Growth in cloud and IoT lend momentum to European managed datacentres

European datacentre services market will grow 16% up to 2018

European datacentre services market will see a growth of 16% up to 2018, thanks to the growth in enterprise cloud computing, content-heavy applications, and machine-to-machine (M2M) connectivity – which forms the basis for the Internet of Things (IoT).

In addition, the cost advantage of outsourcing as companies look for ways to process an escalating amount of data without the hassle of managing an in-house datacentre is also pushing the uptake of managed datacentres in Europe, according to an analysis from research firm Frost & Sullivan.

The UK, Germany, France and Benelux will be the largest datacentre markets in the region, the research firm estimates.

Earlier this year, a new sector report released by pricing specialists Tariff Consultancy Ltd (TCL) revealed that total datacentre capacity available within the UK will expand by 22% over the next five years.

“The pressing need to focus internal resources on innovative IT tasks and capitalise on economical IT management services compel enterprises to turn to managed hosting providers for datacentre services,” says Frost & Sullivan’s information and communication technologies research analyst, Shuba Ramkumar.

The Frost & Sullivan study of datacentre facilities found that retail colocation will witness lower growth rates than managed hosting due to its market maturity. The retail colocation segment generated revenues of $2.83bn (£1.65bn) in 2013 and is estimated to reach $5.27bn (£3.08bn) in 2018. On the other hand, managed hosting revenues will increase from $2.01bn (£1.17bn) to $4.90bn (£2.86bn) over the same period.

“The growth of cloud services will also drive the colocation services market in the short term,” Ramkumar said.

In the long term, however, increasing efficiency and security of the cloud will challenge the growth of the retail colocation market, according to the analyst.

The growth in managed services will come despite cultural, language and regulatory barriers in the region, according to the company analysis.

Organisations across Europe are bound by regional data laws that complicate decisions with respect to availing outsourcing services. The location of datacentres, therefore, becomes an important consideration for users when choosing a provider. The regional nature of European organisations also means that many of them are wary of foreign companies and prefer local providers. These cultural and language barriers are especially strong in countries such as France, Spain, and Italy.

“In order to widen their customer base across Europe, it is important for providers to offer services from a datacentre located within a region,” advised Ramkumar. “At the same time, they must provide efficient IT support as well as ensure data confidentiality and security to win the trust of potential customers.”

The big four datacentre colocation and managed service providers include Interxion, Digital Realty, Telecity and Equinix. Managed cloud provider Rackspace also offers managed hosting services while colocation providers include Interoute and Colt Technologies.

The need to implement different infrastructure frameworks based on application type will push enterprises to use traditional, outsourced datacentre services alongside the adoption of cloud services.

As a result, the European datacentre service providers are focusing on more hybrid datacentre services that combine colocation, managed hosting and cloud solutions.

As Computer Weekly has reported previously, many enterprises are no longer building in-house datacentres. Instead, they are opting for third-party datacentres, and scalable and agile cloud infrastructure to avoid owning depreciating IT hardware assets.

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