Mid-Market Data Center Purchasing Drivers, Priorities and Barriers

30 May 2014

Mid-Market Data Center Purchasing Drivers, Priorities and Barriers

Featuring Sophia Vargas, Forrester Research Inc.

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Introducing today’s presenters:

Matt MiszewskiSenior Vice President of Sales & Marketing,

Digital Realty

Guest Speaker - Sophia VargasResearcher for Infrastructure & Operations,

Forrester Research, Inc

© 2014 Forrester Research, Inc. Reproduction Prohibited

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Forrester Consulting

2014 Data Center Trends And Priorities

Sophia VargasResearcherMay 30, 2014


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Welcome to the connected world

Source: See the October 2013 “Mapping The Connected World” Forrester report


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The public cloud market is in hypergrowth

Source: April 2014 “The Public Cloud Market Is Now In Hypergrowth” Forrester report


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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?”

Source: May 2014 “Strategic Benchmarks 2014: Infrastructure Budgets And Priorities” Forrester report

Virtualization

Consolidation

Cloud

Disaster recovery/business continuity

Higher densities

New, expanded sites

Higher, uniform densities

Multiple sites


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Source: February 2014 “Predictions For 2014: Technology Monitoring” Forrester report

2014 business priorities show a strategic focus on the customer


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Source: March 2014 “The Global eCommerce Opportunity” Forrester report

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.


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Source: January 2014 “Software Must Enrich Your Brand” Forrester report

Customers increasingly interact with your brand via digital channels

Software enriches the brand


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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


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Own and operate data

center

Own data center,

outsource operations

Colocate data center

Infrastructure outsourcing/

managed services/ hosting

IaaS/Cloud or strategic

right-sourcing

Data center sourcing trends

› While the majority of infrastructure remains in company owned facilities…

› Most firms rely on multiple types of environments

Less managed More managed


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Thank youSophia [email protected]

30 May 2014

Analysis of 2014 Digital Realty Data Center Demand Survey


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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?


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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.


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“Where are your company's primary business operations located?"

Australia4%

Hong Kong5%

Singapore7%

Japan11%

Ireland2%

Netherlands3%France

7%

UK8%Germany

8%

Canada6%

US39%

Base: 517 Senior level decision makers with responsibility for data centers at mid-market firms

North America

45%Europe

28%

Asia-Pacific

27%

“Which of the following best describes the industry to which your company belongs?"

1%

2%

2%

3%

4%

5%

6%

6%

7%

10%

11%

12%

14%

15%

Online gaming/shopping/group-buying

Electronics

Media, entertainment and leisure

Consumer product manufacturing

Telecommunications services

Healthcare, Pharmaceuticals, Biotech

Education and nonprofits

Energy, utilities, and waste…

Government, public sector

Business services, consulting

Financial services and insurance

Retail

Manufacturing and materials

High tech

Respondent demographics

A commissioned study conducted by Forrester Consulting on behalf of Digital Realty, February, 2014


21%

38%

21%

7%

5%

3%

5%

1

2-3

4-6

7-10

11-20

21-49

50+

“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.)”

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.

Most mid-market firms have multiple data center sites

41% have at least 4data centers



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.

“What is the approximate footprint of data centers that support your company’s operations?”

Majority of mid-market firms require more than 2,000 sf of data center space

7%

17%

7%

15%

12%

41%

<100

100-499

500-999

1,000-1,999

2,000-2,999

3,000+



Base: 517 Senior level decision makers with responsibility for data centers at mid-market firms.

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? "

2%

9%

40%

40%

9%

Decrease more than 10%

Decrease 5%-10%

Stay about the same

Increase 5%-10%

Increase more than 10%



“Are you in the market for a new data center facility within the next 4 years?”

Base: 233 senior level decision makers with responsibility for data centers at North American midmarket firms (<$500M revenue)

Yes, will be provisioning a new site or expanding a current one No

88%

Expansion plans remain aggressive



"Why are you looking for/anticipate looking for a new data center facility, colocation, or additional IT capacity?"


IT sprawl and business growth encourage companies to consider new facility investments

1%

16%

16%

18%

19%

21%

25%

29%

31%

38%

41%

46%

Other

Want to move to a different utility company territory forlower power costs

Access to green and sustainable energy sources

Want to move data center closer to corporate HQ

Want to move to a different geography for lower risk

Want to move to a new sourcing model

Want a more energy efficient data center

Need a site for disaster recovery

Expanding global/regional footprint

Running out of capacity

Current data center facilities are aging

Consolidating IT infrastructure



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: ________________


"What do you believe are the greatest drivers for data center capacity growth today?”

Base: 517 Senior level decision makers with responsibility for data centers at mid-market firms. Graph displays combination of top three rankings.

Business growth is number one driver behind new facility investments

2%

13%

17%

20%

21%

23%

32%

38%

39%

45%

51%

Other

Mergers and acquisitions

Regulatory or compliance requirements

Consolidation

Application proliferation

Redundancy / resiliency

Business continuity

Virtualization

Big data

Storage growth

Business growth



"How do you currently source your primary data center facilities? (Select all that apply).”


Majority of mid-market firms still own and operate their primary data centers

21%

22%

26%

32%

54%

Infrastructure-as-a-service or cloud computing platforms

Managed services or hosting

Colocation or other data center lease

Fully outsourced

Own them ourselves



"How do you plan to source your new IT capacity in the future? (Select all that apply).”


Many mid-market firms plan to build and operate their new facilities

1%

9%

20%

22%

22%

24%

28%

30%

33%

Dont Know

Shipping container based data center

Managed services or hosting

Infrastructure-as-a-service or cloud computing platforms

Colocation or other data center lease

Modular build with a provider

Fully outsourced

Traditional build with a provider

Build our own



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?”

2%

7%

4%

8%

30%

26%

21%

5%

10%

11%

12%

11%

15%

20%

9%

9%

11%

6%

9%

11%

17%

Other

Individual contributors in Operations

Individual contributors in line of business

Individual contributors in Finance

Facilities manager

Individual contributors in IT

Finance VP, manager or director

Chief financial officer

Chief operating officer

Chief executive officer

Chief information officer or most senior IT decision…

IT VP, manager or director

Top 1 Top 2 Top 3



<10%


"How important are the following when making decisions about new data center facility investments?”


Connectivity, resiliency, control and risk are the most important features

59%

61%

62%

64%

71%

73%

75%

77%

78%

80%

82%

Proximity of location to corporate offices

Access to green and sustainable energy sources

Ease of access to the location

Global footprint of data center provider/multisite availability

Energy efficiency of the data center facility

Cost of energy at the data center location

Access to cloud, managed service providers, or other partners

Risk profile of the data center location

Level of control over data center facility

Resiliency level and availability of the data center facility

Network connectivity options/carrier availability/carrier density

"4" (Important) or "5" (Very important)



"How far away from your primary headquarters do you plan to locate your next data center facility?"


Proximity is more convenient than important, although most will locate their data center close to their primary head quarters

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.

4%

5%

11%

5%

11%

20%

21%

24%

Don’t know

Not applicable

Proximity to my HQ is not important

500 or more miles (805 km or more)

200-499 miles (321 – 804 km)

100-199 miles (160 – 320 km)

30-99 miles (50 – 159 km)

Less than 30 miles (less than 50 km)



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?”


8%

2%

94%

8%

98%

4%

1%

1%

81%

1%

2%

2%North America

Europe

APAC

Asia Pacific Europe Latin America North America MEA

Loca

tion

of p

rimar

y bu

sine

ss o

pera

tions



4%

8%

19%

27%

42%

Dont Know

I’m not familiar with PUE

No – this metric is not important to us

Yes

No – but we are planning to measure it in the future

"Does your firm measure power usage effectiveness (PUE) for data center operations?"


Majority of mid-market firms measure PUE or plan to in the future

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.

27% of mid-market firms say that PUE is not an important

metric, or they aren’t familiar with it

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.



2%

26%

30%

31%

37%

42%

65%

68%

Other

Lack of trusted providers in the market

Lack of management oversight by our organization

Company culture

Impact of outsourcing on internal staff

Regulations and compliance

Rising expenses

Security risk/exposure

"What are the main barriers during the decision making of data center outsourcing in your company? Please rank the top three barriers.”


Companies are concerned with outsourcing security and risk

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



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 VargasResearcher, Forrester Research [email protected]

Matt MiszewskiSenior Vice President, Sales & Marketing Digital [email protected]

www.digitalrealty.com

Mid-Market Data Center Purchasing Drivers, Priorities and Barriers

Technology

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