Base: 517 Senior level decision makers with responsibility for data centers at mid-market firms A commissioned study conducted by Forrester Consulting on behalf of Digital Realty, February, 2014
Many mid-market firms plan to build and operate their new facilities "How do you plan to source your new IT capacity in the future? (Select all that apply). Build our own 33% Traditional build with a provider 30% Fully outsourced 28% Modular build with a provider 24% Colocation or other data center lease 22% Infrastructure-as-a-service or cloud computing platforms 22% Managed services or hosting 20% Shipping container based data center 9% Dont Know 1% Base: 517 Senior level decision makers with responsibility for data centers at mid-market firms A commissioned study conducted by Forrester Consulting on behalf of Digital Realty, February, 2014
Poll question 2 Who in your organization is most influential in the decision to purchase data center facilities, colocation, or IT capacity sourcing? IT VP, manager, or director Chief information officer or most senior IT decision-maker Chief financial officer Line of business leader Other:
IT leaders remain the primary decision-makers, but CEOs play an increasingly important role Who in your organization influences the decision to purchase data center facilities, colocation, or IT capacity sourcing? Top 1 Top 2 Top 3 IT VP, manager or director 21% 20% 17% Chief information officer or most senior IT decision 26% 15% 11% Chief executive officer 30% 11% 9% Chief operating officer 8% 12% 6% Chief financial officer 4% 11% 11% Finance VP, manager or director 7% 10% 9% Individual contributors in IT 2% 5% 9% Facilities manager <10% Individual contributors in Finance Individual contributors in line of business Individual contributors in Operations Other Base: 517 Senior level decision makers with responsibility for data centers at mid-market firms. A commissioned study conducted by Forrester Consulting on behalf of Digital Realty, February, 2014
Connectivity, resiliency, control and risk are the most important features "How important are the following when making decisions about new data center facility investments? "4" (Important) or "5" (Very important) Network connectivity options/carrier availability/carrier density Resiliency level and availability of the data center facility Level of control over data center facility Risk profile of the data center location Access to cloud, managed service providers, or other partners Cost of energy at the data center location Energy efficiency of the data center facility 82% 80% 78% 77% 75% 73% 71% Global footprint of data center provider/multisite availability Ease of access to the location Access to green and sustainable energy sources Proximity of location to corporate offices 64% 62% 61% 59% Base: 517 Senior level decision makers with responsibility for data centers at mid-market firms. A commissioned study conducted by Forrester Consulting on behalf of Digital Realty, February, 2014
Proximity is more convenient than important, although most will locate their data center close to their primary head quarters "How far away from your primary headquarters do you plan to locate your next data center facility?" Less than 30 miles (less than 50 km) 24% 30-99 miles (50 159 km) 21% 100-199 miles (160 320 km) 20% 200-499 miles (321 804 km) 11% 500 or more miles (805 km or more) Proximity to my HQ is not important Not applicable 5% 5% 11% 45% of mid-market firms will locate their next data center within 100 miles of their primary headquarters, even though they ranked it as their lowest priority when selecting a new facility. Don t know 4% Base: 517 Senior level decision makers with responsibility for data centers at mid-market firms. A commissioned study conducted by Forrester Consulting on behalf of Digital Realty, February, 2014
Mid-market firms still plan to locate new facilities within their own region, especially European companies "What is the top location you are considering locating your planned facility? Asia Pacific Europe Latin America North America MEA Location of primary business operations APAC Europe North America 2% 8% 8% 1% 94% 4% 1% 2% 98% 1% 81% 2% Base: 517 Senior level decision makers with responsibility for data centers at mid-market firms. A commissioned study conducted by Forrester Consulting on behalf of Digital Realty, February, 2014
Majority of mid-market firms measure PUE or plan to in the future "Does your firm measure power usage effectiveness (PUE) for data center operations?" No but we are planning to measure it in the future 42% Of those who claim to measure PUE, 73% don t know what their PUE actually is at their primary facility. For those who did know, the median was 2.0. Yes 27% No this metric is not important to us 19% I m not familiar with PUE 8% 27% of mid-market firms say that PUE is not an important metric, or they aren t familiar with it Dont Know 4% Base: 517 Senior level decision makers with responsibility for data centers at mid-market firms. PUE = Power usage effectiveness. A measure of data center efficiency that divides total power to the property by power delivered to the operating computer equipment. A commissioned study conducted by Forrester Consulting on behalf of Digital Realty, February, 2014
Companies are concerned with outsourcing security and risk "What are the main barriers during the decision making of data center outsourcing in your company? Please rank the top three barriers. Security risk/exposure 68% Rising expenses 65% Regulations and compliance 42% Impact of outsourcing on internal staff 37% Company culture 31% Lack of management oversight by our organization Lack of trusted providers in the market Other 2% 26% 30% 27% of mid-market firms see security/risk exposure as their top barrier to data center outsourcing. 30% say rising expenses is the top barrier Base: 517 Senior level decision makers with responsibility for data centers at mid-market firms. A commissioned study conducted by Forrester Consulting on behalf of Digital Realty, February, 2014
Summary of key findings Most mid-market firms (<$500M) are multi-sourcing their facilities With a mix of internally owned, colocation, hosted and cloud The biggest drivers of capacity are business growth and storage growth For new facilities, customers will prioritize network connectivity, resilience, and control The main barriers to outsourcing are security, risk and cost related
Sophia Vargas Researcher, Forrester Research Inc. svargas@forrester.com Matt Miszewski Senior Vice President, Sales & Marketing Digital Realty mmiszewski@digitalrealty.com www.digitalrealty.com