“Things Are About to Accelerate on the Data Center Adoption Side” | Sami Badri Shares Results of Credit Suisse CIO Survey

ATLANTA, GA – CAPRE’s Fourth Annual Greater Atlanta Data Center & Cloud Infrastructure Summit featured a keynote presentations by Sami Badri, Senior Analyst for Credit Suisse, titled “The Acceleration of Colocation in 2019,” which dove deep into questions large and small about the state of the data center supply chain – which covers everything from Juniper and CISCO to Equinix and Digital Realty. In this CAPRE Insider Report, we highlight some data points that Badri showcased to illustrate why he thinks things are about to accelerate on the adoption side.

“We ran a survey that polled 75 CIOs, IT Directors, IT Executives, CTOs, etc. We do this annually. In the most recent poll, we started getting bigger and bigger companies to take this company, so our metrics are getting more pronounced – we’re getting a more and more representative picture of what’s going on in the industry,” he began. “And these 75 executives were spread between North America and Europe. This is a data point that I like to use to draw a connection between what is actually being reported and the macro data points. This ultimately is what is creating an adoption, I think, of acceleration in the industry.”

One of the key survey questions was, For your Private Cloud deployments within your Hybrid Clouds, will you be deploying your equipment into colocation or outsourced wholesale facilities? “When we asked this same survey question in January of 2019, only 36% of responders said yes, that they’re going to deploy into colos and outsourced data centers,” he shared, referring to the slide below. “But in July 2019, this response changed. 43% said yes. So we’re starting to see the pendulum swing to the other side. IT Executives are a lot more for outsourcing and colocation adoption than they were just six months prior.”

The next data point Badri point to in the slide above was the yellow box – this shows whether they’re still on the fence. “Do they actually want to outsource or do they still want to keep it in-house?” he explained. “41% in January of 2019 is down to 39% in July 2019. So once again this is good for the industry.”

Finally, Badri pointed to the green box on the right. “When we ran the survey in January, there were some IT executives who weren’t considering this at all – they basically shut down the idea of outsourcing data centers or even adopting colocation infrastructure,” he shared. “That’s now down to zero. Everybody is for the idea, under consideration, or currently adopting. Those are the three key takeaways we’re seeing in the industry.”

The answers to next survey question are located in the slide below. The question was, Are you using multiple public colocation and/or outsourced wholesale data center providers for your hybrid Cloud? “Once again, it was a positive move,” illuminated Badri. “From 64% of CIOs and CTOs saying they were for the idea in January 2019, now 69% of all responders are now for the idea. Once again, this is another positive inflection in the right direction for the industry.”

The next survey question was, Will you eventually shutdown the majority of your owned data center infrastructure and outsource your data center needs through colocation providers? “Once again, if you look at the two red boxes, there were very big moves,” Badri shared. “Just from six months ago, you’re seeing a pretty big group of IT executives, consumers and spenders, who historically were debating this are now, all of a sudden, all moving to potentially shutting down their facilities and outsourcing.”

However, according to Badri, a key thing to remember is that shutting doesn’t mean they’re going to switch it off at all. “Some of these big enterprises are actually very into doing sale-leasebacks as well, but what it means is that they want to not clausify this infrastructure on their balance sheets anymore,” he explained. “They want to take it off of the books. A lot of people know the reason why – under-utilization, maintenance costs actually running over the data center investment, and ultimately, it’s cheaper to outsource to colocation and it gives you more features and connectivity. That’s the reason everybody goes to outsourced.” In other words, once again, the industry is headed in the right direction.

For more coverage of Badri’s remarks, check out previous CAPRE Insider Reports:

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