How to be a front runner in the shift towards datacentre commoditisation

Companies will need a responsive, flexible datacentre able to deliver greater competitive edge and the IT horsepower to support it

The challenges of delivering IT power for competitive advantage will change dramatically over the next five years. Shaped by the consumerisation and commoditisation of IT, the role of the datacentre as the source of large-scale IT power will evolve to meet the shifting business environment.

Companies need a responsive, flexible datacentre that can deliver greater competitive edge by helping to navigate any business challenges that emerge – whether they come from new competitors, opportunities, economic downturns, spikes in demand, user needs or the increasing pressure on IT infrastructure costs.

“Most business operations have to deal with rapid market-changing conditions, and the business needs the IT department to be able to respond to the business landscape at the same speed as the market is moving,” says Roy Illsley, principal analyst at Ovum.

“For example, if the market is expanding rapidly then IT must be able to deliver the IT horsepower to support it, but if the market slumps then the IT must be resized to the new requirement.”

Flexible cost

Illsley says business leaders expect the cost of IT to be flexible and do not want to have to pay for capacity that is not required or systems that deliver more than is necessary.

“If business can afford a new gold standard service, then IT can provide it, but if a bronze service is all that is needed, then provide that at a lower cost,” he says.

Chris Jones is head of the business school at Glyndwr University, and works closely with the computing department. He agrees that flexibility from IT is a key requirement for organisations, especially for start-ups or small and medium-sized enterprises (SMEs) that cannot afford to pay for state-of-the-art datacentres, but want to be able to scale quickly if the business takes off.

“I met a young entrepreneur, just out of business school, who has a business based on cloud storage of data for various clients. Suddenly the market has opened up, and the IT industry is changing radically,” says Jones.

“Some 98% of businesses are SMEs and with the growth in cloud technologies, the whole business model has changed and they can play with the big boys. Smaller businesses can access what large businesses pay thousands of pounds for and as they grow, they can pay for increased use.”

The challenges facing the future datacentre

Datacentre space, power and/or cooling emerged as one of the biggest challenges facing IT managers in a Gartner survey analysing datacentre infrastructure management (DCIM).

Energy costs are the fastest-growing part of a datacentre budget and Gartner points out that organisations want to avoid the high cost associated with expanding datacentres or building new ones. This means they are looking for ways to manage costs under the current pressure to focus on reducing IT budgets.

Unsurprisingly, the top challenge is dealing with growing data or storage requirements (18%), which affects business agility if not dealt with through storing data on the most efficient storage tiers suited to access.

Some 34% of respondents currently use datacentre infrastructure management (DCIM) tools to combat the problems of managing space, power and cooling, while 51% say they plan to in the next five years.

On the question of the datacentre of the future, more than half (53%) of respondents believed their greatest efficiency gains over the next few years would come from an area that can be measured, monitored or controlled by DCIM tools – improving rack densities, improving energy management, more efficient use of floor space or improving cooling infrastructure.

Meanwhile, developing a private/public cloud strategy was the third biggest challenge (15%), but Gartner analyst April Adams says, “Pursuing a public cloud strategy or even a private cloud strategy if it is not hosted on-premises is one way to address the top two challenges of growing data volumes; and datacentre space, power and cooling.”

Illsley says many organisations will expect to have capacity continuously 80% to 90% utilised, and then obtain the additional horsepower when necessary. “The fundamental challenge is how to categorise the workloads, assign the correct service, security and risk profile, and resources, then execute them in the correct resource pool – high-security stuff in house and unimportant stuff on the public cloud,” he says.

Competitive advantage

To ensure the datacentre will deliver competitive advantage for the business over the next five years, the CIO must balance these requirements so they deliver the same services as a competitor, but more cost-effectively and with a faster response to market conditions.

“The aspect often overlooked is that IT should provide the tools for business to innovate, which requires CIOs to understand the business and ensure the datacentre is designed to deliver it,” says Illsley.

For a CIO to ensure he or she delivers flexible, cost-effective IT power, they must understand the cost model of every service they provide, and also understand the business value and risk of the service.

“Only if they know this will they be able to ensure that what they are providing is the most cost-effective solution for that business,” says Illsley.

Bill Limond, former CIO at the City of London Corporation, and now a consultant and adviser to the government, says to keep abreast with the level of change it is essential for the CIO to understand their organisation’s business objectives and strategy – which has consequences for the datacentre.

“The CIO role is essential in leading change. The emphasis in the past has been on technology and systems, but that is changing. The role of CIO within the organisation is becoming more about information management in whatever way information needs to be delivered. As CIOs are the guardians of information, governance becomes key,” says Limond. 

“IT and the datacentre are increasingly becoming 
commoditised and CIOs can buy flexibility from suppliers, which may be a cloud solution. Over the coming years, ownership of services must be around pragmatic decisions. Competitive advantage will be determined by what value firms can extract from their data, not the value of their datacentres – unless they are an Amazon or a Google, where the business is critically dependent on the datacentre.”

Limond believes the CIO as a procurer of services – whether internal or external – will depend on the business case, which will determine the future of the datacentre.

“It’s horses for courses, but developments must be driven by the business need and if a supplier can supply you with storage and processing capability at a cheaper rate, and has disaster recovery and business continuity built in, then that’s a strong business case, but some businesses are very uncomfortable with the idea of the public cloud,” he says.

Commoditisation trend

The trend over the next five years, however, is towards commoditisation of the datacentre.

“The datacentre is important, but increasingly in a lot of business circumstances it starts to become a commodity, and it is the information that gives competitive advantage,” says Limond.

If the market is expanding rapidly then IT must be able to deliver the IT horsepower to support it

Roy Illsley, Ovum

One trend that is impossible to ignore – and will only grow stronger over the coming five years – is consumerisation and commoditisation of IT. This is giving more power to the user and bringing the democratisation of IT – literally putting IT power into the hands of the masses. Businesses are still grappling with issues of security and control, but many are also recognising the opportunities, and it is incumbent on the CIO to help with innovation and strategy.

“Consumerisation will impact users’ expectations of quality and level of service and usability of technology,” says Illsley.

“The biggest impact is the commoditisation and democratisation, as these go hand in hand, as the power shifts to the user, and the technology becomes more of a commodity, which means the skills will change in the IT department.”

When this trend is combined with the greater use of automation, then IT will be a very different department in the future, and the datacentre will become like a black hole to the business, which will be interested only in the service and the price.

“What the datacentre is run on and where it will be becomes immaterial. Like the tele-phone service, people just expect to make a call at a price they know – people will not care where their datacentres are or how the network is operated,” says Illsley.

IT will be a very different department in the future, and the datacentre will become like a black hole to the business, which will be interested only in the service and the price

Limond says the mobile revolution is unstoppable and CIOs must respond to this as an opportunity. “Mobility gives you flexibility and ubiquity and the ability to move data around very quickly. It also gives organisations a much bigger audience, and on the one hand is an enabler – but it demands good governance from the CIO,” he says.

The inevitable preoccupation with mobility means that CIOs will not want to worry about the nuts and bolts of the datacentre.

“Within local government there is more focus on facility sharing and gaining economies of scale. Having your own datacentre is starting to make less and less sense,” 
says Limond.

Jones says future skills will instead be directed around governance, data and mobile apps. “The traditional role of the CIO or IT director as someone who maintained systems and ran the datacentre is changing and there is a new job role required by the business. In the old way of doing things, everything was heavily regulated, and it was difficult to have a voice outside the company. But now there is the potential for a rogue employee to bring the business down through Tweeting something inappropriate. There is a huge policing and regulatory role required of the CIO which didn’t exist before, but will only grow,” he says.

Leveraging information

Much future focus will be about leveraging information to create apps and in recognition of this, Glyndwr University is to launch a degree next summer in app design, in what it claims is an academic first.

“The app market is worth $12bn currently and that will grow at least fourfold to $55bn by 2015, which is why we have created a BSc Honours specifically tailored to app design,” says Jones.

The shifting role of the CIO and the balance of power in IT going to the user is something many organisations will have to grapple with and find answers to.

“A local UK police force is looking for somebody to come in to help educate the police on the role of social media. As technology exists to communicate more closely and informally with the public than previously there are opportunities and threats,” says Jones.

“Consumerisation and democratisation of IT has filtered into organisations, which must manage and embrace this head-on. A member of the public came up to a policeman who was proactive in social media in the local supermarket and said how much safer they felt knowing what was going on, but at the same time the release of information opens up risk.”

All organisations are having to deal with similar challenges and will often look to the CIO. But if he or she is too busy worrying about the datacentre or does not have the right skills, it is an opportunity missed, says Jones: “Previously, keeping the datacentre lights on may have been a priority, but over the next five years, this technical role will transform into one which combines corporate and social responsibility with a legal and an HR element, and CIOs will need to understand the business and become more mainstream in how they fit into the organisation.”

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