There is a storm heading towards the datacentre industry. It probably won’t hit this year, but when it does, both service providers and enterprise IT departments need to be ready.
Those selecting the right strategy will gain new levels of agility and efficiency, and be poised to take advantage of exciting new business opportunities. But those which get it wrong could end up saddled with suppliers and technologies that hamper their ability to compete.
“Disruptive technology trends and emerging vendors are driving some tectonic shifts in the datacentre market, which we think will challenge established, protective vendors," says Errol Rasit, a research director at analyst Gartner. "This will create new opportunities and expose new areas of technology and vendor disruption that customers will have to navigate in 2014."
Traditionally, datacentre infrastructure managers have been left pretty much to their own devices when it comes to selecting hardware, software and services. As long as they are within budget, and put together a business case that passes muster with the procurement department and/or executive, they are unlikely to be challenged on their technical recommendations. Rare is the C-suite that wants to micro-manage the intricacies of selecting cooling systems, server racks or colocation providers.
But unless senior IT managers take a proactive role in setting future datacentre strategy, they could find their organisations shaken by the winds of change. One fear among customers is that if they standardise on a particular supplier’s technology, which today seems to offer the best solution to their challenges, it could end up costing them dearly if more efficient and economical alternatives take hold in the market. In other words, you need to be careful whose mast you tie your colours to.
“We think there will be a number of protective datacentre vendors that will look to maintain market share and profit margins,” says Rasit.
Disruptive technology trends and emerging vendors are driving some tectonic changes in the datacentre market
Errol Rasit, Gartner
Now is the time for organisations to take stock, says Andy Lawrence, vice-president of research at industry analyst 451 Research.
“This year there will be a lot more scrutiny and some genuine preparation for investment, but most of the actual investment will take place in 2015. 2014 will be more about planning your strategy,” he says.
So what are the “tectonic shifts” Gartner is talking about? Many of the datacentre developments that hit the headlines in 2013 were driven by the hyperscale (or, as Gartner calls them, “Web-scale”) datacentre users and operators.
“Some of the largest datacentre customers in the world – organisations such as Facebook, Google, Tencent, Baidu and Alibaba – are establishing alternative new methodologies to deliver computing at low cost with high availability at extreme scale," says Rasit.
Coming from that is a new paradigm of IT architectures and evolving technologies, including the community-based developments that have been started by some of those organisations. The Facebook-led Open Compute Project is a good example, but it’s not the only one.
We have also seen initiatives such as Project Scorpio and The Open Data Center Alliance trying to achieve similar goals, which are all about establishing a different style of IT architecture for the datacentre.”
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451’s Lawrence agrees that such initiatives, among other concurrent developments, will have a big effect of the industry. “Datacentre operators, particularly service providers, need to understand the economics of delivering datacentre services are changing," he says.
"We’ve seen concerted moves to develop new technologies that improve performance, manageability, availability, scalability and energy efficiency," says Lawrence.
"They’re certainly being driven by the hyperscale cloud providers, but there is innovation going on in all kinds of areas: prefabricated and modular datacentres, advanced DCIM [datacentre infrastructure management], software-defined datacentres, distributed power management, transactive energy – all kinds of things. While a lot of these developments haven’t really made a big impact yet, I think they will – and it will be fairly dramatic when it comes.
“The risk is that datacentres built in the past two to five years – which ought to have a 15-year life span – could look obsolete within two years unless companies have planned to make sure they remain competitive."
Gartner’s Rasit, however, is not sure the message has sunk in. “When you talk about web-scale IT to many datacentre organisations today," he says, "it’s not necessarily in their consciousness or at the top of their priorities. In some cases, they don’t even know about it. For those organisations, what matters are things like keeping the lights on, providing an efficient IT service and being responsive to business needs.”
That said, Rasit believes customers are beginning to scrutinise supplier roadmaps far more closely. “There is a consciousness shift in traditional enterprises that is starting to question the value of vendors and their products more closely,” he says.
Rasit says buyers will be particularly vigilant with regards to to considering integrated infrastructure solutions, such as VCE Vblock, IBM PureSystems and HP CloudSystem.
“When it comes to improving operational efficiency, a number of large suppliers say integrated solutions are the answer," he says. "However, such solutions represent a particular vendor’s interpretation of what the future should look like.
While a lot of these developments haven't made a big impact yet, they will – and it will be fairly dramatic when it comes
Andy Lawrence, 451 Research
"And with all the open source, community-based development that’s happening, enterprises will start to ask how an integrated system from their preferred vendor is going to incorporate things like software-defined networking and storage in the future," he says.
"They’ll want to know whether they’ll still be able to embrace the commoditisation of technology, or if they’re going to have to build a much closer relationship with their technology provider and therefore tie themselves into that provider’s view of the future."
For many organisations, though, the convenience of integrated systems will be a big draw, according to Clive Longbottom, service director at analyst Quocirca. “They make so much more sense for a lot of companies, because everything’s configured in the box itself.
"They can achieve much higher interconnect speeds, so they are able to handle workloads a lot more efficiently. Engineered systems require engineered cooling, engineered power distribution and all the rest, but once you’ve taken the plunge, it’s a hell of a lot easier than trying to engineer power distribution for racks you’re populating yourself,” he says.
But Longbottom also agrees customers will want to ensure such solutions do not stifle their agility. While he thinks integrated solutions will sit at the core of many organisations’ datacentre strategies, he believes most companies will end up with a hybrid architecture.
“They’ll still need an incremental scaleout capability," he says. "For example, if they’ve paid several million for a Cisco UCS box, but then they find they need additional resources, they’re not going to go out and buy another UCS."
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Gartner, meanwhile, is keeping a close eye on a collection of companies it believes could accelerate the challenge facing traditional datacentre suppliers.
“There is an increasing number of what we would describe as ‘revolutionary disruptors’ – startup organisations, typically funded by venture capital, entering the market with new solutions based around the software-defined paradigm or on some of the practices we’ve seen in hyperscale environments," says Rasit.
"Although some of these companies will major on selling into hyperscale organisations, increasingly we’re seeing them focus on providing traditional organisations and service providers with the same levels of efficiency that hyperscale customers are achieving,” he says.
In terms of specific companies Gartner is watching, Rasit cites names like Nutanix, Simplivity and Servergy. He says the analyst is also monitoring system-on-chip suppliers such as Cavium and Marvell that are developing new server processor technologies based on low-power ARM architectures. “There is a whole collection of organisations like that,” he says.
But while such innovators have the potential to disrupt the market, their long-term success is by no means guaranteed. “Many of the startups in infrastructure markets will either go bust or they’ll be acquired by larger vendors,” says Rasit.
However, innovative startups that get taken over will not necessarily see their technology adopted by their new parents. “They can be acquired by larger providers which want to implement their innovations, but it’s just as likely that a vendor will buy them to stamp out their technology. The datacentre industry is characterised by a small number of mega-vendors that control a large amount of market share. There is a real state of control,” he says.
Nonetheless, despite the desire of some protective suppliers to hold back the tide of innovation, both Gartner’s Rasit and 451’s Lawrence say it is too late to put the cat back in the bag.
There is a big, concerted push towards far greater economic and energy efficiency
Andy Lawrence, 451 Research
“The challenge established datacentre vendors need to consider is that as the evolution of new technologies and IT architectures continues to invade the consciouness of customers, the technologies they’re producing may not be fit for companies’ changing requirements. This will effectively create a vacuum in the marketplace,” says Rasit.
As a result, he says the savvier big players will seek to reposition themselves as what Gartner terms “evolutionary disruptors”.
“This means there are going to be a number of established vendors that will try to represent the same goals as the revolutionary disruptors, but from the position of a familiar vendor with a richer history of delivering technology,” says Rasit.
Lawrence foresees more companies will start to take an interest in the Open Compute Project, and he’s expecting some “fairly major” announcements at the organisation’s summit at the end of January.
“I think this year the penny will drop in the datacentre industry that there’s a big, concerted push towards far greater economic and energy efficiency, and that we’re moving away from the traditional heavy focus on availability," he says. "The conservatism of the datacentre industry has possibly held things up for a while, but I genuinely believe we’re going to start to see a lot more innovation over the next couple of years."
But it is not all going to happen straight away. “Datacentre margins are still generally quite good, so I don’t think there will be a shakeout in the industry just yet," says Lawrence. "But over the next two years or so, we could well see a gradual stratification of the market into those players that decide to embrace an efficient, almost industrial, model and those that need to find niches and specialisms because they won’t be able to compete on price."
The comparatively glacial pace of change may give enterprise IT departments some breathing space, but they should spend 2014 wisely.
“They need to start being open to alternative approaches and consider the implications of the emerging technologies and operational standards growing out of some of the largest datacentres in the world," says Rasit.
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