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Sizing the Data Center Services Market, 2012

The Data Center Services (DCS) market is at a turning point today, with both Infrastructure-as-a-Service (IaaS) and Platform-as-a-Service (PaaS) strategies potentially playing a pivotal role.

Traditionally data centers generate the majority of their business from colocation, data center outsourcing, and hosting.  The current and future impact of IaaS and PaaS is small but growing rapidly in this market.  Gartner estimates the global DCS market generated $150B globally as of 2011, projected to grow to $200B in 2012.

IaaS and PaaS Will Define The Future of the DCS Market

With IaaS generating $4B in global revenues in 2011 and PaaS is generating $1.4B, together they contributed 3.6% of the total DCS revenues last year.  The future direction of the DCS market, including the nature and trajectory of IaaS and PaaS, will be determined over the next three to five years by enterprise adoption of these platforms and the increasing move of enterprise applications to the cloud.  In sizing the DCS market, it’s useful to take a look at the forecasts from Gartner of cloud application infrastructure and cloud applications as a proportion of enterprise application software.  The following tables provide this analysis.

Cloud Application Infrastructure, Cloud Systems Infrastructure as a Proportion of Core ITO and Traditional Web Hosting (Dollars in Billions)

Source: Forecast: Public Cloud Services, Worldwide and Regions, Industry Sectors, 2010-2015, 2011 Update

Cloud Applications as a Proportion of Enterprise Application Software (Dollars in Billions)

Source: Forecast: Public Cloud Services, Worldwide and Regions, Industry Sectors, 2010-2015, 2011 Update

Mapping the Data Center Services Market – A First Approach

Gartner has proposed a Data Center Services Map and Market Compass for Enterprise Data Center Services, both of which are shown below.  Taken as taxonomies for organizing the market, they are effective, resembling value chains in their structure.  The Garter Data Center Services Map is shown below:

The Gartner Data Center Services Map

Source: Data Center Services: Regional Differences in the Move Toward the Cloud, 2012

Gartner’s Market Compass for Enterprise Data Center Services takes into account size, scope and management of data center (DC) applications by the use of sharing, pricing models and elasticity (Time to Provision Change) to create a market grid.  These are considered to be the six most differentiating factors in DC performance in this model.  The foundation of the Market Compass are shown below:

Gartner’s Market Compass for Enterprise Data Center Services

Source:Data Center Outsourcing, Hosting or Cloud? Use Gartner’s Market Map and Compass to Decide

The Garter Market Compass can further be used to define which solution sets in the DCS market best align with a given business’ strategic and IT needs.  Elasticity of infrastructure utility and cloud computing are, according to the analysis, the strongest growth factors in the DCS market today.

Analyzing the Six Main Segments of the Data Center Services Market with the Gartner Market Compass

Source: Data Center Outsourcing, Hosting or Cloud? Use Gartner’s Market Map and Compass to Decide

Bottom line: As more enterprise applications migrate to the cloud, DCS providers will be forced to rapidly improve the elasticity and time provisioning options their platforms provide.  All these changes will re-order the economics of cloud computing forcing DCS providers to greater level of flexibility that many have attained in the past.

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3 Comments Post a comment
  1. First off I want to say great blog! I had a quick question in which I’d like to ask if you do not mind. I was interested to find out how you center yourself and clear your mind prior to writing. I have had a difficult time clearing my thoughts in getting my thoughts out there. I do enjoy writing but it just seems like the first 10 to 15 minutes are wasted simply just trying to figure out how to begin. Any suggestions or hints? Appreciate it!

    May 9, 2013
  2. Louis Columbus #

    Hi Spoken English,

    Indeed, the first ten to fifteen minutes of writing an interesting start to a blog post is hard work I think for every writer. Sometimes the ideas for a good start of the post just happen – but that is rare.

    I like to think about the readers and what they need, what would help them. And then I try to see the reader as a person I know and I write to them. When a reader becomes the focus of my writing it is much easier to decide which points to leave in, and which to leave out. And my writing moves much faster too. Thinking of the audience and what their needs are also brings a very active voice to your writing too.

    Second I believe in outlining posts and articles. It helps to break it up, makes it less intimidating to write. You can write in short bursts by subsection as you have time.

    Third, get a ton of research on the area you are writing about and share it all with the reader.

    Those are the three ideas I usually go by. I wish you all the best, writing is great fun and serving readers with information is really interesting too. You get to learn a lot back from them as well.

    Good luck,

    Louis

    May 9, 2013

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