Reinventing The Corporate Data Center

The drivers behind an anticipated upswing in data center spending include a need to refresh aging hardware, compliance-driven business-continuity issues and, in particular, new technologies that promise to cut management costs and help companies meet new business objectives.

"It's a perfect storm for the data center," said John Murphy, executive vice president of Advanced Systems Group, a Denver-based solution provider. "It bodes great for those helping manage the data center, including vendors and integrators."

Most observers agree that one of the key drivers of change in the enterprise data center in 2004 is the need to control costs. Between 60 percent and 80 percent of IT budgets is tied up in managing the assets a data center already has, said Debra Curtis, research director at Gartner.

As a result, IT spending this year will move away from passive management, which is monitoring what is happening with IT infrastructures, to active, or automated, management, she said.

Automation helps fix problems in the data center with less need for user intervention, she said. "Systems become more proactive. But for real active management, we need automation that makes sure an event never even takes place."

The first step toward automation is already trickling into data centers via a number of hardware and software technologies that virtualize resources such as storage, servers, networking and applications into pools, which can be dynamically sliced and diced based on customers' changing needs. Solution providers say, however, that there is still more vaporware than actual products. But the key change from even a year ago is that virtualization is now seen as one step toward turning a data center into a provider of computing resources on a utility basis, and not just an end in itself.

By pooling resources and automatically allocating those resources according to revenue-generating activity, businesses can get a better picture of their return on investment for their data center expenditures. Utility computing helps turn IT from a cost center to more of a profit center, said Tom Bittman, vice president and research director at Gartner. That automation also allows changes to be made proactively to reduce IT glitches before they become problems. "Lack of speed kills," he said.

Curtis said 2004 will also see a continued focus on shrinking the number of vendor partners as a way for enterprise data centers to cut costs. Vendor consolidation eases the burden of managing data centers while giving enterprises fewer throats to choke. "But there are others that feel it could decrease innovation," she said.

However, that consolidation is not happening overnight. "I don't see [data centers] converging to one world," she said. "Maybe a few worlds? I don't see it happening soon. There are still a lot of point products out there. So we need to think more about how to integrate multiple point solutions."

Some consolidation is already taking place as solution providers adopt server virtualization technologies from companies such as VMware, which was recently purchased by EMC, and Jareva Technologies, acquired a year ago by Veritas Software. These applications allow multiple virtual servers to be carved out of a single, larger physical server, eliminating the need to manage so many individual boxes.

In the short term, data center opportunities for the channel are expected to come from solutions for which more immediate benefits can be shown. A lot of data centers invested heavily in infrastructure in preparation for Y2K, but then curtailed spending in the economic downturn, which bodes well for spending in 2004, said Scott Robinson, CTO of Datalink, a Minneapolis-based storage solution provider.

"There's still a lot of old technologies in data centers that are expensive to maintain and have slow performance," Murphy agreed. "There are a lot of old servers out there that people are looking to upgrade."

That, along with compliance issues, is putting pressure on data centers to invest in their IT infrastructures, solution providers say. With spending opening up and companies starting to get serious about complying with the Sarbanes-Oxley Act as well as other regulatory requirements, solution providers can look forward to more spending on data protection and disaster recovery.

Spending on data backup is increasing as IT departments realize they can increase their recovery chances at a far lower cost than before due to falling prices for hardware and bandwidth, said Annette Raynor, co-owner of XACT Solutions/XSI, Colts Neck, N.J.

"Prior to 9/11, customers wanted to make sure backups didn't take too long," she said. "If they lost a service, they needed to make sure they could recover that service. Now, they realize they can build a remote backup site that can recover an entire company."

But none of these changes will happen until corporate executives and their IT departments get in tune with each other's needs, solution providers and analysts say.

Many corporate executives today do not see IT expenditures producing the same return on investment as they once did, according to Gartner analyst Jorge Lopez. "The world is so well-connected execs say, 'Well, what do I get from any investment?' " he said.

On the other hand, executives also see a large risk in further investments based on past experience. "About 31 percent of all IT projects are canceled before they are complete," he said.

The disconnect between top executives and IT staffs is something integrators will need to deal with, Datalink's Robinson said. "The challenge is: How can we cover all the bases in the organization?" he said. "We focused on the IT staff in the past. The challenge is how to talk to the CIO."

The pieces are in place for corporations to refresh their data centers. The trick will be convincing the executive suite that IT investments will support strategic business objectives.

 Published for the Week Of March 1, 2004