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Economic conditions: Q&A with the Data Center Advisory Board

In this discussion with our Data Center Advisory Board, IT industry experts discuss their insights into the economic climate and how the IT landscape is changing in 2011.

It’s a new year, and 2011 couldn’t have come fast enough. The economic challenges of the last few years have hit the IT industry hard. Budgets and staff are slashed to the bone, putting a halt to new investments and displacing long-term strategic thinking with daily firefighting. But the landscape is still changing as the bust of 2008 begins to abate. We asked our Advisory Board members to share their insights and observations about the economic changes taking place today versus 2008 and their strategies for overcoming today’s economic conditions.

SearchDataCenter.com: How do you see economic conditions changing for data centers today versus late 2008?

In the government, things will be getting worse, especially given the emphasis on data center consolidation and use of the cloud. There will be little money for upgrades of infrastructure as management struggles with these new requirements. -- Robert Rosen, mainframe user and CIO of National Institute of Health

Late 2008 was full of gloom and doom. Early 2011 shows a glimmer of light at the end of the tunnel -- the economy is slowly getting better. Spending is picking up at the same rate, some companies are giving bonuses again and the belt has loosened a bit. -- Bill Bradford, Unix/Solaris expert and freelancer

Things seem slightly better when it comes to IT spending. We're not numbers-oriented predictors, but all of the major forecasters out there for IT spending have it as a slight up-tick. I think the good revenues tech companies have been reporting also indicate recent loosening of wallets. Just because the world was freaked out about the financial crater, it didn't slow down the need to refresh existing IT year after year. That ‘pent-up demand’ that you saw Michael Dell and others referencing since 2008 has to be real. All-in-all, if you're selling technology in 2011, you'll probably be happier than you were in recent years. -- Michael Coté, analyst, RedMonk

September 2008 was a month that caused the entire business world to hold its collective breath, stop and consider what to do next. Most businesses chose to do nothing, cease all current projects and adopt a "wait and see" stance, declare a moratorium and observe what the economy was going to do. Nobody wanted to be caught spending money if the economic conditions continued to worsen. The first ones to start building and/or deploying in data centers again were those who realized that economic downturns are actually the best time to build. Prices are down and conditions are ripe for smart growth. Today, it appears the economy is recovering and things are moving again. Every day I see announcements of small-to-medium-sized data center businesses being acquired and large data center businesses either announcing their latest build or acquisition. -- Chuck Goolsbee, data center manager

Data center managers held their breath in late 2008, stretched server life cycles maybe an extra 24 months, sat on their wallets and rode out the crisis. Now, a lot of shops need to do major infrastructure upgrades. We'll probably see a data center spending increase on a trajectory steeper than the economic recovery. But this upgrade cycle should be smarter than previous boom-bust data center build outs. -- Matt Stansberry, director of content and publications, Uptime Institute

SearchDataCenter.com: How do you see data center strategies or operations changing to meet today's economic conditions?

Expect more use of virtualization to get utilization of machines up and reduce power demands. Infrastructure costs (power/cooling) will continue to rise as the cost of energy sources (e.g., petroleum) keeps going up. CEOs will look at those costs and say, ‘Who's the big user? Make them cut those costs.’ It will be IT. -- Rosen

I see a lot more initiatives for ‘green’ computing as well as server consolidation using the various virtualization solutions. It's no longer, ‘How many machines can I cram into this rack?’ It's now, ‘How much performance can I squeeze out of what I've got already if we virtualize?’ Metrics such as performance-per-watt are starting to have an effect on purchasing decisions. -- Bradford

There's still a lot of consolidation going on and optimizing the ‘fat’ in process and tools. The other thing I hear a lot of is sorting out the hair ball of IT that organizations inherit as they merge. For all the talk of cloud computing, enterprises are still trying to figure out how cloud offerings apply to them. Meanwhile, all of the traditional needs from rack-and-stack to Windows 7 upgrades are going on, despite how little attention those normal activities get from analysts. To hear some of our clients tell it, as older high priced IT management systems are rolling off maintenance agreements, IT shops are evaluating new, cheaper options, be they closed source, open source or SaaS (Software as a Service). There's a certain ‘what have you done for me lately’ feel going on in purchasing. Elder companies (incumbent vendors) are retooling some offerings to SaaS form-factors to meet some of those demands, while others are less tactical in their response. -- Coté

The first data center boom was focused on building the ‘best’ data centers with glitz -- from biometric scanners, man-traps, ultra-redundancies, close to major interconnect points, etc. The second boom shifted focus to scale with big facilities and huge power and cooling infrastructure. Now it seems we're concentrating on efficiency with chiller-less facilities and PUEs in territory unimaginable just a few years ago. Efficiency saves significant operational costs over time. -- Goolsbee

Companies should spend time building a strategy that balances their facilities requirements, IT hardware requirements and best use of available resources. For example, rather than overbuilding data center infrastructure and hoping to grow into the capacity over time, smart companies will pursue a modular, multi-tiered approach to data center design that will help them to operate data center facilities more efficiently from day one, instead of ramping up to fill a space over the course of months or even years. Many data center mechanical infrastructure vendors have adopted the "modularity" mantra and have tweaked product offerings to match this smarter design philosophy. -- Stansberry

Miles to go before recovery takes hold
Ultimately, there is still a long way to go before any economic recovery truly permeates the IT department. Even then, the aggressive adoption of virtualization, management, automation, self-service and other technologies like Infrastructure as a Service and the cloud may permanently change the landscape of IT and current economic conditions in ways that we can barely predict for tomorrow.

Stephen J. Bigelow, a senior technology editor in the Data Center and Virtualization Media Group at TechTarget, has more than 15 years of technical writing experience in the PC/technology industry. He holds a bachelor of science in electrical engineering, along with CompTIA A+, Network+, Security+ and Server+ certifications, and has written hundreds of articles and more than 15 feature books on computer troubleshooting, including Bigelow’s PC Hardware Desk Reference and Bigelow’s PC Hardware Annoyances. Write to him at sbigelow@techtarget.com.

This was last published in January 2011

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