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Two studies show the data center is thriving instead of dying

News Analysis
Jul 13, 20183 mins
Data CenterServers

Despite the rapid growth and adoption of the cloud, companies still need on-premises systems.

data center
Credit: Thinkstock

Once again research is showing that rumors of the demise of the data center are greatly exaggerated: One study shows across-the-board growth in IT spending, while a second predicts that the financial services sector is really set to explode.

Market research firm IHS Markit surveyed IT managers at 151 North American organizations and found that most of them expect to at least double the amount of physical servers in their data centers by 2019.

“We are seeing a continuation of the enterprise DC growth phase signaled by last year’s respondents and confirmed by respondents to this study. Enterprises are transforming their on-premises DC to a cloud architecture, making the enterprise DC a first-class citizen as enterprises build their multi-clouds,” wrote Clifford Grossner, senior research director in the cloud and data center research practice at IHS Markit.

In addition to doubling the number of physical servers by 2019, survey respondents said 73% of servers are expected to be running hypervisors or containers by 2019, up from 70% now. An interesting was that 9% of servers are expected to be single-socket, up from 3% now.

The top reasons for such investment are security and application performance (75% of respondents) and scalability (71%). It also found that 53% of respondents intend to increase investment in software-defined storage, 52% in NAS and 42% in SSD. They are also stocking up on switches, routers, security appliances, load balancers and WAN optimization appliances.

IHS noted that new technologies such as artificial intelligence and containers are gaining traction, traditional data center apps, such as Microsoft Office (22%), collaboration tools such as email, SharePoint, and unified communications (18%), and general-purpose IT apps (30%) are still being used.

The second survey comes from SNS Telecom & IT, a market research firm based in Dubai, UAE. It attributes the growth in big data and the subsequent massive inflow of all sorts of unstructured data as the reason for investment in IT equipment by the financial services industry.

“As this Big Data construct expands to include streaming and archived data along with sensor information and transactions, the financial sector continues its steady embrace of big data analytics for high-frequency trading, fraud detection and a growing list of consumer-oriented applications,” said the authors.

This has prompted banks, insurers credit card and payment processing vendors, and other financial services companies to invest an estimated $9 billion in big data technologies just this year, and SNS predicts that those investments will grow at a compound annual growth rate of 17% over the next three years. That comes out to $14 billion investment through 2021.

The whole 521-page report will cost you a pretty penny, but in summation, the firm found that banks and other financial-services institutes are warming to the idea of embracing cloud-based platforms, particularly hybrid-cloud implementations, in an attempt to avoid the scalability issues associated with on-premises data centers.

This is pretty much the reason everyone goes to the cloud. You can spin up virtual machines in 20 minutes, whereas it would take you a few hours to fill out the purchase order for new hardware, let alone have it delivered and installed.

But financial services firms were among the most leery of the cloud, not trusting its security and protection of the data. And with good reason; financial services companies are among the most heavily targeted for cyber attacks. But it seems they are feeling more secure in the cloud now.

SNS also said big data technologies are playing a pivotal role in facilitating the creation and success of innovative FinTech startups, most notably in the online lending, alterative insurance and money transfer sectors.

Andy Patrizio is a freelance journalist based in southern California who has covered the computer industry for 20 years and has built every x86 PC he’s ever owned, laptops not included.

The opinions expressed in this blog are those of the author and do not necessarily represent those of ITworld, Network World, its parent, subsidiary or affiliated companies.

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