2008 Colocation Industry Trends Report

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Survey and Analysis from over 200 IT Executives and Colocation Users

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2008 Colocation Industry Trends Report

  1. 1. Boston Irvine Louisville San Francisco 2008 COLOCATION INDUSTRY TRENDS REPORT Created From 2008 Colocation Client Survey Results
  2. 2. TABLE OF CONTENTS The Survey Page 3 The Participants Page 4 Participant Company Growth Page 5 Why Companies Colocate Page 6 Expected ROI Page 7 Distance Page 8 Disaster Recovery Pages 9 and 10 Virtualization Pages 11 and 12 Green Page 13 Choosing Providers Page 14 Value of Colocation Services Pages 15 and 16 Who is Hosting.com Page 18 Additional Information Page 19 2008 Colocation Industry Trends Survey
  3. 3. THE SURVEY Hosting.com proactively engages with clients and prospects to effectively understand their business goals to build solutions that are both client relevant and applicable. A core component of Hosting.com’s client engagement strategy is the use of surveying tools. The 2008 Colocation Industry Trends Survey was sent to colocation clients of Hosting.com and other colocation providers throughout the world. The Colocation Industry Trends Survey was launched on August 7, 2008 and respondents had until September 5, 2008 to respond. The survey was conducted and hosted electronically. The survey asked approximately 30 questions and took between 6 and 10 minutes to complete. In sharing the results, Hosting.com will provide general demographic information about respondents and the companies they represent; however, Hosting.com will not reveal the specific identity of any respondent or company. 2008 Colocation Industry Trends Survey
  4. 4. THE PARTICIPANTS 212 Respondents IT and Business Decision Makers Over 20% were CEOs and Business Owners Industries Included : Financial Services, Retail, Social Networking, Healthcare, Manufacturing, IT Service Providers, Marketing and Advertising, Non Profits, City Governments, etc. Number of employees ranged from 2 to over 100,000 31% had 10-99 employees 8% had over 1,000 Revenues ranged from <$1M to >$100B 2008 Colocation Industry Trends Survey
  5. 5. RESPONDENT EXPECTED COMPANY GROWTH 24-Month Revenue Growth 11% Forecasted Revenue Growth of 100% or Greater 40% Forecasted 5%-20% Growth Lead Generation 44% ; < 20% of Company’s Lead Generation is Web-Driven 10% ; 81%-100% Company’s Lead Generation Web-Driven Web Presence 56% Expected Company’s Web Presence to Grow 25% or More Over the Next 24 Months 16% Weren’t Sure 2008 Colocation Industry Trends Survey
  6. 6. WHY COMPANIES CHOOSE TO COLOCATE What factors most influenced your decision to colocate your data infrastructure? Multiple selections were allowed 67% - Improve Availability/Reliability 49% - Improve Operational Efficiency/Performance 45% - Reduce/Eliminate Costs 39% - Scalability (Exponential Growth) 36% - Risk Mitigation 19% - Compliancy/Regulatory Requirements Analysis: Improved performance, reliability and security at a lower cost dominated the responses of participants. Colocating allows companies to achieve the benefits of redundant layers of security, connectivity, and failover at a much lower cost than building their own data center. 2008 Colocation Industry Trends Survey
  7. 7. DID WE MENTION REDUCED COSTS? 69% of Respondents Expect a Return on Their Colocation Investment • Of those, 24% Expect to See an ROI Within 6 Months • 40% in 12 months • 29% in 2 Years • 7% in 5 Years Analysis: Brick and mortar investments, such as building a data center rarely have a measurable ROI. Capital expenses for colocating are significantly lower than building a datacenter. When colocating, companies may see an ROI in the form of increased uptime by using a more reliable solution, increased client retention due to a higher quality of experience, eliminated expenses to build a data center, etc. Colocation providers should proactively consult with their clients to understand the clients’ objectives for colocating and to help them set achievable expectations with regards to cost savings and increased revenues. For most companies, a 6-month ROI will be hard to measure and achieve. 2008 Colocation Industry Trends Survey
  8. 8. 14% – LONG DISTANCE RELATIONSHIP OKAY What is the distance between your colocation facility and your office? Distance Between Office and Colo Facility Analysis: The majority of companies want their colocation facility to be within an hour’s drive of their offices. This reduces travel costs, allows companies more flexibility and 60% control, and provides IT personnel <$10M peace of mind. 36% Smaller businesses may be willing to 19% 14% 13% incur travel expenses to colocate in 3% less expensive markets to reduce their total outlay. 0-10 11-25 26-100 101-250 250+ Miles Miles Miles Miles Miles 2008 Colocation Industry Trends Survey
  9. 9. DISASTER – CAN WE RECOVER? If your servers were “down” for 24 hours or longer, the impact on your business would be catastrophic. 9% Strongly Agree 24% Unsure Strongly Disagree 67% Of the 67% that strongly agree – • 20% do not have a Disaster Recovery (DR) and Business Continuance Plan • 34% do not have a budget for DR and Business Continuance 2008 Colocation Industry Trends Survey
  10. 10. DISASTER RECOVERY AND COLOCATION Does your company have a strategic plan to provide disaster recovery / business continuance in the case of an unforeseen emergency? 70% - Yes Only 46% of respondents have a budget for DR Types of Disaster Recovery Used 29% - Failover in a Different Geographic Area 12% - Intra-datacenter Failover Readiness 11% - High Availability and Failover in a Virtualized Server Environment 10% - Used All of the Above 30% - Used Other DR Solutions or Unsure Analysis: CEOs, CIOs, IT Directors and IT personnel agree that downtime often creates lost revenues. Subsequently, companies have adopted “DR Plans” but often fail to appropriate adequate funding to support those plans. Colocation providers that have geographically dispersed datacenters and provide virtualized solutions may close this gap for companies that state they have or need a DR plan and their ability to fund the plan. 2008 Colocation Industry Trends Survey
  11. 11. VIRTUALLY UNCONVINCED Does your company use virtualization technologies internally? 51% - Yes Does your company use virtualization in its colocated data infrastructure? 32% - Yes Virtualization Products Used 15% VMWare 13% Microsoft 56% 16% Xen Other 2008 Colocation Industry Trends Survey
  12. 12. VIRTUALIZATION IMPACT To what extent do you believe virtualized solutions will reduce your current data center space requirements in the next 24 months? 8% Expect a 10% Reduction 13% Expect a 25% reduction 14% Expect a 50% reduction 8% Expect a 75% reduction 21% Expect No Reduction 37% Were Unsure Analysis: Increasingly, virtualization manufacturers and colocation providers target companies that colocate their infrastructure for virtualized solutions. Only 40% of respondents foresee virtualization having an impact on their datacenter space requirements, 21% expect no reduction and 37% are unsure. Two major obstacles remain for virtualization providers; one, many individuals must be convinced that virtualization can bring value (21%) and two, educating consumers that are unfamiliar with the benefits of virtualization (37%) is still necessary. 2008 Colocation Industry Trends Survey
  13. 13. DOES “GREEN” MATTER? Does your colocation provider invest in green initiatives to reduce it’s carbon footprint? 29% Yes 55% Unsure Does a colocation provider’s green initiatives positively influence your decision to use them as a colocation provider? 46% Yes 54% No Analysis: It is estimated that data centers use 1.5% of all power consumed in the US. It is imperative that they take the lead in reducing their carbon footprint with high-efficiency servers, optimized power/cooling solutions, using alternative energy sources, green building practices, etc. The ability to positively impact 46% of your prospects and clients through green initiatives is significant. However, while colocation providers may see increased revenues and brand loyalty as a result of green initiatives, but neither should be a catalyst for adopting practices to reduce their carbon emissions. 2008 Colocation Industry Trends Survey
  14. 14. HOW PROVIDERS ARE CHOSEN Rank these seven items, in order of importance, to your company when selecting a colocation provider Most Important When Choosing a Colocation Provider 78% 61% 44% 37% 32% 31% 31% 21% 17% 13% 7% 5% 5% 2% Ranked #1 Ranked in Top 3 2008 Colocation Industry Trends Survey
  15. 15. VALUE IN SERVICES? Respondents were asked to rate the value of service options that colocation providers offered. They were rated between 1 and 10; 10 was the highest rating. All Responses (Data Explanation on Next Page) 10 9 8 7 6 5 4 3 2 1 Remote Hands 24% 14% 16% 10% 5% 13% 3% 4% 3% 1% Firewall Monitoring 12% 12% 21% 9% 8% 9% 5% 6% 7% 3% and Maintenance Hot Swap 14% 9% 16% 17% 6% 12% 4% 6% 7% 2% Hardware Monitoring 13% 9% 17% 12% 7% 15% 5% 8% 4% 4% Application Monitoring 8% 6% 11% 10% 8% 17% 3% 6% 11% 4% 2008 Colocation Industry Trends Survey
  16. 16. SERVICES DATA TRANSLATED To simplify the value of offered services we categorized the responses as follows: A 1, 2, or 3 Signifies Low Value Offering to Colocation Clients A 4, 5, 6, or 7 Signifies Moderate Value Offering to Colocation Clients A 8, 9, or 10 Signifies High Value to Colocation Offering Clients 24% Rate a 10 53% 44% 39% 39% 25% 21% 16% 16% 15% 8% Low Value High Value 2008 Colocation Industry Trends Survey
  17. 17. ANALYSIS Bandwidth, Security and Redundancy are the three most important factors for most companies when choosing a colocation provider. These items are also the most cost prohibitive for companies building their own data centers. 100% of respondents listed a combination of two of these three items in their top three considerations. In addition, colocation providers with multiple data centers can more easily provide cost effective solutions to provide higher levels of redundancy, geographic failover, and bandwidth routing optimization. Increasingly, colocation clients and prospects are interested in managed services provided by colocation providers. This is a change from traditional colocation clients that did not want anyone to touch their infrastructure. Small and medium businesses choosing to colocate are looking to reduce costs and the management of the technology that allows them to accomplish their business objectives. Respondents rate “Remote Hands as a Service” as the most valuable service option offered by colocation providers. 2008 Colocation Industry Trends Survey
  18. 18. WHO IS HOSTING.COM Hosting.com provides enterprise colocation, cloud computing, dedicated hosting, managed hosting, disaster recovery and business continuance services to a global customer base demanding a high level of security, reliability and responsiveness. Hosting.com monitors, manages, and enhances the web based platforms of Web 2.0 companies, software as a service providers (SaaS), content distribution networks (CDN), and medium to large enterprises whose web presence is crucial and high availability mandatory. Hosting.com currently operates SAS 70 certified data centers in Louisville, Kentucky; Irvine, California; San Francisco, California; Boston, Massachusetts, and is currently expanding into Silicon Valley and Northern Virginia. For more information, please visit www.Hosting.com or call the company at 800-446-7627 2008 Colocation Industry Trends Survey
  19. 19. MORE ANALYSIS All questions and responses were not included in this survey. Omitted questions include questions on projected growth in power requirements, colocated data storage solution usage, when DR budgets are expected to be created, virtualization impacts over 12 and 36 months, etc. If you would like to schedule a personalized, in-depth analysis of this information for your organization, please email AHollobaugh at Hosting.com to schedule an appointment. Hosting.com will be coordinating webinars to share this information with interested parties in November. All individuals that download the e-book will be informed of theses dates. Visit www.Hosting.com for more information about Colocation Services and Solutions provided by Hosting.com 2008 Colocation Industry Trends Survey

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