Mid-Market Data Center Purchasing Drivers, Priorities and Barriers

30 May 2014
Mid-Market Data
Center Purchasing
Drivers, Priorities
and Barriers
Featuring Sophia Vargas,
Forrester Research Inc.

2
Introducing today’s presenters:
Matt Miszewski
Senior Vice President of Sales & Marketing,
Digital Realty
Guest Speaker - Sophia Vargas
Researcher for Infrastructure & Operations,
Forrester Research, Inc

© 2014 Forrester Research, Inc. Reproduction Prohibited
33
Forrester Consulting
2014 Data Center Trends And Priorities
Sophia Vargas
Researcher
May 30, 2014

4
Welcome to the connected world
Source: See the October 2013 “Mapping The Connected World” Forrester report

5
The public cloud market is in hypergrowth
Source: April 2014 “The Public Cloud Market Is Now In Hypergrowth” Forrester report

6
2014 infrastructure priorities focus on reducing
complexity and increasing efficiency
“Which of the following initiatives are likely to be your firm’s/organization’s top hardware/IT infrastructure priorities over the next 12 months?”
Source: May 2014 “Strategic Benchmarks 2014: Infrastructure Budgets And Priorities” Forrester report
Virtualization
Consolidation
Cloud
Disaster recovery/business continuity
Higher densities
New, expanded sites
Higher, uniform densities
Multiple sites

7
Source: February 2014 “Predictions For 2014: Technology Monitoring” Forrester report
2014 business priorities show a strategic focus on the
customer

8
Source: March 2014 “The Global eCommerce Opportunity” Forrester report
Online retail market is large, global and growing
By 2017, Forrester expects that the Web will
influence half of all retail purchases in some way,
via features like store locators, price checks, and
ratings and reviews.

9
Source: January 2014 “Software Must Enrich Your Brand” Forrester report
Customers increasingly interact with your brand via
digital channels
Software
enriches
the brand

10
2014 data center trends
› Data center demand continue to increase
› Businesses depend on computing resources for both internal and
external operations and services
› Data center performance will increasingly impact topline revenue and
customer experience
› Data center buyer preferences are shifting to accommodate new
business priorities
› Emerging technologies and form factors disrupt traditional solutions

11
Own and
operate data
center
Own data
center,
outsource
operations
Colocate
data center
Infrastructure
outsourcing/
managed
services/
hosting
IaaS/Cloud or
strategic
right-sourcing
Data center sourcing trends
› While the majority of infrastructure remains in company owned
facilities…
› Most firms rely on multiple types of environments
Less managed More managed

12
Thank you
Sophia Vargas
svargas@forrester.com

30 May 2014
Analysis of 2014
Digital Realty Data
Center Demand
Survey

14
Key questions explored
› How are customers sourcing their data center facilities?
› How do customers plan to source future capacity expansions?
› What are the key factors and motivations that influence this decision?

15
Survey methodology
› In this Digital Realty-commissioned study, Forrester conducted an
online survey of 517 organizations in the US, UK, Singapore, Japan,
Germany, Hong Kong, France, Canada, Australia, the Netherlands,
and Ireland to evaluate their data center investment plans and
drivers.
› Survey participants included senior-level decision makers in IT,
Finance, and line of business roles with responsibility for data centers
at midmarket firms with up to $500 million in revenue.
› Respondents were offered a small incentive as a thank you for time
spent on the survey.
› The study began in January, 2014 and was completed in February,
2014.

16
“Where are your company's primary business
operations located?"
Australia
4%
Hong Kong
5%
Singapore
7%
Japan
11%
Ireland
2%
Netherlands
3%France
7%
UK
8%Germany
8%
Canada
6%
US
39%
Base: 517 Senior level decision makers with responsibility for data centers at mid-market firms
North
America
45%
Europe
28%
Asia-
Pacific
27%
“Which of the following best describes the industry
to which your company belongs?"
1%
2%
2%
3%
4%
5%
6%
6%
7%
10%
11%
12%
14%
15%
Online gaming/shopping/group-buying
Electronics
Media, entertainment and leisure
Consumer product manufacturing
Telecommunications services
Healthcare, Pharmaceuticals, Biotech
Education and nonprofits
Energy, utilities, and waste…
Government, public sector
Business services, consulting
Financial services and insurance
Retail
Manufacturing and materials
High tech
Respondent demographics
A commissioned study conducted by Forrester Consulting on behalf of Digital Realty, February, 2014

21%
38%
21%
7%
5%
3%
5%
1
2-3
4-6
7-10
11-20
21-49
50+
“How many data centers currently support your company’s global operations? (This includes both
internally owned data centers/server rooms and outsourced, hosted, and colocated data centers. This
does not include any public cloud services.)”
Base: 385 Senior level decision makers with responsibility for data centers at mid-market firms. “Don’t know,” “None, we only
use cloud services” and “None, but we have plans to implement one” responses omitted.
Most mid-market firms have multiple data center sites
41% have at least 4
data centers

Base: 251 Senior level decision makers with responsibility for data centers at mid-market firms. “Not applicable, everything is in
the cloud” and “Don’t know” responses omitted.
“What is the approximate footprint of data centers that support your company’s operations?”
Majority of mid-market firms require more than 2,000 sf of data center space
7%
17%
7%
15%
12%
41%
<100
100-499
500-999
1,000-1,999
2,000-2,999
3,000+

Base: 517 Senior level decision makers with responsibility for data centers at mid-market firms.
Majority of mid-market firms plan to increase spend on data center facilities
"How do you expect your firm's spending on data center facilities to change over the next 12
months? "
2%
9%
40%
40%
9%
Decrease more than 10%
Decrease 5%-10%
Stay about the same
Increase 5%-10%
Increase more than 10%

“Are you in the market for a new data center facility within the next 4 years?”
Base: 233 senior level decision makers with responsibility for data centers at North American midmarket firms (<$500M revenue)
Yes, will be provisioning a new site or expanding a current one No
88%
Expansion plans remain aggressive

"Why are you looking for/anticipate looking for a new data center facility, colocation, or additional
IT capacity?"
IT sprawl and business growth encourage companies to consider new facility
investments
1%
16%
16%
18%
19%
21%
25%
29%
31%
38%
41%
46%
Other
Want to move to a different utility company territory for
lower power costs
Access to green and sustainable energy sources
Want to move data center closer to corporate HQ
Want to move to a different geography for lower risk
Want to move to a new sourcing model
Want a more energy efficient data center
Need a site for disaster recovery
Expanding global/regional footprint
Running out of capacity
Current data center facilities are aging
Consolidating IT infrastructure

Poll question 1
What do you believe is the greatest driver for your business’ data
center capacity growth today?
 Business growth
 Big data
 Application proliferation
 Regulatory or compliance requirements
 Mergers and acquisitions
 Other: ________________

"What do you believe are the greatest drivers for data center capacity growth today?”
Base: 517 Senior level decision makers with responsibility for data centers at mid-market firms. Graph displays combination of
top three rankings.
Business growth is number one driver behind new facility investments
2%
13%
17%
20%
21%
23%
32%
38%
39%
45%
51%
Other
Mergers and acquisitions
Regulatory or compliance requirements
Consolidation
Application proliferation
Redundancy / resiliency
Business continuity
Virtualization
Big data
Storage growth
Business growth

"How do you currently source your primary data center facilities? (Select all that apply).”
Majority of mid-market firms still own and operate their primary data centers
21%
22%
26%
32%
54%
Infrastructure-as-a-service or cloud computing platforms
Managed services or hosting
Colocation or other data center lease
Fully outsourced
Own them ourselves

"How do you plan to source your new IT capacity in the future? (Select all that apply).”
Many mid-market firms plan to build and operate their new facilities
1%
9%
20%
22%
22%
24%
28%
30%
33%
Dont Know
Shipping container based data center
Managed services or hosting
Infrastructure-as-a-service or cloud computing platforms
Colocation or other data center lease
Modular build with a provider
Fully outsourced
Traditional build with a provider
Build our own

Poll question 2
Who in your organization is most influential in the decision to purchase
data center facilities, colocation, or IT capacity sourcing?
 IT VP, manager, or director
 Chief information officer or most senior IT decision-maker
 Chief financial officer
 Line of business leader
 Other: ________________

IT leaders remain the primary decision-makers, but CEOs play an
increasingly important role
“Who in your organization influences the decision to purchase data center facilities, colocation, or
IT capacity sourcing?”
2%
7%
4%
8%
30%
26%
21%
5%
10%
11%
12%
11%
15%
20%
9%
9%
11%
6%
9%
11%
17%
Other
Individual contributors in Operations
Individual contributors in line of business
Individual contributors in Finance
Facilities manager
Individual contributors in IT
Finance VP, manager or director
Chief financial officer
Chief operating officer
Chief executive officer
Chief information officer or most senior IT decision…
IT VP, manager or director
Top 1 Top 2 Top 3
<10%

"How important are the following when making decisions about new data center facility
investments?”
Connectivity, resiliency, control and risk are the most important features
59%
61%
62%
64%
71%
73%
75%
77%
78%
80%
82%
Proximity of location to corporate offices
Access to green and sustainable energy sources
Ease of access to the location
Global footprint of data center provider/multisite availability
Energy efficiency of the data center facility
Cost of energy at the data center location
Access to cloud, managed service providers, or other partners
Risk profile of the data center location
Level of control over data center facility
Resiliency level and availability of the data center facility
Network connectivity options/carrier availability/carrier density
"4" (Important) or "5" (Very important)

"How far away from your primary headquarters do you plan to locate your next data center
facility?"
Proximity is more convenient than important, although most will locate their
data center close to their primary head quarters
45% of mid-market firms will locate
their next data center within 100 miles
of their primary headquarters, even
though they ranked it as their lowest
priority when selecting a new facility.
4%
5%
11%
5%
11%
20%
21%
24%
Don’t know
Not applicable
Proximity to my HQ is not important
500 or more miles (805 km or more)
200-499 miles (321 – 804 km)
100-199 miles (160 – 320 km)
30-99 miles (50 – 159 km)
Less than 30 miles (less than 50 km)

Mid-market firms still plan to locate new facilities within their own
region, especially European companies
"What is the top location you are considering locating your planned facility?”
8%
2%
94%
8%
98%
4%
1%
1%
81%
1%
2%
2%North America
Europe
APAC
Asia Pacific Europe Latin America North America MEA
Locationofprimarybusinessoperations

4%
8%
19%
27%
42%
Dont Know
I’m not familiar with PUE
No – this metric is not important to us
Yes
No – but we are planning to measure it in the future
"Does your firm measure power usage effectiveness (PUE) for data center operations?"
Majority of mid-market firms measure PUE or plan to in the future
Of those who claim to measure PUE, 73%
don’t know what their PUE actually is
at their primary facility. For those who did
know, the median was 2.0.
27% of mid-market firms say
that PUE is not an important
metric, or they aren’t familiar with it
PUE = Power usage effectiveness. A measure of data center efficiency that divides total power to the property by power delivered to the operating
computer equipment.

2%
26%
30%
31%
37%
42%
65%
68%
Other
Lack of trusted providers in the market
Lack of management oversight by our organization
Company culture
Impact of outsourcing on internal staff
Regulations and compliance
Rising expenses
Security risk/exposure
"What are the main barriers during the decision making of data center outsourcing in your
company? Please rank the top three barriers.”
Companies are concerned with outsourcing security and risk
27% of mid-market firms see
security/risk exposure as their
top barrier to data center
outsourcing. 30% say rising
expenses is the top barrier

Summary of key findings
› Most mid-market firms (<$500M) are multi-sourcing their facilities
• With a mix of internally owned, colocation, hosted and cloud
› The biggest drivers of capacity are business growth and storage
growth
› For new facilities, customers will prioritize network connectivity,
resilience, and control
› The main barriers to outsourcing are security, risk and cost related

Sophia Vargas
Researcher, Forrester Research Inc.
svargas@forrester.com
Matt Miszewski
Senior Vice President, Sales & Marketing
Digital Realty
mmiszewski@digitalrealty.com
www.digitalrealty.com

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