2011 In Review: Will 2012 Be Any Different?
The end of 2011 is almost here; that means it’s time to look back at the past year and attempt to prognosticate the year to come. The world at large has seen a variety of political and economic shakeups that no doubt presage further turmoil in the year to come. For the data center industry, perhaps the biggest story—in 2011 and likely in 2012 as well—surrounds energy: its cost, its consumption and all the lengths companies will go to in an attempt to use less of it (or at least use it more efficiently). Although IT and the data centers that power it are to some extent insulated from economic and other world events because they are now fundamental tools for doing business and even for going about one’s daily business, these events nevertheless have an impact. The following are some stories and trends that greatly influenced the data center industry in 2011.
Energy
Energy (or power) is the single greatest ongoing expense of operating a data center, and it is even beginning to eclipse capital expenses: over the lifetime of a server, the cost of the energy needed to operate it is now greater than its initial capital cost. As demand for IT services continues to rise, companies are scrambling to find ways to increase the efficiency of their operations. In many cases, cutting energy consumption is not an option: the only feasible strategy is attempting to slow its rate of growth.
According to the Uptime Institute’s inaugural data center industry survey, the vast majority of respondents cited money as the main motivator behind efforts at increasing energy efficiency. Continuing the trend of recent years, server virtualization led the pack as the most popular means of increasing efficiency, followed by hot aisle/cold aisle containment and power monitoring and measurement.
To make matters worse, energy prices continue to rise. This is the result of a number of factors, ranging from political instability (particularly in the Middle East), uncertainty about potential government regulations regarding energy production and consumption, regulations themselves in this area, economic conditions (particularly inflation) and increasing demand for the limited resource.
Few of the conditions that are making energy problematic for data centers are likely to change in 2012. Thus, expect it to continue as a major (if not the greatest) concern for companies into 2012 and even beyond. Until demand for IT services levels off or falls, the data center’s appetite for power will continue to grow.
The Economy
Following the so-called Great Recession of a couple years ago, little changed. Sure, lots of people watched lots of money evaporate, and the floor dropped out of the housing market (which is still waiting to find a bottom), but the economy really saw no fundamental changes as a result. The federal government promised to make everything better by imposing a bunch more rules (what else is new) and by printing a bunch more money (in what is euphemistically called quantitative easing). Banks tightened credit (at least as far as housing goes). But what else happened? Certainly nothing to indicate that everything had been fixed. Not surprisingly, then, the recovery that so many hoped for never really appeared. Unemployment remains stubborn at around 9%, inflation is hammering the necessities of life (food and energy) and the incomes of middle-class consumers are falling. The U.S. economy, far from recovering, is looking at the increasingly likely prospects of another recession.
IT is such a necessity of business (and of daily life for many individuals) that the effects of economic troubles are somewhat milder than for the rest of the economy. If a company is to stay in business, for instance, then shutting down its data center is not an option. Furthermore, this means that firing the IT staff that runs the facility is a no-go. Companies made some cutbacks during the last recession, of course, but IT has remained relatively strong. Despite the increasingly dismal economic prospects, about half of companies increased their data center budgets in 2011, according to the Uptime Institute’s inaugural data center industry survey.
The year 2012 may not see any gross economic calamity, but given worldwide difficulties such as the European debt crisis (which is mirrored by the growing debt problem in the U.S.) and political turmoil in the Middle East, a widespread recovery doesn’t seem to be in the cards. On the other hand, the recent riots in England and protests in the U.S. (“Occupy Wall Street”)—while not necessarily as disruptive as the uprisings that have spread among Arab nations—show a certain amount of unrest. IT demand is likely to grow in 2012, too, but the political mood is nevertheless something to keep an eye on.
Japanese Earthquake
For those who think nuclear power is the solution to the world’s (and data center industry’s) growing energy appetite, the March 2011 earthquake in Japan was unwelcome news. Subsequent flooding from a tsunami caused reactor meltdowns at the Fukushima Daiichi nuclear power plant, once again garnering nuclear energy much unflattering press coverage. Fears of the dangers associated with nuclear power have once again been stoked, likely pushing greater reliance on this source well into the future (assuming it will ever gain truly large-scale acceptance in the style of coal). This catastrophe also highlighted the ongoing need for disaster recovery and business continuity plans—an issue of great concern for data centers, which cannot afford lengthy spells of downtime.
Steve Jobs Dies
An icon (no pun intended) of innovation and persistence, Steve Jobs led Apple back from the brink of irrelevancy to make the company a technology powerhouse. The iPod, iPhone and iPad are standards of mobile computing. Jobs died on October 5, 2011, having resigned as CEO of the company only weeks before (August). He may not have been a guru of data centers in particular, but in the IT world, he held a position of particularly high esteem. His departure leaves Apple as something of a question mark—will it continue its recent winning streak, or will it descend once more into second-class status? Look for Apple to maintain momentum in 2012, but it will need to match Jobs’s drive and innovation if it is to maintain its position in subsequent years.
The Feds Make Some Consolidation Headway
In its second attempt to reduce its data center footprint since the 1990s, the federal government under the leadership of CIO Vivek Kundra made some headway in its Federal Data Center Consolidation Initiative program, slating over 100 facilities for closure in 2011 (as of June), with about 40 facilities having already been closed by midyear. With about 2,100 data centers, the federal government has a lot of work to do—and plenty to work on. But even a few hundred closures leaves a gargantuan data center footprint, and the relevant question is what the government will do to avoid simply building more data centers once more.
In what may turn out to be a blow to the government’s momentum in this area, CIO Kundra departed from his post to take a fellowship at Harvard University. Although the attempts to slim down the federal IT giant were admirable, they have always appeared slightly at odds with the rest of the government: seldom are effective attempts ever made to reduce spending or to liquidate assets. Indeed, the welfare and warfare state seems to continue expanding (how many countries is the U.S. now attacking in the Middle East?)—so why not the IT to support it all? But we can still hope that, despite Kundra’s departure, the federal government will continue to slim down in the data center arena (perhaps to the benefit of cloud service providers) in 2012.
Security
In addition to energy, security is a top concern for data center operators. Even 10 years after the 9/11 attacks, terrorism is still a hot-button issue. Although data centers per se may not be as greatly threatened by political terrorists as, say, government and financial organizations, they face their own security concerns—both physical and virtual. LulzSec and Anonymous are exemplars of the threats posed by nearly invisible groups intent on engaging in virtual attacks on companies and organizations. Physical security is a perennial concern: there will always be individuals who’d like to break into a facility (whether residential, commercial or any other type) and steal something of value (whether physical property or information). But the battle will always go back and forth: as companies further secure their data centers, hackers and other malicious parties will find ways around these protections.
IPv6
The explosion of the Internet’s popularity is quickly eating away at the available IP address space. Thus, the latest version of the Internet Protocol, IPv6, greatly expands this space. But companies must prepare to implement the new protocol as more and more customers and other businesses begin demanding its use. June 8, 2011, was World IPv6 Day, an event intended to increase awareness of the new protocol through a series of tests involving Internet giants like Google and Facebook. Next year will see acceleration of IPv6 into greater use.
Wrap-Up
The data center and IT industries are increasingly influential and important, owing to the vast number of companies and individuals that rely on them for daily tasks. But they are not insulated: some of the trends in the larger economy, and in the world, have an impact. Energy costs and availability, for instance, are of great concern to data center operators owing to their facilities’ power appetites. Furthermore, the fortunes of data centers, while independent to some extent, will still follow the trends of the larger economy.
In addition to energy, security is a major concern. Some organizations may be bigger targets than others (depending on their industry affiliations) for groups like LulzSec and Anonymous, but anybody with a network cable to the outside world is a potential target. Security will remain a perennial issue: companies can improve their security, but hackers will always find some new avenue of attack. Thus, the battle will go back and forth, but it will always remain, in some sense, a stalemate.
Many of the same data center concerns and trends of 2011 will remain in 2012. Virtualization is and will remain a major means of enabling greater energy efficiency. The transition to IPv6 will continue to accelerate. IT budgets will, barring serious economic disruptions, continue to have a general upward trend. Nevertheless, any number of events could make 2012 a very different year—much as the recent year or two of recession changed the outlook for IT and the data center market.
