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Tons of Data Centers Closing?

I had an interesting Twitter conversation with Robert Scoble over the past week or so. Robert asserts that, “you must have missed the financial crisis. This is forcing TONS of companies to get rid of data centers or minimize them.”I respect this opinion. However I talk to a lot of people in this space and I do not intrinsically share this opinion. Here are some of my observations:What I Have NOT SeenAn example of a company getting rid of a data center without consolidating it into a larger facility.A reduction of workload, application, or storage requirements.Holistic outsourcing of an IT infrastructure to a cloud or hosted provider for a sizable business.What I Have Seen- Data Center Consolidation projects, sometimes coupled with a decommissioning, most started in the past five-years, yield tangible benefits by consolidating computing resources together, usually into denser, higher power, more available data center facilities.- Companies use Virtualization technologies to consolidate virtual machines onto a smaller number of servers that have the memory, CPU, and I/O architecture that enable greater workload consolidation. -- VM’s proliferate like Tribbles throughout the enterprise driving workload demands back up quickly.- Enterprises look toward cloud computing offerings and holistic managed offerings to defer risk, capital expense, and achieve linear operating cost growth with workload/application deployment. I don’t disagree that the fallout from the economic crisis is real, of that I have no doubt. What I question is if it has forced the workload reductions necessary to actually reduce the IT Infrastructure required to support line-of-business operations. There is also the time-factor. Data Center builds take years, application migrations take years. We are not far enough into the financial crisis for it to have been the cause of a data center migration or decommissioning… yet.dg

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10 Comments.


  1. I’m with you Doug, data centre consolidation is seen as a means of saving money for the enterprise. Most enterprise I’ve dealt with recently are seeking to rationalise into large data centre locations sat on their own corporate network. I expect many will seek to move further out into the cloud over the next few years.

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  2. I am seeing the same thing as you. Primarily the customers I have are running out of power, can’t cool their systems fast enough, and don’t have enough space. I think that it is obvious that Scoble spends more time in front of a camera, than in front of a customer. Anyone in front of a customer will realize that computing needs are still increasing, and the need to take an end to end look at applications and system virtualization to lower the overall cost of computing is more relevant now then ever.

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  3. Now Colin be nice! We like Robert and what he writes! Besides someday I hope to do one of those cool interviews with him about networking, virtualiztion, clouds and such from some obscure part of Half Mon Bay so don’t ruin my chances ok? I think we may see a time of negative-growth in DCs, but it would only be after significant portions of the infrastructure were virtualized, and far enough into the future that the effect of the near-term financial crisis have the time to seep in and affect IT budgets and long-term capital investments/depreciation.dg

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  4. Sorry Doug, I didn’t mean to come across as mean. I just see customers every day facing the challenges of shoehorning year 2009 infrastructures into year 2000 data centers.Eventually customers will move to 80%+ virtualization, but right now most are stuck only virtualizing 10% or so. Soon, with the 1000V and other advances bringing virtual systems security and performance in line with physical systems we may see some wiggle room in our Data Centers. Until them, we still face the same challenges that were there before the financial crisis.

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  5. I’ll second your argument. Yes companies are cutting back and the downturn is clearly limiting what companies are able to invest in (to Colin’s point of having to make do with what they have in many cases) IDC’s survey data on what IT departments are cutting starts with investments in client devices (PCs and mobile) and ends with infrastructure. The other important thing to remember is that nothing about the causes of this recession fundamentally change the underlying trends driving networking or for that matter data center spending. Obviously, the growth rates all slow and shift, but even Lehman’s datacenter is still in operation after being purchased by Barclays!The other question is will we see a net negative number of DCs over the next three years, or will we see fewer, but larger DCs due to data center consolidation?

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  6. DG,I have seen DC consolidation fom 100s into few. One of the Financial institute consolidated 173 DC into 3. One of the High tech company consolidated 87 into 6. DCs are not going away … Consolidation will be first task and next move will be to move non-core operations to cloud to start with.Shreyas

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  7. Doug – pretty much on board with your comment; it’s been rare but we have seen a few instances where a client built out a new dc but is now delaying populating it.

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  8. I’m afraid we are fighting over semantics. Robert Scoble said, …get rid of data centers or minimize them.”So, if “”One of the Financial institute [sic] consolidated 173 DC into 3. One of the High tech company [sic] consolidated 87 into 6,”" didn’t both get rid of a bunch of data centers AND minimize them?”

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  9. These 173 DC and 87 DCs were world wide, there is also compliance criteria along with DR+backup+redundancy of DC played big role in consolidation. WAN bandwidth is cheaper than used to be 5 years ago.I think you are right, consolidation (fewer DC and fewer systems within DC (Do more with less hw)) and convergence (compute x86 & Network) will be the game of DC in next decade or so……

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  10. FYI-CNET did a report recently (roughly a year after this article posted) stating that the cloud migration movement is slower than expected.

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